Grocery, Most Active Sector in Retail

LOS ANGELES—Grocery Outlet Bargain Market, a discount grocer based in Emeryville, CA, is planning to open 14 stores in the Los Angeles area starting in December 2015 through 2016. The company already has stores in northern California, the central coast and in San Diego, and thinks Los Angeles is the perfect place to complete its California portfolio.

“The greater Los Angeles area was the next logical step in their expansion as they have a healthy portfolio of stores in San Diego County and a mature base in northern and central CA,” Scott Burns, EVP and Los Angeles retail brokerage lead for JLL, tells GlobeSt.com. “Los Angeles is a key destination for most value-oriented retailers and it will complete Grocery Outlet's California market coverage. They look for neighborhood oriented shopping centers with a mix of other daily needs services and retail uses. In addition to being the anchor, they will also co-tenant with other large format retailers such as soft goods, promotional and other discount stores.” Burns is representing Grocery Outlet Bargain Market in their expansion.

The grocer has found major success offering as much as a 60% discount off of traditional supermarket prices, while carrying name brands, like Kraft, Kellogg's, Tide, Tyson and Naked Juice. The 14-store expansion in Los Angeles will create as many as 500 jobs. “Grocery Outlet's structure as independently operated and locally owned is unlike any of the other major grocery store chains in the market.  That family business feel and low pricing certainly has a place with the Southern California consumer,” adds Burns.

This is only the latest news in the grocery sector, which has been experiencing rapid growth as a whole. Earlier this year, Washington-based grocer Haggen opted to expand and pick up nearly 150 stores that went to disposition in the Albertson's-Safeway merger. With high consumer demand for grocery stores, the retail class has also become a favorite among shopping center landlords looking for anchor tenants.  “The density and strength of the consumer is the driving force behind the grocery expansion,” says Burns. “People are hungry for value and for unique shopping experiences. Grocery Outlet's opportunistic buying style provides this by the way they merchandise their stores.”

However, this isn't new business. Grocery Outlet has been around for 70 years. The 14-store opening is an expansion, and really speaks to the increasing demand among both consumers and landlords for grocers. Despite the growth of ecommerce, brick-and-mortar grocers are still big business and help drive consumers to shopping centers. “The grocery sector is one of the most active in the industry,” says Burns, and most experts agree, grocer demand is here to stay.