scorecard
BUSINESS
TECH
MARKETS
REVIEWS
AI
VIDEOS
  1. Home
  2. Retail
  3. news
  4. Discount supermarket Grocery Outlet could see more business as shoppers face high food prices. I visited the store and saw why bargain-hunters love it.

Discount supermarket Grocery Outlet could see more business as shoppers face high food prices. I visited the store and saw why bargain-hunters love it.

Discount supermarket Grocery Outlet could see more business as shoppers face high food prices. I visited the store and saw why bargain-hunters love it.
Sarah Jackson/Insider
  • Food prices have been pinching Americans' wallets for several months.
  • Discount retailers like Grocery Outlet could draw consumers looking to cut costs at the supermarket.

Millions of Americans have felt a pinch on their wallets at the grocery store over the past few months as food prices ballooned.

Millions of Americans have felt a pinch on their wallets at the grocery store over the past few months as food prices ballooned.
Luis Alvarez

For the year ended April 2022, food prices were up 10.8%, marking their largest 12-month increase since November 1980.

For the year ended April 2022, food prices were up 10.8%, marking their largest 12-month increase since November 1980.
Liao Pan/China News Service via Getty Images

The high prices could drive shoppers to discount retailers instead, and that's where stores like Grocery Outlet come in.

The high prices could drive shoppers to discount retailers instead, and that
Sarah Jackson/Insider

In mid-May, analysts at investment bank Cowen said they expect the discounter to be "a relative long-term winner in the value grocery space," noting in addition that "its value proposition has broad demographic appeal that cuts across a wide spectrum of income levels, ages, and other factors."

Grocery Outlet calls itself "the nation's largest extreme value retailer."

Grocery Outlet calls itself "the nation
Sarah Jackson/Insider

I decided to visit a Grocery Outlet to see why bargain shoppers love it and how it can help customers save as grocery trips become more expensive.

I decided to visit a Grocery Outlet to see why bargain shoppers love it and how it can help customers save as grocery trips become more expensive.
Sarah Jackson/Insider

Right off the bat, the front of the store advertises its steep discounts, drawing customers with the promise of prices 50% off those found at traditional grocery stores.

Right off the bat, the front of the store advertises its steep discounts, drawing customers with the promise of prices 50% off those found at traditional grocery stores.
Sarah Jackson/Insider

The company has an opportunistic buying model.

The company has an opportunistic buying model.
Sarah Jackson/Insider

Name-brand labels offer Grocery Outlet surplus inventory due to occurrences like packaging changes or manufacturing overruns, in which companies produce more goods than they need.

Name-brand labels offer Grocery Outlet surplus inventory due to occurrences like packaging changes or manufacturing overruns, in which companies produce more goods than they need.
Sarah Jackson/Insider

Grocery Outlet then buys the excess items for "pennies on the dollar" and can pass those savings onto consumers.

Grocery Outlet then buys the excess items for "pennies on the dollar" and can pass those savings onto consumers.
Sarah Jackson/Insider

This allows Grocery Outlet to sell items at 40%-70% less than conventional grocery stores.

This allows Grocery Outlet to sell items at 40%-70% less than conventional grocery stores.
Sarah Jackson/Insider

Grocery Outlet says most of its stores are independently operated by local families. A sign in the wine and beer section at my store proudly declared this was the case there.

Grocery Outlet says most of its stores are independently operated by local families. A sign in the wine and beer section at my store proudly declared this was the case there.
Sarah Jackson/Insider

When the company buys from suppliers, local store owners choose which products from the inventory to offer in their stores, which Grocery Outlet says helps with "personalizing each store's selection to its local community."

When the company buys from suppliers, local store owners choose which products from the inventory to offer in their stores, which Grocery Outlet says helps with "personalizing each store
Sarah Jackson/Insider

As a result, product selection can vary greatly by store.

As a result, product selection can vary greatly by store.
Sarah Jackson/Insider

When I visited, there were large signs throughout the store indicating the various big-name brands that supply products there, like these.

When I visited, there were large signs throughout the store indicating the various big-name brands that supply products there, like these.
Sarah Jackson/Insider

Grocery Outlet signed its first supplier agreement, with Del Monte, in 1971.

Grocery Outlet signed its first supplier agreement, with Del Monte, in 1971.
Sarah Jackson/Insider

Today, it works with more than 2,500 brands.

Today, it works with more than 2,500 brands.
Sarah Jackson/Insider

Its top suppliers include household names like Kellogg's, General Mills, Kraft, Nestle, Unilever, and Procter & Gamble.

Its top suppliers include household names like Kellogg
Sarah Jackson/Insider

When it comes to a lot of common staples, however, many items can't usually be sourced opportunistically, like milk...

When it comes to a lot of common staples, however, many items can
Sarah Jackson/Insider

...and eggs.

...and eggs.
Sarah Jackson/Insider

In these cases, Grocery Outlet sources these products just like other grocery stores but tries to price them at or below the competitors' lowest price.

In these cases, Grocery Outlet sources these products just like other grocery stores but tries to price them at or below the competitors
Sarah Jackson/Insider

This is meant to help shoppers finding a good bargain make sure they can also get everything they need in one trip.

This is meant to help shoppers finding a good bargain make sure they can also get everything they need in one trip.
Sarah Jackson/Insider

Grocery Outlet has had plenty of time to become, as it calls itself, "one of the largest opportunistic buyers of grocery items in the country." The company's history dates back to 1946, when founder Jim Read opened the first store.

Grocery Outlet has had plenty of time to become, as it calls itself, "one of the largest opportunistic buyers of grocery items in the country." The company
Sarah Jackson/Insider

Located in San Francisco, the store was called Cannery Sales.

Located in San Francisco, the store was called Cannery Sales.
Sarah Jackson/Insider

It sold military surplus items at heavily discounted prices.

