According to estimates from Cowen, Grocery Outlet has only grabbed 16% of available inventory on the secondary market. There are plenty of deals left for the taking. “We seemed to be the only ones who had frozen wings available for customers at the time,” said Justin Maenner. Priced at $99, they still sold like mad, with employees frequently dispatched to help customers schlep them out. It bought 75,000 cases of miniature-sized Bota Box Chardonnay and Cabernet Sauvignon after the winemaker stopped selling them in four-packs.ĭuring the Super Bowl earlier this year, the Maenners’ store got a shipment of 40-pound boxes of frozen chicken wings at a time when there was a chicken shortage. The retailer has a robust buying team that works hard to make sure it’s the first call that suppliers make when they are trying to get rid of something, he said.įor instance, Grocery Outlet recently purchased all 90,000 cases of biscuits and cinnamon rolls that a large packaged foods company was looking to jettison, then turned around and sold them to customers for 75% off. “This is one of the ways they are un-Amazonable,” said Oliver Chen, an analyst at Cowen & Co. It serves as a critical release valve for these companies when they change the packaging, make too much of something or introduce a new product or flavor that turns out to be a dud.Īn employee stocks shelves as a customer browses at a Grocery Outlet store in San Francisco. The list spans giants like Hershey, Mondelez and Tyson, as well as buzzy new brands like Olipop, Beyond Meat and Hippeas. Grocery Outlet, which began as a military surplus store in 1946, has spent decades building relationships with over 2,500 suppliers. “It seems there’s both a deepening on the level of buys, which means there are more cases per offer, and a broadening, which means there’s more stuff on the list.” “The buying environment has gotten a lot more favorable,” said Lindberg. Why? Many of its suppliers are dealing with a mountain of excess inventory - a result of delayed shipments and shifting consumer preferences that have made it difficult to forecast orders - and they’re unloading a lot of it to Grocery Outlet. Supply chain disruptions have been a boon for the company. Old dollar bills, which look like they’ve been stashed away for years and only recently rediscovered, are sometimes fished out at the checkout counter. He has seen a lot of older customers on fixed incomes come in and roam the aisles with calculators to tally their purchases. “Customers come in and say I wouldn’t be able to feed my family if you weren’t here,” said Justin Maenner, 35. A recent deal on Tyson chicken drumsticks, priced at just 79 cents a pound, was a hit. So they stopped stocking many of those items and doubled down on fresh offerings, with fruits and vegetables delivered six times a week and meat twice a week. Justin and Ellie Maenner, who operate a Grocery Outlet store in Lancaster, Pennsylvania, noticed that people began spending less on general merchandise, like makeup, cookware and blankets, around the time that gas prices spiked. That allows stores to be nimble when responding to local preferences and shifts in demand. The retailer relies on a network of independent operators to staff stores, run advertisements and choose which products they sell, and splits profits with them in return. Hana Brown, who operates a Grocery Outlet in Gresham, Oregon “I think everybody is trying to stretch their dollar as much as they possibly can.” While they aren’t necessary sold at a deep discount, it makes it possible for customers to purchase all the items on their lists. To serve these customers, Grocery Outlet has been working to offer a more consistent selection of everyday products, adding 600 new items in the past year. The average amount spent per trip has inched up to $40 from $35 to $37, he said. More shoppers are trying to stock their fridges for the week when they visit, said James Brown, the operator of the Oregon store, rather than just browsing for deals on snacks, desserts and other fun items.
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