Grocery Outlet to open 40 new stores in 2019

Grocery Outlet, the California-based discount food retailer, has quietly ramped up its growth as competitors like Aldi and Lidl are making much more industry noise. Earlier this year the company opened its 300th store, and 40 new stores are expected for 2019.

Grocery Outlet, which purchased Amelia's stores in Greater Philadelphia a few years ago, operates stores in Pennsylvania, Oregon, Washington, Idaho, Nevada and California. Southern California represents their largest region, with 70 locations.

According to a recent story in Supermarket News, Grocery Outlet offers 40% - 70% off nationally recognized brands. They purchase from manufacturers that have excess inventory and pass their savings on to consumers. As a result of this opportunistic approach, the lineup of products often varies with each shopping trip. And since the stores are locally owned (not franchised), the product lineup may also vary from store to store. Each owner has the ability to choose what products they want to buy and sell.

"People love to save money, there's no question," said Phil Lempert, founder and editor of SupermarketGuru.com. "If you can combine that with a treasure hunt, from a consumer standpoint, it's great."

Although the products may differ from week to week, Grocery Outlet's inventory is predominantly made up of national brands, unlike Aldi and Lidl, who only offer a limited amount of national brands.

Recently Grocery Outlet has addressed its millennial customers, who are often their most vocal shoppers. Millennials seek both value and high quality, as well as an understanding of 'the experience of the food," according to Vice President of Marketing Layla Kasha. As a result, Kasha describes a new store in Los Angeles as "modern and hip, focusing on clean lines and a design aesthetic that matches the surrounding area."

Nationally, the model seems to be working, as Grocery Outlet recently surpassed $2 billion in annual sales, according to Supermarket News.

Grocery Outlet to close Royersford, PA store

The Grocery Outlet in Royersford, PA announced that it will close on October 30, but township residents and several government and elected officials are pleading with the company to keep the store open.

There is a Giant supermarket down the road, and several supermarkets in the Route 422 corridor.

The Grocery Outlet currently has more than 300 independently-operated stores in California, Idaho, Nevada, Oregon, Pennsylvania and Washington.

Grocery store openings fell sharply in 2017

According to an annual "Grocery Tracker" report from JLL, grocery store openings dropped 28.8% in 2017 compared to the previous year. The report states that the decline reflects chains' efforts to reexamine their current footprints and rethink strategies to deal with new online and brick-and-mortar competition.

JLL said that California led the way in 2017 with 1.6 million square feet of new grocery store space. Virginia and North Carolina combined for 2.7 million square feet of new space, and Texas was described as "still one of the hottest states for grocery expansion."

Sprouts, Grocery Outlet, Aldi and Lidl were mentioned as notable chains that are expanding.

JLL's report said that investment in grocery-anchored centers grew 5.3% in 2017, and the company expects supermarkets to retain high interest as anchor tenants for shopping centers.

"It (grocery-anchored centers) was one of the only retail sectors to see growth in a year of low transaction volume," the study said. "Grocery-anchored centers remain a safe bet for investors, as overall transaction volume for retail has been down, indicating the asset remains a stable sector."

The study mentioned that the increase in smaller footprint stores is a clear trend - for more compact formats like Aldi and Trader Joe's, as well as for traditional supermarket chains and mass merchants like Walmart and Target.

"The grocers that can deliver the right in-store experience, combined with the right online pickup or fulfillment plan... are the ones that will thrive, whether their stores are 15,000 square feet with limited products or take up a footprint four times as large," said James Cook, JLL director of retail research.

Grocery Outlet thriving by selling national products for less

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.)

ShopRite, Weis, Grocery Outlet add stores

It was announced last month that Village Super Market, a Wakefern member that operates 29 ShopRite supermarkets, signed a lease for a 90,000 square foot store that will anchor a new mixed-use development in Old Bridge, NJ. The store is slated to open next summer. Plans for the development include 2,000 residential units and more than 500,000 square feet of retail space.

Weis announced last month that it plans to purchase five Mars stores in Baltimore County, Maryland. When the purchase is complete (in late July, according to the announcement), Weis will have nine stores in the county. Mars currently operates 13 stores, including the five stores to be closed. The company closed four stores earlier this year.

Grocery Outlet, the California-based chain that purchased Amelia's in 2012, celebrated its 50th Pennsylvania store with its opening last month in Quakertown's Trainer's Corner Shopping Center. Sears Hardware had previously occupied the building. A Grocery Outlet employee said the company plans more stores, with an expansion goal of 80 throughout New Jersey, Maryland and Virginia.
  

Amelia's conversion to Grocery Outlet banner nearly complete

As I reported last fall (Amelia's Grocery Outlet parent...), Grocery Outlet has been in the process of converting the Amelia's banner to Grocery Outlet, which will result in a consistent name throughout the entire country. It was reported yesterday that the conversion is nearly done.

Starting tomorrow, visitors to Amelia's website will be redirected to groceryoutlet.com.

Amelia's Grocery Outlet parent to be purchased by investment firm

"Extreme-value" retailer Grocery Outlet, which operates 198 stores in the Western U.S. plus 16 Amelia's supermarkets in Pennsylvania, has entered into an agreement to be acquired by Hellman & Friedman, an investment firm in San Francisco.

Grocery Outlet's principal owner for the last five years has been Berkshire Partners, based in Boston. The chain was founded in 1946 and has been profitable ever since, according to a company representative.

The stores in Pennsylvania operating as Amelia's Grocery Outlet are in the process of converting to the Grocery Outlet banner. The Amelia's chain was purchased by Grocery Outlet in 2012.

Grocery Outlet offers branded grocery products at discount prices, with the stores mostly managed by independent operators.

Hellman & Friedman Managing Director Erik Ragatz says his company plans to move Grocery Outlet "into its next phase of growth."

Amelia's parent company could fetch $1 billion in sale

Grocery Outlet, the discount supermarket with a remarkable track record of profitability, is exploring a sale that may bring more than $1 billion, according to reports. The company's private equity owner, Berkshire Partners, LLC, has hired Barclays and Goldman Sachs to run a sale process.

Grocery Outlet, whose stores are mostly in California, Washington and Oregon, wasn't known in Pennsylvania grocery circles until late 2011 when the company purchased Amelia's. Amelia's currently operates 16 stores in Eastern PA, while Grocery Outlet has about 180 stores.

Sales for Grocery Outlet in 2013 were approximately $1.3 billion.

Redner's 6th on list of small chains and independents

Last year The Fresh Market and Grocery Outlet were the top two grocers on Supermarket News' list of Top 50 Small Chains and Independents, but their growth has lifted them off the list and on to the Top 75 list of the largest food retailers and wholesalers in the U.S. and Canada. Last year Grocery Outlet, based in Berkeley, CA, purchased Amelia's, a chain based in Southeastern PA.

Redner's Markets, seventh on last year's list, moved up to sixth due to the addition of three stores. Brown's Super Stores, a ShopRite operator that's part of the Wakefern cooperative, is 35th on this year's list.

Fareway Stores (Boone, Iowa) operates 102 stores and tops the list, while PAQ, Inc. of Stockton, CA is second.