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How good are the deals at Cincinnati's new 'extreme' grocery discounter? The I-Team ran a price check.

Grocery Outlet prices are low but not always lowest

Grocery Outlet claims to save people money on name brands - we compared it against Aldi/Kroger/Walmart and others.

By: Dan Monk

Posted at 10:52 AM, Jun 21, 2024

CLERMONT COUNTY, Ohio — Bo Elmore loves a bargain.

That’s why he drove 60 miles to the grand opening of Grocery Outlet in Eastgate this week. The California-based chain that touts itself as an extreme discounter didn’t disappoint the Falmouth, Kentucky resident.

“Got some taquitos for $4.99. They’re usually about 8 bucks,” Elmore said. “Italian sausage, dollar 49. Can’t beat that. And it’s hot too, which is good.”

Four hundred people were in line when the doors opened at 8 a.m. Thursday. Four hours later, the store was still packed and dozens waited in the sweltering heat outside. Elmore surveyed his haul while waiting to pay, as cashiers rang a bell every time a shopper saved $100.

“Onions for 99 cents a bag, great deal. Eye drops for $1.49. Big, monstrous Slim Jims. Anywhere you go, they’re three or four bucks – 99 cents,” he proudly proclaimed.

All that sounds well and good, but how does it compare to neighboring grocery stores? We dug in to find out.

Grocery Outlet opened its first Greater Cincinnati on June 20, 2024. Store officials said up to three additional stores may follow here.

If ever there was a time for extreme grocery discounts, this is it. The U.S. Department of Agriculture says grocery inflation jumped 9.9% in 2022 and 5.8 percent last year. Although it slowed to 1.1% in April, forecasts call for high inflation to continue in pockets of the food industry. Pork prices are predicted to increase 10.2% in 2024, while farm-level egg prices will jump more than 20%.

That’s why the WCPO 9 I-Team decided to look into the pricing strategy at Grocery Outlet, which claims to offer brand-name products at 40-to-70 percent discounts. The I-Team compared Grocery Outlet’s prices on 17 national brands to five other stores operating within a mile of its new location at 650 Eastgate South Drive.

Those products, including Tide Pods detergent, Heinz Ketchup, Starbucks coffee, Honey Nut Cheerio’s and Freschetta frozen pizza, would have cost shoppers a combined $91.55 on the Eastgate store’s opening day. (You can see a full list of the products we tested at the bottom of this story)

Our pricing survey showed that combination of products would have cost 10-to-27 percent more at four of the five stores operating near Eastgate Mall: Kroger, Jungle Jim’s, Meijer and Walmart. But none of them matched Aldi’s prices on private-label substitutes that the German retailer uses as alternatives to national brands.

“I knew Aldi was going be good competition for us,” said Matt Alicea, owner-operator of the Eastgate store. “I would think we compared pretty well on the majority of items.”

Alicea is a retail industry veteran who joined his wife in buying into Grocery Outlet. It plans to open at least 58 stores this year to bring its national total to more than 500 stores. The company relies on independent store operators to take advantage of the company’s “opportunistic purchases” of excess inventory, according to its November presentation to investors.

While Grocery Outlet claims to offer discounts up to 70 percent compared to other supermarkets, Alicea said that claim doesn’t apply to all products.

“We do have a lot of DSD items (direct-store deliveries), your Cokes, your Pepsi, your Frito-Lay. We work contracts with them direct. Those, we don’t buy opportunistically. So, for those we don’t always see the same pricing differences,” Alicea said.

Grocery Outlet finds its best bargains by shopping for out-of-season merchandise, discontinued products or brands that change their packaging, size or ingredients, store officials told the I-Team Thursday.

That would explain why it was difficult to match the specific brand, product and size at all retail establishments during the I-Team’s price comparison, which took place over two days starting June 17. The search began with a visit to Grocery Outlet, where we took pictures of products and price tags we wanted to compare at other stores.

That was followed by an attempt to find the same products at Aldi’s Eastgate store. Next came online searches at Meijer and Kroger, followed by in-store visits to Walmart and Jungle-Jim’s.

When we couldn’t match the brand, we chose a comparable private-label product. When we couldn’t match the size, we chose what looked like the best deal on a per-unit basis. We used posted prices for loyalty card holders if they were advertised as such but didn’t count digital or paper coupon offers.

Finally, we ranked the retailers on their basket price and unit price of all goods. The basket price is the total cost of all items. The unit price measures how much a product costs for each ounce, K-Cup, soda can, paper-towel roll or square foot of toilet paper.

Here’s a summary of our findings:

Aldi was the low-price leader, with a basket price of $80 for all 17 products and a unit price of $4.48. Aldi had lower prices on many items because it doesn’t offer as many name-brand products as its competitors. For example, Grocery Outlet had the lowest price for a 10-pack of Starbucks Pike Place Roast K-Cups. But it couldn’t beat Aldi’s price for Barrissimo coffee: $4.29 for 12 K-Cups, or 36 cents per unit. Aldi had private-label options only for 10 of the 17 brands we price-checked. However, Aldi also had lower prices than Grocery Outlet on four of the seven national brands in this analysis.
Grocery Outlet had the second-lowest prices overall, with a basket price of $91.55 and a unit price of $4.67. As Alicea expected, Grocery Outlet had the lowest prices on its opportunistic buys like Prime hydration drink, which it sold for 99 cents a bottle on opening day. The next nearest competitor, Kroger, had it for $1.69. Alicea figured he would have the lowest price in town when he spotted the product in a list of merchandise available at Grocery Outlet’s distribution centers. So, he claimed as much as he could. “My kids buy it all the time. They love it,” Alicea said. “So, when I saw I had this available, I know it’s popular. And I knew the price was good.”
Kroger ranked third in the I-Team’s analysis, with a basket price of $100.64 and a unit price of $5.54. Grocery Outlet beat Kroger’s price on 13 of the 17 brands included in this analysis and tied on two others. However, Kroger showed some signs of responding to its new competitor by adding a digital coupon Wednesday that reduced its price by $2 for Dove body wash.
Jungle Jim’s ranked fourth among its Eastgate rivals with a basket price of $103.70 and a unit price of $5.71. The homegrown mecca for foodies isn’t known as a discounter, but there are some deals hidden in its 500,000-square-foot megastore, if you’re patient enough to find it. For example, we found a 24-ounce bottle of Rao’s spaghetti sauce for $6.99. That’s 5 cents per ounce less than Grocery Outlet and 7 cents less than Aldi. Hint to shoppers: Don’t look in the aisle where most of the spaghetti sauce is stocked. Go to the Italian food section instead.

The bottom two in this analysis – Meijer and Walmart – were examples of how buying in bulk can be the best deal for shoppers but also lead to sticker shock at the checkout counter.

Meijer, with a basket price of $103.70 and unit price of $5.60, ranked first among its rivals with a 28-ounce jar of Jif peanut butter for $3.99. That’s a better deal, but it’s also more expensive than the 16-ounce jar of Jif that Grocery Outlet sold for $2.69. Spending that extra $1.30 saves you 3 cents per ounce on the peanut butter.
Similarly, Walmart had the best deal on Bounty Essentials paper towels: 18 rolls for $12.98, or 72 cents per roll. That’s 9 cents per roll cheaper than Kroger’s price, but its 8-roll package cost only $6.49. Deals like that made Walmart’s basket the second largest, at $116.22, while its unit price was third lowest, at $4.99.

Here are the brands we tested: