The Friday Checkout is a weekly column providing more insight on the news, rounding up the announcements you may have missed and sharing what’s to come.
Discount grocers have the inside track right now with consumers given ongoing price sensitivity across the U.S. But being a discount grocer alone doesn’t guarantee success.
Grocery Outlet reminded us of this fact earlier this week when it announced a sweeping restructuring plan that includes layoffs and a significant reduction in store openings this year. The plan aims to refocus the chain on sustainable growth after it moved too quickly into new markets and wasn’t selective enough in the operators it chose to run its stores, executives said during a Tuesday earnings call.
Rapid growth is a hallmark among discount and specialty chains these days, and Grocery Outlet’s strategy of opening around 30 stores per year has been in line with what we’ve seen from Aldi and Sprouts Farmers Market. But Grocery Outlet hasn’t selected the best store sites, Chairman Eric Lindberg recently told investors, particularly in new markets, where he implied the company hasn’t effectively clustered stores to build brand awareness and drive operational efficiencies.
Value messaging has also been a problem. For all the grocer’s talk about its low prices and treasure hunt shopping experience, its customers apparently haven’t been feeling that as the company focused more on boosting margins last year.
“While we’re beginning to see value move in the right direction, we can do more to best communicate our industry-leading value to our customers,” Lindberg, who briefly served as the company’s CEO before Jason Potter’s hiring, said on the earnings call.
It’s not just Grocery Outlet that’s feeling the discount grocery blues. Save A Lot, which also operates a franchise model, has struggled recently due to its high debt load, aging store base and growing competition from discounters, according to a new report from Coresight Research. Last year, Save A Lot closed 50 stores, the report noted.
Grocery Outlet’s Q4 earnings report had plenty of bright spots, including a nearly 11% increase in net sales, indicating that the grocer is still resonating with shoppers. However, the restructuring news is a reminder that value retailers, too, will struggle if they can’t execute across all aspects of the business.
In case you missed it
Cerberus CEO joins Albertsons board
Frank Bruno, co-CEO of Cerberus, will take the place of Steve Feinberg as a member of Albertsons’ board of directors following Feinberg’s nomination for U.S. Deputy Secretary of Defense, the grocery company announced last Friday when the changes took effect.
The Fresh Market is ready for growth
The specialty grocer’s newly appointed president and CEO, Brian Johnson, recently outlined plans to open at least eight stores in 2025 after the company debuted that many in 2024, the Charlotte Business Journal reported Monday. He added that The Fresh Market plans to keep this expansion concentrated to its existing markets.
It appears this growth initiative is already underway. On Wednesday, The Fresh Market announced the opening of its seventh Chicagoland store in New Northbrook, Illinois.
A hidden poet at Associated Food Stores
Dan Hilgenberg, the independent grocery cooperative’s director of fresh bakery, recently won first place at the IFA Cowboy Poetry Roundup, with prizes including a $500 gift card and an invitation to perform at the Juab County Cowboy Gathering in April.
Hilgenberg began competing in cowboy poetry contests eight years ago, according to the press release. Associated Food Stores is a long-time supporter of Hilgenberg’s work — and even had him perform an original cowboy poem during a team-building event at the Grand American Hotel in Salt Lake City.
To see Hilgenberg’s talent on display, check out this video in which he reads one of his poems, “The Old Saddle.”
Impulse find
If you thought eggs were expensive….
Erewhon has done it again. The luxury grocery chain recently went viral when a customer posted a taste test of a single $19 strawberry.
With 1.2 million likes in just six days, the video says the strawberry is from Kyoto, Japan, and is “apparently the best tasting strawberry in the entire world,” the Los Angeles TikToker said.
The strawberry, luckily, lived up to its reputation in the taste test. However, the comments on the viral video make it clear that, no matter how good, a lone strawberry should not be $19. Even Aldi joined the discourse, posting on its Instagram page this week, “$18.99 for one berry. We would never. Never, ever, ever.” The discounter then highlighted that its organic strawberries are just 32 cents a berry, telling shoppers to “keep the change.”
@alyssaantocii insane
♬ original sound - lyss
