SOURCE: Grocery Outlet Inc.

Grocery Outlet Inc.

December 29, 2015 13:46 ET

Grocery Outlet to Open Numerous Los Angeles-Area Locations

Continual Expansion of Grocery Retailer Points to Industry Strength

EMERYVILLE, CA--(Marketwired - Dec 29, 2015) - Grocery Outlet is shaking things up in the Southern California market. While other retail grocers in the region are filing for bankruptcy, merging or otherwise slowing their pace of expansion, the nearly 70-year-old company continues to grow.

Beginning in December, the retail grocer plans to open numerous stores in the greater Los Angeles area -- a move that will create hundreds of jobs. Store openings are projected to continue into 2016. Grocery Outlet's sales have been growing, up from just over $500 million in 2000 to more than $1.5 billion in 2014. According to Grocery Outlet Vice President of Marketing Melissa Porter, they could easily double or triple sales in the next decade.

"Our plan is to open a substantial number of stores each year in Southern California over the next several years," she said. "But so much will depend on real estate. Our first entry came about because a competitor gave up great locations as they looked to pull back from the market. We're very opportunistic; we like to take advantage of great deals."

Founded in 1946, Grocery Outlet is the one of the nation's largest extreme-value grocery retailers. With more than $1.5 billion in annual sales, Grocery Outlet stores offer name-brand groceries at up to 60 percent off conventional grocery store retail prices. Grocery Outlet offers a unique business opportunity for aspiring entrepreneurs: The California company builds stores and stocks the inventory on consignment. The company then recruits an independent operator to operate a Grocery Outlet Bargain Market independently under a license from Grocery Outlet.

This opportunity allows the independent operator the ability to experience uncapped earning potential while avoiding the multimillion-dollar cost of building out a location and purchasing inventory. Independent operators have the ability to control their own earning destiny by growing their stores and controlling costs.

Grocery Outlet is growing in markets that competitors shy away from

Grocery Outlet's entry into Southern California comes on the heels of retail grocer Haggen's failed expansion. In mid-August, Haggen announced it would be closing 27 stores, and recently it filed for Chapter 11 bankruptcy. Haggen had entered Southern California's competitive market earlier this year when it acquired 146 supermarkets -- including 83 California locations -- that formerly operated as Vons or Albertsons. Soon after the stores were open, Haggen began cutting employee hours and implementing layoffs.

"With 10 million-plus residents in Los Angeles County and 18 million in the greater Los Angeles area this is a seemingly ideal place for retail to come in, set up and try to do business," said Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corp. "But it's a very competitive marketplace. We have a handful of grocery chains that have been in business for a long time and have lots of loyal customers."

Nonetheless, Grocery Outlet is pushing forward in the Southern California market because it contains untapped potential.

Grocery Outlet Co-CEO Eric Lindberg said the company's focus will be on offering trusted supermarket brands at a fraction of their normal cost.

"There is a reason we label products with discounts over 50 percent as 'WOW' deals," he said. "It's often the first thing shoppers say when they realize how much money they'll save."

A powerful operating strategy equals growth opportunity

Grocery Outlet's operating strategy is somewhat different from their competitors'. Based on their ongoing expansion, it has also been effective.

"The stores are all run by independent operators under an operating agreement," Porter said. "And many of our stores are run by husband-and-wife teams, while others are run by father/daughter teams or father/son teams. The independent operators set the tone for each store, so you'll find different deals at every store. They are not the same."

Grocery Outlet offers customers name brands at prices up to 60 percent off conventional grocery store retail prices. This year alone, their shoppers have saved more than $1 billion on products purchased at Grocery Outlet as compared with traditional grocery retailers.

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Contact Information

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    Bruno Amedore
    Grocery Outlet
    Senior Recruiter
    (888) 809-1690