Grocery Outlet Closes Acquisition of United Grocery Outlet

Deal gives company an entry point into the southeast region
Marian Zboraj, Progressive Grocer
Grocery Outlet
Grocery Outlet's acquisition of United Grocery Outlet expands its presence into new adjacent markets in the Southeast.

Grocery Outlet Holding Corp. has officially become the owner of United Grocery Outlet (UGO), a closeout grocery retailer operating throughout the southeastern United States. The company closed the previously reported acquisition of UGO on April 2 from affiliates of Gen Cap America Inc. and current and former UGO management. Consisting of 40 stores and a distribution center, the acquisition of UGO expands Grocery Outlet’s presence into Tennessee, North Carolina, Georgia, Alabama, Kentucky and Virginia.

"We are pleased to complete this transaction and extend our footprint into the Southeast," said RJ Sheedy, president and CEO of Grocery Outlet. "These stores have a track record of strong performance and give us immediate scale and a platform for future expansion in this new region. Our similar opportunistic buying strategies, customer value propositions and shared mission of serving our communities make this acquisition a natural fit for our business. We are excited to welcome the United Grocery Outlet team to the Grocery Outlet family and work together on the many growth opportunities ahead."

Grocery Outlet is currently making good progress on a number of strategic initiatives aimed at strengthening future growth. Its personalization app is on track to be active in all stores by the end of the first quarter. “This app will allow us to communicate our weekly deals to customers and customize their treasure-hunt experience,” said Sheedy during the company's fourth-quarter earnings call. “This will increase customer engagement with Grocery Outlet and help drive trip frequency and share of wallet.“

The retailer also plans to launch its first private label program in the second half of this year, with a goal of 100 SKUs by year end. “Our assortment will initially focus on everyday-value commodity categories that deliver better value and margin and complete the full shop,” said Sheedy. “These items will help us capture larger baskets and create a stickier customer relationship. Our private label strategy will also include NOSH [natural, organic, specialty and healthy] categories and unique items that will serve as another differentiator, enhancing the customer shopping experience.”

In addition to the UGO stores, Grocery Outlet plans to open 15 to 20 stores, for a total of 55 to 60 net new stores in 2024. In total, the retailer projects fiscal 2024 net sales of $4.3 billion to $4.35 billion.

Emeryville, Calif.-based Grocery Outlet offers products sold through a network of independently operated stores at 470-plus locations in California, Washington, Oregon, Pennsylvania, Idaho, Nevada, Maryland, New Jersey and Ohio. The company is No. 66 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America

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