Grocery Outlet Holding Corp. (Grocery Outlet) operates as a retailer of name-brand consumables and fresh products sold primarily through a network of independently operated stores.
The company has stores in California, Washington, Oregon, Pennsylvania, Tennessee, Idaho, Maryland, Nevada, North Carolina, New Jersey, Georgia, Ohio, Alabama, Delaware, Kentucky and Virginia.
Each of the company's stores offers a fun, treasure hunt shopping experience in an easy-to-navigate, small-box format. An ev...
Grocery Outlet Holding Corp. (Grocery Outlet) operates as a retailer of name-brand consumables and fresh products sold primarily through a network of independently operated stores.
The company has stores in California, Washington, Oregon, Pennsylvania, Tennessee, Idaho, Maryland, Nevada, North Carolina, New Jersey, Georgia, Ohio, Alabama, Delaware, Kentucky and Virginia.
Each of the company's stores offers a fun, treasure hunt shopping experience in an easy-to-navigate, small-box format. An ever-changing assortment of ‘WOW!’ deals, complemented by everyday staple products, generates customer excitement and encourages frequent visits from bargain-minded shoppers. The company's flexible buying model allows it to offer quality, name-brand opportunistic products at prices generally 40% to 70% below those of conventional retailers. The company's Grocery Outlet stores are primarily run by entrepreneurial independent operators (IOs) who create a neighborhood feel through personalized customer service and a localized product offering.
The company sources quality, name-brand consumables and fresh products opportunistically through a large, centralized purchasing team that leverages long-standing and actively managed supplier relationships to acquire merchandise at significant discounts. The company’s speed and efficiency in responding to supplier needs, combined with its specialized supply chain capabilities and flexible merchandising strategy, enhance its access to discounted products and allow it to turn inventory quickly and profitably. The company’s buyers proactively source on-trend products based on changing consumer preferences, including a wide selection of Natural, Organic, Specialty and Healthy (NOSH) products. The company also sources everyday staple products and have recently introduced the company's own private label products to complement its opportunistic offerings.
The company's Grocery Outlet stores are independently operated by entrepreneurial IOs, who are small business owners that have a relentless focus on selecting the best products for their communities, providing personalized customer service, and driving improved store performance. Unlike a store manager of a traditional retailer, IOs are independent businesses and are responsible for store operations, including ordering, merchandising, managing inventory, marketing locally, and directly hiring, training, and employing their store workers.
The company plans to continue to expand its reach to additional customers and geographies across the United States.
On April 1, 2024, Grocery Outlet Inc., the company's wholly owned subsidiary, acquired The Bargain Barn, Inc., which does business as United Grocery Outlet (United Grocery Outlet, or UGO), which included some stores in six adjacent states the company did not operate in as of December 28, 2024 (Tennessee, North Carolina, Georgia, Alabama, Kentucky and Virginia) and a company-operated distribution center. The acquisition provides the company with the opportunity to scale in a new region and is a platform for potential future expansion in the Southeast.
Growth Strategies
The company is executing a long-term growth strategy built on three primary pillars: strengthen its core business model; evolve its business; and expand its footprint.
Products
The company’s product offering includes a constant rotation of opportunistic products, complemented by an assortment of competitively priced everyday staples, across grocery, produce, refrigerated and frozen foods, beer and wine, fresh meat and seafood, general merchandise and health and beauty care. The company has continued to expand its product assortment to meet customer needs, including a wide selection of NOSH, fresh, ethnic and local products. In the third quarter of fiscal 2024, the company introduced its own private label products and launched over 180 new private-label SKUs across grocery and deli categories.
Supply Chain and Distribution
The company relies on its distribution and transportation network, including by means of truck, ocean and rail to provide goods to its distribution centers and stores in a timely and cost-effective manner. Deliveries to the company’s stores occur from its distribution centers or directly from its suppliers. The company distributes inventory through primary distribution centers, four of which the company operates (for dry goods), and five of which are operated by third parties (for cold items, produce, and dry goods). The company has an in-house transportation fleet, as well as strong transportation partner relationships that provide consistent performance and timely deliveries to its stores.
The company intends to continue to invest in its distribution and logistics infrastructure in order to support its anticipated store growth over the long term, including as it enters into new geographies.
Independent Operators
The company encourages the IOs to establish local roots and actively participate in their communities to foster strong personal connections with customers. The company’s collaborative relationship with the IOs creates a powerful selling model allowing it to deliver customers exceptional value with a local touch.
The company has entered into an Operator Agreement with each IO, which grants that IO a license to operate a particular Grocery Outlet Bargain Market retail store and to use its trademarks, service marks, trade names, brand names and logos under its brand standards. The Operator Agreement, along with the company’s Best Business Practice Manual, defines its brand standards and sets forth the terms of the license granted to that IO.
