USA: Grocery Outlet readies US East Coast Invasion

Updated: Oct 26, 2020

Discount Retail Chain Grocery Outlet (NASDAQ listed: GO), the fast-growing US West Coast discounter that has quietly maintained a small pocket of stores on the East Coast, looks poised to begin a significant move to expand the latter front, newsportal winsightgrocerybusiness (WGB) states.

However, the company has made no secret of its desire to eventually expand in Pennsylvania, where it acquired the Amelia’s Grocery Outlet chain nearly a decade ago and has quietly rebranded it to the Grocery Outlet banner. Those stores—most in rural counties further out from metro Philadelphia—are supplied from a warehouse in Leola, Pa. in Lancaster Country.

Grocery Outlet utilizes a unique model in which stores are typically owned and operated by independent entrepreneurs responsible for hiring and operations and who buy goods from the company to sell on consignment. Grocery Outlet’s buying teams focus on overruns, packaging changes and other non-traditional supply practices providing deeply discounted and rotating assortments drawing comparisons to the discount clothing retailer TJ Maxx. WGB reported last year that six of Grocery Outlet’s Pennsylvania stores were company owned.

About a year ago, Grocery Outlet hired a former Boxed and Sam’s Club executive, Heather Mayo, as EVP of Grocery Outlet’s East division. At that time, company officials said Mayo would take a lengthy “immersion” in the company and its business with eyes on opening a second front of store expansion.

Grocery Outlet’s expansion, if carried though, will represent another discount grocer vying for a slice of business in the Northeast which has seen rapid expansion from German-bred rivals Aldi and Lidl in recent years, which like Grocery Outlet are riding widening consumer acceptance of discount stores and what Grocery Outlet officials characterize as declining loyalty to traditional supermarkets and supercenters. Grocery Outlet had a successful public stock launch last year and has performed well during the pandemic, saying most recently that comps were up by 16.5% in its fiscal second quarter.

Discount chains historically tend to do best in times of economic stress, which have also come along with the pandemic.

US $52 Million Philadelphia ‘Linchpin’ In Philadelphia, Grocery Outlet was named as an anchor tenant in a $52 million mixed-use development planned for Philadelphia’s Sharswood neighborhood, according to the Philadelphia Housing Authority.

The Sharswood Ridge development, which broke ground Oct. 14, is expected to bring 98 rental units—with nearly half to be offered at below-market rents—and more than 45,000 square feet of retail to Sharswood, a North Philadelphia neighborhood described as among the most distressed in the city. The project is to be developed by Mosaic Development Partners and SHIFT Capital and funded through federal, state and local authorities as well as private investors. The Philadelphia Housing Authority is the senior lender and partner in the project.

That group said in a release that Grocery Outlet, along with Santander Bank and Wingstop restaurant, would be among the retail tenants. Construction is anticipated to begin this month.

“This development will serve as a linchpin in the rebirth of the Sharswood neighborhood,” Philadelphia Mayor Jim Kenney. "It shows what we can achieve when government and private partners join together with a common purpose. It also shows the value of including community members in setting priorities for the services they feel are most important to them. Congratulations to PHA and all of its partners for making this day possible.” “This project checks so many boxes for our residents on issues magnified by the COVID-19 pandemic,” added Council President Darrell L. Clarke, whose district includes the site.  “A lack of access to healthy foods—we have a supermarket in this development. Check that box. Access to adequate health care—we have an urgent care coming here. Box checked. Access to banking—a new bank is locating here. Check that box. More affordable housing for seniors. Check the box. Businesses which are minority-owned gaining economic opportunity. A black developer is developing this project. This project checks every box we want and need in North Philadelphia. I cannot wait to get shovels in the ground.”

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