Grocery Outlet Strong Growth

[storewanderer]

https://www.supermarketnews.com/retail- ... -growth-q2

What is interesting here is they note transaction size was flat but transaction count was up 9.1% and sales went up. This alludes that traffic is increasing. But are sales to existing customers declining? Even though they haven't done many price increases I would expect at least 2-3% increase in sales there from price increases. They need to figure out how to get more sales out of existing customers, seems like a huge missed opportunity there but at least they are getting the new customers through the door.

Grocery Outlet has been quite slow on price increases but I have noticed some... way fewer than most retailers.

[mjhale]

Does Grocery Outlet have enough consistent stock that customers feel they can do their weekly shopping at the store? If they don't have consistent stock as a closeout retailer perhaps existing customers are not visiting as frequently for this reason. However, new customers are hearing the buzz about low prices and are checking the store out. I've been to Sharp Shopper when I've been in PA. Sharp Shopper is a similar concept. You could probably do your weekly shopping there but I wouldn't consistently count them having the same product in each section every week. For instance, they will have cereal but they might not always have Kelloggs Corn Flakes.

[babs]

Does Grocery Outlet have enough consistent stock that customers feel they can do their weekly shopping at the store? If they don't have consistent stock as a closeout retailer perhaps existing customers are not visiting as frequently for this reason. However, new customers are hearing the buzz about low prices and are checking the store out. I've been to Sharp Shopper when I've been in PA. Sharp Shopper is a similar concept. You could probably do your weekly shopping there but I wouldn't consistently count them having the same product in each section every week. For instance, they will have cereal but they might not always have Kelloggs Corn Flakes.

It's a treasure hunt store. You can't rely on them having anything from one day to the next. I enjoy the treasure hunt aspect but can't imagine doing all my grocery shopping there.

[ClownLoach]

Does Grocery Outlet have enough consistent stock that customers feel they can do their weekly shopping at the store? If they don't have consistent stock as a closeout retailer perhaps existing customers are not visiting as frequently for this reason. However, new customers are hearing the buzz about low prices and are checking the store out. I've been to Sharp Shopper when I've been in PA. Sharp Shopper is a similar concept. You could probably do your weekly shopping there but I wouldn't consistently count them having the same product in each section every week. For instance, they will have cereal but they might not always have Kelloggs Corn Flakes.

It's a treasure hunt store. You can't rely on them having anything from one day to the next. I enjoy the treasure hunt aspect but can't imagine doing all my grocery shopping there.

It all depends on the operator. Some of the stores near me do have consistent everyday items like Coke and corn flakes, but their prices are not good at all on them. I think they're trying to go down the road Big Lots did where they start to have a core list of SKUs that are always there in hopes of generating regular shops and boosting margin as a customer buys a higher priced everyday item out of convenience. The problem at Big Lots was that they would have a section of "everyday" items with bin labels and a planogram, but the next section was the closeout buys just shoved onto the shelves randomly... Before long the customers scrambled everything, leaving them with no ability to reorder or maintain in stocks in the "everyday" items that were so critical to their business. Sometimes they'd even receive a short dated batch of a everyday item and put a different UPC sticker on the corner and put it in the closeout section next to the regular item confusing everyone including their cashiers. Many of their stores still haven't been able to wrap their arms around this problem and you see thousands of out of stocks, most of which have led to a massive culling of stores. I'd estimate 50% of their SoCal stores have closed in the last 24 months, the irony being more in the suburbs where they're supposedly trying to expand along with rural areas.

[storewanderer]

Grocery Outlet has a consistent stock from its warehouse on certain items. These include milk, eggs, some bagged nuts, jugs of vinegar, sugar, flour, also a line of bread items. They also have consistent DSD on some bread items, soda, beer from vendors. This list of core SKUs is very small and has not changed in decades. They are not adding to this list.

Remember Grocery Outlet was able to take the Lady Lee and Harvest Day trademarks from Albertsons when they let them expire and I thought at that point they were going to go down the road of doing a private label program of core SKUs. All they have is Lady Lee Milk and Harvest Day Bagged Nuts and that is where it stopped. So while they definitely have options to get some core SKUs they don't seem to be going that route.

Grocery Outlet operators can opt to have a more consistent stock of additional items (not sure how they source them) but are sort of discouraged from doing so and if they try to fill up too much shelf space with those non-Grocery Outlet items, supposedly Grocery Outlet gets upset. Also I think it messes up the inventory if the operator gets items from some other source as that is now the operator's inventory and all of the inventory that Grocery Outlet sends the stores belongs to Grocery Outlet and is consigned to the stores.

