“High prices at the grocery store” has become a common refrain in news headlines over the past several months, and that’s not likely to change in the near term. In February, the Consumer Price Index for food-at-home jumped 8.6% year over year, the largest 12-month hike since April 1981 and edged up 1.4% month to month after a 1% uptick in January. The increase continued a steady rise in inflation since the latter part of 2021. That trend is steering more consumers to stores like Grocery Outlet. The Emeryville, Calif.-based chain, which describes itself as an “extreme value” retailer, touts big discounts on brand-name products and prices a typical shopper basket at about 40% lower than that of conventional grocers.
“The recent months have been interesting. When you’re paying US$4, $5, $6 or $7 for a gallon of gas in California, everyone starts thinking about how to save money,” Layla Kasha, senior vice president, chief marketing officer and chief new store growth officer at Grocery Outlet, told Supermarket News in a podcast. “We’ve always been all about value, delivering customers the brands they love at prices that they can afford. And I think that’s never been more relevant than it is today. So we are seeing the traffic patterns come back and people really trying to stretch their budget.”
But there’s more to Grocery Outlet’s formula. The stores are run by independent owner-operators from the communities they serve, enabling locations to cater to shifting customer preferences. Shopper savings is achieved through a sourcing model of procuring surplus inventory and product overruns directly from thousands of supplier partners. This includes a changing assortment of products with “WOW!” prices, creating a “treasure hunt” shopping experience a key draw for Grocery Outlet
“The treasure hunt is something that emotionally connects to people. When you find that epiphany item, you get really excited. And that drives you to continue to shop at Grocery Outlet,” Kasha said. “But the value is unbeatable. When you get that brand at such a deep discount, that value is unprecedented. And that is another thing that really connects to you emotionally."
Grocery Outlet opened 36 new stores in fiscal 2021, ending the year with 415 stores in California, Washington, Oregon, Pennsylvania, Idaho, Nevada and a new state New Jersey. More locations in new markets are upcoming.
“We’re all about the East,” Kasha said of Grocery Outlet’s expansion, adding that new stores are slated for Delaware and Maryland this year.