The company leases and builds out each Grocery Outlet location. Under the Operator Agreement, it provides IOs with the right to occupy the store premises solely to operate the retail store on the terms set forth in the Operator Agreement. The Operator Agreement specifies the retail store that the IO is entitled to operate, but it does not grant the IO an exclusive territory, restrict the company from opening stores nearby, or give the IO preference to relocate to another store as opportunities arise. In a typical year, the company receives and filters thousands of leads for prospective new IOs in pursuit of smart and entrepreneurially minded retail leaders to support its continued growth. The company supplements on-the-job training with classes at its headquarters, when available, and through online tutorials.
Stores and Expansion Opportunities
The company’s stores averaged approximately 14,000 square feet on the sales floor. The company leases substantially all of its store locations, with initial lease terms of generally ten years and options to renew for two or three successive five-year periods.
The company’s stores are convenient, neatly organized, well maintained and easy to navigate with wide aisles and clear signage to guide the customer through its various departments, such as produce, beer and wine and fresh meat and seafood. The stores require neither membership fees nor bulk purchases for customers to save money and have a high level of customer service. Upon entering a store, customers are greeted by signage introducing the IOs, a tailored selection of fresh produce and other perishables, followed by a Power Wall displaying some of its most compelling offerings.
The company continues to implement operational initiatives to support IOs in enhancing the customer experience. The company develops and improves tools that provide IOs with actionable insights on sales, margin and customer behavior, enabling them to further grow their business. The company seeks to continuously improve its inventory planning tools to help IOs make better local assortment decisions while reducing out-of-stock items and losses related to product markdowns, throwaways and theft (shrink).
Marketing
The company’s ability to consistently deliver WOW! deals that generate customer excitement is its strongest marketing tool. The company promotes brand awareness and drive customers to shop through centralized marketing initiatives along with local IO marketing efforts.
The company focuses its centralized marketing efforts to build brand awareness and communicate specific in-store deals to drive customer traffic, primarily through digital ads, emailed WOW! Alerts, social media, television and radio commercials and in-store and outdoor signage. The company markets via television, streaming television platforms and radio (terrestrial and digital) to specific markets to build brand awareness and highlight the value it provides. In 2023, the company launched a mobile personalization app, which was fully deployed across all Grocery Outlet stores in fiscal 2024. The app allows customers to track their savings and provides new, trending, and top-selling items, as well as curated product recommendations based on user preferences. Further, the app provides the company with critical data analytics to make its marketing efforts more effective and efficient.
Competition
The company sees discount retailers of consumable products, which include Costco, WinCo, Target, Trader Joe's, Aldi and Lidl, as competitors given their broad product offerings at low prices relative to conventional grocery stores.
Trademarks and Other Intellectual Property
The company owns federally registered trademarks related to its Grocery Outlet Bargain Market brand, including ‘GROCERY OUTLET BARGAIN MARKET,’ ‘WOW!,’ ‘NOSH’ and ‘BARGAIN BLISS.’ In addition, the company maintains trademarks for the images of certain logos that the company uses, including the ‘GROCERY OUTLET BARGAIN MARKET’ logo, the ‘NOSH’ logo and the ‘WOW!’ logo. The company is also in the process of pursuing several other trademarks to further identify the company’s services. The company has disclaimed the terms ‘GROCERY OUTLET’ and ‘MARKET’ with respect to the company’s ‘GROCERY OUTLET BARGAIN MARKET’ trademarks, among other disclaimed terms with respect to the company’s registered trademarks and trademark applications.
The company also owns federally registered trademarks utilized by United Grocery Outlet, including ‘1st Stop For Extreme Value,’ ‘Shop G.O. 1st,’ and ‘GO GROCERY OUTLET.’
The company also owns several domain names, including www.groceryoutlet.com and www.ownagroceryoutlet.com, and registered and unregistered copyrights in the company’s website content.
Seasonality
The company’s business is impacted by mild seasonality, as its average weekly sales per store fluctuate throughout the year, with sales typically higher during major U.S. holidays or events.
Regulations
The company and the IOs are subject to regulation by various federal agencies, including the Food and Drug Administration (the ‘FDA’), the Federal Trade Commission (the ‘FTC’), the U.S. Department of Agriculture (the ‘USDA’) the Consumer Product Safety Commission, and the Environmental Protection Agency.
The U.S. Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws and regulations generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The company’s policies and its supplier compliance agreements mandate compliance with applicable law, including these laws and regulations.
History
Grocery Outlet Holding Corp. was founded in 1946. The company was incorporated in Delaware in 2014.