Grocery Outlet also invested in reshap- ing value perception. Potter said during the call that the near-term synthetic promo- tional support the company provides drives customers into stores. This move has been especially effective around high-traffic occasions like the Super Bowl and Easter, where event-driven promotions helped drive meaningful traffic gains. “This is an important first step in restor- ing comp performance as the momentum from our improving opportunistic prod- uct mix begins to translate into stronger transaction trends,” Potter said. “As we invest, we’re managing the impact on gross margins through disciplined promotional targeting and our ongoing focus on improv- ing our mix.” Potter said he expects the investments to total $20 million this year. Grocery Outlet is also sharpening value messaging through its extreme value cam- paign. This work focuses on making the retailer’s value proposition unmistakable, highlighting the significant savings custom- ers can find on branded products—often at meaningful discounts to conventional retailers—and reinforcing the excitement of the treasure hunt experience. To support this, the retailer drives awareness through targeted at-home and digital campaigns that bring its deals and product discovery to life. “In the market, we’re focused on aware- ness-based media,” Potter said. “In store, we’re simplifying signage and elevating key value items to make savings more visi- ble, easier to navigate and more compelling at the shelf.” Potter believes the three initiatives with the singular focus of improving value are beginning to drive a meaningful, positive customer response. “The trends we’re seeing in traffic are consistent with the initial stages of stabili- zation that we would expect at this point,” he said during the earnings call. Grocery Outlet is also executing a store refresh program. The company completed 34 refreshes during the first quarter. Improvements in layout, signage and merchandising are part of the refresh and make the shopping trip easier and reinforce value more clearly. Grocery Outlet expects to complete 100 store refreshes by the end of the year. —Bill Wilson
Grocery Outlet is also sharpening value messaging through its extreme value campaign.
Grocery Outlet looks at fair quarter performance as just the beginning A three-pronged strategy is in place and already producing results
GROCERY OUTLET PRESIDENT and CEO Jason Potter detailed the retailer’s comeback strategy during the first-quarter earnings call in early August. The plan appears to be gaining traction. The grocer reported a modest increase in second-quarter sales while compara- ble-store sales remained negative. Net sales increased 1.1% to $1.19 billion for the quarter that ended July 4. Transactions increased 1.8%. Potter said the company made meaning- ful strides to increase the mix of branded opportunistic products in stores. Grocery Outlet’s best opportunistic deals offer sav- ings of 70% compared with conventional retailers. “These savings, when paired with the excitement of a treasure hunt experience, provide a compelling experience that our customers love,” Potter said during the call.
Since the start of the year, Grocery Outlet has increased its opportunistic mix by nearly 2 percentage points with mean- ingful improvement across inventory, shipments, variety and sales. The retailer has made meaningful progress by improv- ing sourcing, increasing product visibility and helping operators further differentiate their stores. The work includes upgrading systems and reporting, expanding supplier out- reach, shortening delivery times, testing short-dated offerings and engaging suppli- ers more directly at the leadership level. This allowed Grocery Outlet to move quickly in the first quarter on excess inventory from several top-selling brands, delivering significant savings for customers while creating high-margin, high-volume opportunities for the com- pany and operators.
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