A feature story in Shopping Center Business earlier this year explained the continuing success of Grocery Outlet, a 70-year old, privately held grocery chain with 265 stores, 20 of which are in Pennsylvania. The author, Katie Sloan, points out that the company has made a name for itself by offering national brands at lower prices.
"Approximately 60 percent or more of what we sell in the store is opportunistically purchased national brands - we do not have a private label," according to VP of Real Estate Marc Drasin. "This means that the manufacturer could have made too many and we've bought the excess inventory, it could be a test item, it might have been part of a cancelled order from another grocery chain, or there could have been a package change and we've purchased the items in its prior packaging."
The result is a selection of popular national products, but at a price that is often 50 percent cheaper than traditional food retailers.
"It's a treasure hunt experience for our customer," says Drasin. "We're always going to have the basic product categories, but one month it is possible we're going to have Heinz ketchup, and the next month we might have a different brand."
Grocery Outlet stores are typically 18,000 square feet (about the same as an Aldi store), and the company prefers to be in middle-income areas. The stores are leased by Grocery Outlet, Inc., but each one is independently owned and operated.
Drasin says that company sales are nearing the $2 billion mark, and expansion is planned for existing trade areas.
(Let's do the math... 265 stores at 18,000 SF with $2 billion in sales is about $7.5 million per store, or $419 PSF.)