We'll cover Slack tomorrow after Day #1 of trading... Grocery Outlet earned your attention today. The 73-year-old chain is the nation's fastest-growing "extreme-value" grocery retailer. Picture Trader Joe's meets Dollar General — 300 independently-run stores generated $2.3B in sales with prices that are 40% under regular ol' "conventional" grocers. Here's how:
- The secret sauce: Strong supplier relationships — 30-year average connections with 15 key suppliers (Grocery Outlet buys their foods when other grocers won't).
- The not-so-secret risk: Relationships aren't permanent. They can end. And Walmart, Aldi, and Amazon's Whole Foods can build supplier relationships, too.
One word: "WOW!"... We noticed the term 48 times in Grocery Outlet's pre-IPO paperwork (aka its S-1) describing its values, business model, and risks. Turns out WOW! is how Grocery Outlet promotes its "Power Wall" (also a real thing) of top deals hitting you as soon as its automatic doors open. Here's how else it energizes your weekly guac run.
- “Deliver a treasure hunt shopping experience” with extra-wide aisles and ceiling-high packs of anything.
- Then it makes its cashiers circle the savings with a marker on your receipt.
This is the convergence of 2 major retail trends... Extremification and experiences. Society-wide income inequality is driving high-end luxury retailers and low-end dollar stores to record high stock prices. Meanwhile, stores that are actually fun to go to can get you off Amazon. Grocery Outlet covers both.