In The News

From San Jose Business Journal (San Jose, CA):

Grocery chain sees market opportunities
By David Goll

Grocery Outlet Inc., the Berkeley−based discount grocer, is poised for growth in Silicon Valley.

The retailer plans to open two stores by late October or early November, relocating an existing Gilroy store to a new location and debuting its first store in Watsonville.

The new stores are generating jobs directly and in the local construction industry, reeling from the recession with a unemployment rate of 30 to 35 percent. Each store employs a staff ranging in size from 20 to 30, according to company officials. And the company hires general contractors and subcontractors to convert existing space into Grocery Outlet stores.

Jim Fletcher, a retail broker based in Mill Valley, said the company is seeking locations in Santa Clara County for up to three additional stores. Grocery Outlet, with 141 stores in six western states, is now lightly represented in the region, with two San Jose stores " 2300 Monterey Road and 3140 Williams Road " as well as locations at 1833 Broadway in Redwood City and 36601 Newark Blvd. in Newark.

"We are definitely looking for additional store locations in San Jose," said Melissa Porter, Grocery Outlet’s vice president of marketing. "We have two successful stores there now, and there is a lot of interest from consumers in new stores."

Porter said the company has focused its growth strategy over the past two years on Oregon and Washington, but now is setting its expansion sites on its home territory, the Bay Area. It’s opening stores this summer in the East Bay cities of Dublin and Concord. Though Porter declined to discuss her company’s annual revenue, 2009 sales were estimated at $875 million by the Supermarket News publication.

Porter said true to Grocery Outlet philosophy, the company "always is seeking great deals " whether locating new stores or converting existing space into stores. She said the company only leases space and gives day−to−day responsibility for operating its stores to on−site managers, who independently handle hiring and ordering of products, among other duties.

Tom E. Nelson, retail specialist with Colliers International, brokered the deal that brought Grocery Outlet to 333 E. Tenth St., the new store in Gilroy. He said the grocer is expanding the location from 10,000 square feet to 12,000 square feet. The facility previously housed a Western Appliance store until a year ago.

Kelly Ramirez, planning technician with the city of Gilroy, said Grocery Outlet decided to move from its previous location at 727 First St. after its lease expired. That 22,500−square−foot location is being converted into a Mi Pueblo supermarket.

Although Porter declined to discuss construction costs on Grocery Outlet (TM)s new stores, Ramirez said company officials estimated work on their new Gilroy location would cost $600,000 when they filed for a building permit.

Ramirez said the stand−alone building, bordered by an Orchard Supply Hardware store and Wendy’s restaurant, was built in 1985. The rear of the building will be expanded, she said. Before becoming a Western Appliance location, Ramirez said the store housed a McWhorter’s, the San Jose−based stationery and office products store that went out of business in 1996.

Fletcher, who brokered the Watsonville deal, said Grocery Outlet will occupy an 18,500−square−foot building at 1000 Main St. that previously housed a Toyota car dealership, a newspaper office and a Safeway grocery store. The new Watsonville store will be the only Grocery Outlet location in Santa Cruz County.

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