Grocery Outlet has made its name by offering a treasure hunt-style shopping environment fueled by opportunistic purchasing of well-known brands. Now, the discounter is looking to add private label goods as a way to further stand out to customers.
“[T]his is a program that we have been working on for the past year which we believe will become another key differentiator, providing even more value and excitement for our customers,” President and CEO R.J. Sheedy told investors last week.
The move comes at a time when numerous retailers including Walmart, Sprouts Farmers Market and West Coast chain Good Food Holdings are rolling out more private labels as a way to help boost margins and tap into consumer desire for store brands.
Grocery Outlet, which started teasing its private label expansion early last year, shared more details about its plans during an earnings call last week.
It’s coming out in the second half of 2024
Grocery Outlet is planning to introduce the private label program during its third quarter. Initial items will include goods in the beverage and grocery categories, followed by more products in these categories as well dairy, household and baking products, Sheedy said last week.
It will include staples as well as specialty items
Sheedy told investors in February that the private label will also include “unique items” and natural, organic, specialty and healthy products, which the company calls “NOSH.”
In the grocer’s most recent earnings call, Sheedy positioned the store brand as an “enhancement” to its everyday assortment, offering better value to customers, better margins for the business and more differentiation.
“Many of [the private label products] will be more unique items, whether in the NOSH space, different formulations, new adds to the shop that create another reason for customers to shop our stores beyond just the value that they provide,” Sheedy said.
Private label will complement the company’s “treasure hunt” store experience
Grocery Outlet’s shelves change frequently, creating a treasure hunt-style atmosphere that its shoppers enjoy. While some of the private label items will be in the stores year-round, Sheedy said the company plans to offer seasonal items and rotate store brand offerings frequently so that they, too, become part of that dynamic store experience.
“We do intend to have a treasure hunt component to the private label assortment. There [are] lots of different ways to do that,” Sheedy said.
The discounter is still squarely focused on its opportunistic buying model
Grocery Outlet is “on track” to roll out roughly 100 private label SKUs by the end of the year, Sheedy said. That’s a fraction of the more than 5,000 SKUs per store, which already include a mix of staples complementing what it calls its “WOW! offerings,” which stem from opportunistic buying of excess inventory from CPGs.
Launching private label could help Grocery Outlet provide more of a full shop for its customers. In 2023, private label sales accounted for nearly 21% of grocery industry unit sales — an all-time high, according to the Private Label Manufacturers Association.
Store brand popularity is projected to last: A little more than half of shoppers surveyed last summer said they plan to buy much or somewhat more store brands in the future, compared to 26% who said the same for name brands, according to a report last fall from FMI – The Food Industry Association.
