Discount retailer ‘Grocery Outlet’shares on the way up in public debut
West Coast based discount retailer Grocery Outlet are extremely happy with their companies first day of trading after going public on Thursday the same day as messaging service Slack. CEO Eric Lindberg said in a recent interview “We think there’s a lot of room to grow beyond just our footprint,” as shares of the company opened on Thursday at $31 USD per share. The day of trading went well for the company although they did see a small drop off down to $28.51, the company are more than happy with the 29.59% rise from their IPO price of $22 USD per share.
Grocery Outlet describes themselves as a “high-growth, extreme value retailer of quality, name-brand consumables and fresh products”, this taken from documents filed with the SEC.
The California based Grocery outlet has been constantly expanding since its founding in 1946, where the company operated out of one store, today the company has stores in over 323 locations, with the majority of stores on the West Coast and in Pennsylvania. The company are well known for selling brand name products at discount prices varying from 40% -70% below retail price. CEO Lindberg says their business model is very different from competitors like Aldi as their stores are run by independent operators. Each independent operator is responsible for the operations of their store, ordering, inventory, marketing, hiring, and merchandising. “We have an independent operator that in each one of the stores, is part of the community, delivering customer service.” Lindberg said. Each of their current stores is run by an operator who has bought into the Grocery Outlets organization, which enables the operators to use its size to buy at a scale that a large majority simply cannot leverage, and competition cannot replicate.
The company revealed that for the last 15 years they have seen consecutive comparable sales growth in stores, and since the year of 2014 they saw an annual growth rate of 4.2%. Looking at last year’s revenue for the company they exceeded over $2.2 Billion and net income was in the region of $16 Billion. The company has plans to continue its expansion with their East Coast outpost in Pennsylvania being a prime place to launch that growth. However CEO Lindberg has said that there are currently no plans to direct the company to become an online discount chain. Lindberg said “Fundamentally we don’t believe our customers, who are value seekers, are going to trade the value that they get inside the store for the cost of delivery and that’s a really hard place to make a lot of money,” Recently Lindberg has said the company plans to open 32 new stores this year and are looking at reaching a 10% annual growth in locations, with the long term plan for the company opening 4,800 nationwide locations, although Lindberg has not given a time frame for that.
David Xiang – IEC International