Published on San Gabriel Valley Tribune | Dated Sept. 15, 2015
Written by Kevin Smith
Southern California’s supermarket industry is about to get a new player.
Grocery Outlet Bargain Market announced Tuesday that it plans to open 14 stores in the greater Los Angeles area beginning in December — a move that will create about 500 jobs.
The Emeryville-based company, a self-described “extreme-value” grocery retailer with more than 227 locations throughout California, Idaho, Nevada, Oregon, Pennsylvania and Washington, said the store openings will continue into 2016. Store locations will include Upland, Ontario, La Habra, Azusa, Long Beach, Westminster, Costa Mesa and Compton, among others.
But it won’t end there. Melissa Porter, the company’s vice president of marketing, said Grocery Outlet is planning an even more aggressive expansion into the Southland market.
“Our plan is to open 20 to 30 stores each year in Southern California over the next several years,” she said. “But so much will depend on real estate. This entry came about because of all the (former) Fresh & Easy stores that became available. We’re very opportunistic, but not in a negative way. We like to take advantage of great deals.”
Porter said the company’s stores are typically 14,000 to 15,000 square feet with about 35 employees per store. She noted that Grocery Outlet’s operating strategy is a bit different from its competitors.
“The stores are all run by independent owners under an operating agreement,” she said. “And 85 to 87 percent of our stores are run by husband and wife teams, while others are run by father/daughter teams or father/son teams.”
Porter said each Grocery Outlet store is unique.
“The independent owners set the tone for each store, so you’ll find different deals at every store,” she said. “They are not the same.”
Grocery Outlet offers name-brands such as Kraft, Kellogg’s, Tide, Tyson, Amy’s Kitchen, Naked Juice and other brands with prices up to 60 percent off traditional supermarkets. This year alone, shoppers have saved more than $1 billion on products purchased at Grocery Outlet as compared to traditional grocery stores, the company said.
Grocery Outlet’s entry into Southern California will likely be watched closely in light of Haggen’s failed expansion.
That Bellingham, Wash.-based chain entered Southern California’s ultra-competitive market earlier this year when it acquired 146 supermarkets — including 83 California locations — that formerly operated as Vons or Albertsons. But soon after the stores were open Haggen began cutting employee hours and implementing layoffs.
Shoppers said the store’s foods were overpriced and that the company did little advertising.
In mid-August Haggen announced it would be closing 27 stores, and last week it filed for Chapter 11 bankruptcy.
“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 and we have a handful of grocery chains that have been in business for a long time and have lots of loyal customers.”
Southern California is already home to such mega players as Vons, Albertsons, Ralphs, Stater Bros.,Food 4 Less, Trader Joe’s, Whole Foods Market, Sprouts, Smart & Final, Walmart, Target, Vallarta andSuperior Grocers, among others.
And Grocery Outlet won’t be the only new addition.
Aldi, a German discount grocer with nearly 1,400 U.S. stores, plans to open 45 locations in Southern California, with the first stores opening in March. And Lidl, another German discount grocer that operates about 11,000 stores in Europe, also plans to enter the U.S. with a barrage of 2,000 stores by 2020, according to Forbes.
Grocery Outlet Co-CEO Eric Lindberg said his 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,” Lindberg said in a statement. “It’s often the first thing shoppers say when they realize how much money they’ll save.”