Grocery chain makes bargain hunting an event.
It’s called extreme-value retailing. Grocery stores that incite their shoppers to feverishly scour shelves in search of 70 percent markdowns – not just to save money – but for the pure sport of hunting, bagging and bringing home unbelievable bargains. It feels like the premise of a reality TV show.
Phil Lempert wrote about this phenomenon in 2009. Back then, casting the extreme-value retail segment as an adventure in shopping may have been construed as a good-hearted attempt to help take the sting out of the recession. However, with the economy improving and unemployment at 5% extreme-value retailers like Aldi, Supervalu and Winco continue to gain strength.
Leading the charge is Grocery Outlet, an Emeryville, California chain that boasts 40-70 percent markdowns on products from name brands like Kraft, Tide and Kellogg. Grocery Outlet plans to open 14 new stores in Los Angeles and Orange County over the next year. It’s interesting to note that Orange County is California’s seventh wealthiest county.
Grocery Outlet purchases discontinued and overrun stock at a discount – then passes the discounts on to their shoppers. This buying strategy means that stock changes frequently. The genius of Grocery Outlet is that they’ve been able to turn what should be a liability into a selling feature. For example: some weeks they may have Gulden’s mustard and other weeks they have French’s. This may aggravate shoppers who frequent more conventional grocery stores and are accustomed to a broader, more consistent selection. Grocery Outlet, however, declares this as part of the shopping adventure and urges consumers to come in every week – so they won’t miss out on the deals.
Grocery Outlet also offers similar discounts on wine. That can’t hurt. Especially when it comes to attracting more affluent shoppers looking to feel the rush of getting a great buy.
Since the recession, there has been some talk of penny pinching being the new normal. But remember luxury brands are also doing well. Extreme-value retailing may simply be one more niche in an ever-fracturing retail landscape.