It sold military surplus items at heavily discounted prices.
Sarah Jackson/Insider

Grocery Outlet didn't start selling fresh produce until 1999. On my visit, I found some deals were particularly good when it came to organic produce (I'm looking at you, avocados).

Grocery Outlet didn
Sarah Jackson/Insider

There was also a great deal on watermelon with summer just around the corner. These were regular-sized for sale at the price of some personal-sized watermelons.

There was also a great deal on watermelon with summer just around the corner. These were regular-sized for sale at the price of some personal-sized watermelons.
Sarah Jackson/Insider

Up next was the meat section.

Up next was the meat section.
Sarah Jackson/Insider

Many of the items here had orange stickers denoting their prices were reduced for quick sale. This made some products an especially good deal, if you could use them in time before they expired.

Many of the items here had orange stickers denoting their prices were reduced for quick sale. This made some products an especially good deal, if you could use them in time before they expired.
Sarah Jackson/Insider

And though Grocery Outlet has been around for decades, the company didn't start selling fresh meat until 2003.

And though Grocery Outlet has been around for decades, the company didn
Sarah Jackson/Insider

Nearby, there was an aisle devoted to what Grocery Outlet calls the "NOSH" section.

Nearby, there was an aisle devoted to what Grocery Outlet calls the "NOSH" section.
Sarah Jackson/Insider

NOSH stands for "natural, organic, specialty, healthy."

NOSH stands for "natural, organic, specialty, healthy."
Sarah Jackson/Insider

Products here included everything from coconut flour and spirulina to snack bars and even watermelon jerky (not pictured here), which was new to me.

Products here included everything from coconut flour and spirulina to snack bars and even watermelon jerky (not pictured here), which was new to me.
Sarah Jackson/Insider

As I walked through the store, I saw a lot of products still stored in the cardboard packaging they came in.

As I walked through the store, I saw a lot of products still stored in the cardboard packaging they came in.
Sarah Jackson/Insider

This can help the company save on the costs of labor for workers stocking shelves.

This can help the company save on the costs of labor for workers stocking shelves.
Sarah Jackson/Insider

Besides groceries, the store had plenty of other products, including household items like this sharply discounted toilet paper...

Besides groceries, the store had plenty of other products, including household items like this sharply discounted toilet paper...
Sarah Jackson/Insider

...and this assortment of laundry detergent.

...and this assortment of laundry detergent.
Sarah Jackson/Insider

There was a section for beauty products, personal care items, and toiletries.

There was a section for beauty products, personal care items, and toiletries.
Sarah Jackson/Insider

This area had some of the biggest discounts in the store.

This area had some of the biggest discounts in the store.
Sarah Jackson/Insider

There was a small clothing section in one corner of the store, although some boxes were left on the sales floor nearby.

There was a small clothing section in one corner of the store, although some boxes were left on the sales floor nearby.
Sarah Jackson/Insider

Some clothes had piled up into a small heap.

Some clothes had piled up into a small heap.
Sarah Jackson/Insider

One area had a small selection of kids' toys.

One area had a small selection of kids
Sarah Jackson/Insider

There was kitchenware...

There was kitchenware...
Sarah Jackson/Insider

...outdoor items and pet products.

...outdoor items and pet products.
Sarah Jackson/Insider

I went to the store in mid-May, a full month after Easter, but found some merchandise still lingering from the holiday, on clearance.

I went to the store in mid-May, a full month after Easter, but found some merchandise still lingering from the holiday, on clearance.
Sarah Jackson/Insider

There were also heart-shaped Ding Dongs from Valentine's Day.

There were also heart-shaped Ding Dongs from Valentine
Sarah Jackson/Insider

In the same aisle, I even saw some Oreo knock-offs from fellow grocer Food Lion.

In the same aisle, I even saw some Oreo knock-offs from fellow grocer Food Lion.
Sarah Jackson/Insider

As I walked through the store, I saw empty shelves from time to time.

As I walked through the store, I saw empty shelves from time to time.
Sarah Jackson/Insider

Inventory can change very quickly at Grocery Outlet stores because of the company's opportunistic buying model.

Inventory can change very quickly at Grocery Outlet stores because of the company
Sarah Jackson/Insider

As a result, many deals can be one-time only.

As a result, many deals can be one-time only.
Sarah Jackson/Insider

After visiting the store, I can see why bargain-hunters love it.

After visiting the store, I can see why bargain-hunters love it.
Sarah Jackson/Insider

The company's website says, "From a demographic perspective, Grocery Outlet customers are generally reflective of the grocery shopping population. What makes them different is their shared attitude about shopping. They are bargains shoppers and they LOVE a deal. They shop often and do not like to pay full retail."

The company
Sarah Jackson/Insider

If you enjoy hunting for bargains, Grocery Outlet could be a great place to shop because you never know what deals you might find.

If you enjoy hunting for bargains, Grocery Outlet could be a great place to shop because you never know what deals you might find.
Sarah Jackson/Insider

And I found that many of the items were in fact priced lower than I'd probably see elsewhere, which could very well attract more shoppers as inflation remains high.

And I found that many of the items were in fact priced lower than I
Sarah Jackson/Insider

But the store may not be for everyone.

But the store may not be for everyone.
Sarah Jackson/Insider

Shoppers who value consistency more than the fun of a bargain hunt may be turned away by the stores' constantly changing inventory since it means they may not be able to make repeat purchases very often.

Shoppers who value consistency more than the fun of a bargain hunt may be turned away by the stores
Sarah Jackson/Insider

I enjoyed my visit to the store and would definitely go back again.

I enjoyed my visit to the store and would definitely go back again.
Sarah Jackson/Insider

READ MORE ARTICLES ON

Popular Right Now

Advertisement