Grocery Outlet stocking in cases/boxes on the shelves should avoid the Big Lots issue. They have a test format that uses conventional shelving and does not keep the cases/boxes on the shelves but they keep that arranged like a normal store. Grocery Outlet uses a lot of labor to maintain its aisles. That is a big thing for them and operators will lose stores over not maintaining aisle conditions properly because it is considered poor housekeeping and cause of mishandling of inventory (since that inventory belongs to Grocery Outlet corporation)... They will never look anything close to what Big Lots looks like.

All Grocery Outlet locations for years have had a full line of Coke, Pepsi, etc. that is DSD and is sold all the time at prices comparable to Wal Mart's everyday soda pricing (meaning no loss leader like a weekly grocery store ad price- but 5.99/12pk instead of 9.99/12pk like Safeway NorCal). A couple locations in my area make deals with soda vendors to get near expired soda and blow it out- things like 20oz bottles at 5 for $1 and usually of odd flavors that get discontinued. Never see any 12 packs of Coke, etc. on a blowout.

[HCal]

Grocery Outlet operators can opt to have a more consistent stock of additional items (not sure how they source them) but are sort of discouraged from doing so and if they try to fill up too much shelf space with those non-Grocery Outlet items, supposedly Grocery Outlet gets upset. Also I think it messes up the inventory if the operator gets items from some other source as that is now the operator's inventory and all of the inventory that Grocery Outlet sends the stores belongs to Grocery Outlet and is consigned to the stores.

Per their annual report, the operators are only allowed to source merchandise from the company. They do have some discretion in selecting products, but the company can also make them accept items that have been advertised or are close to expiry. In my experience, the product mix is fairly consistent between locations in California. I'm sure it's completely different on the east coast though.

[mbz321]

From my experiences with Grocery Outlet here in PA, it's just not a place I can regularly shop at. I pop in every few weeks when I'm not really looking for anything in particular, but over the past year or so there seems to be fewer and fewer bargains to go around, and I don't find the regularly stocked merchandise to be much of a bargain. Now one of the local operators is very good about sending out email blasts and Facebook posts about new arrivals and such and definitely has lured me in. Some of the other operators, not so much.

[storewanderer]

From my experiences with Grocery Outlet here in PA, it's just not a place I can regularly shop at. I pop in every few weeks when I'm not really looking for anything in particular, but over the past year or so there seems to be fewer and fewer bargains to go around, and I don't find the regularly stocked merchandise to be much of a bargain. Now one of the local operators is very good about sending out email blasts and Facebook posts about new arrivals and such and definitely has lured me in. Some of the other operators, not so much.

Their best deals are short dates. Really, really good deals.

Also sometimes they have weird small sizes of things, I think they work with school lunch providers. I see little 3 or 4oz Yoplaits individual, pudding cups 4oz individual, weird little bags of 1 oz cheese chunks, single bags of craisins in various flavors, etc. So for those I try things I otherwise wouldn't buy.

I also enjoy finding items from distant private labels or distant regional brands. But the mix varies. In a lot of May-June out here they had a lot of Land O Lakes Shredded Cheese (1.99). That is not an item sold out here by any chains, so I made some purchases of it. Now they are selling some generic thing or Kraft and it is 2.49 for most of it so I am not really interested anymore.

[storewanderer]

Per their annual report, the operators are only allowed to source merchandise from the company. They do have some discretion in selecting products, but the company can also make them accept items that have been advertised or are close to expiry. In my experience, the product mix is fairly consistent between locations in California. I'm sure it's completely different on the east coast though.

Mix varies widely in my area's locations. There are items that flow through some locations that never appear at others. I think part of the mix variance is also just that some items sell better at some locations than others. Sell through isn't the same speed at every location so every location may have gotten 4 boxes of item A, some locations sold it out the first week, another may take 3 weeks to sell it, another couple may have the stuff sitting around for 2 months.

Operators are able to make arrangements to source their own items under certain circumstances but it is discouraged and I think only experienced operators are given the consideration. For instance one operator in my area, the one I mentioned before who gets the short dated sodas, also has gotten some kind of a deal with a pet food distributor in the area to get short dated pet food in big bags and sell it.

[Romr123]

I think that's exactly it----the store in downtown Palm Springs differs from the one in Cathedral City. The one in Palm Springs got a good bit of good press opening as there was a bit of a food desert there in the downtown area (otherwise closest store was Ralphs at Sunrise/Ramon). I find it possible to do more complete shopping there than at the Cat City store, but both are really "discovery" fill-in stores for me.

The 99 cent Store used to be that way when we first started going to Palm Springs, but with inflation they stopped being quite as interesting and converged (more or less) with Dollar Tree in my mind.