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Supply Chain Disruptions Could Benefit This Grocer in the Long Term

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Many consumers are switching to online grocery ordering because of the coronavirus, and grocery retailers are scrambling to meet their needs. Grocery Outlet, an “extreme value” supermarket chain on the West Coast, however, is at the other end of the spectrum.

Grocery Outlet’s business model is similar to TJX, the parent company of TJMaxx and Marshalls, which CNN Business reported may put it in a strong position to succeed during the crisis and beyond. The grocer, which doesn’t sell online, “is capitalizing on shoppers stockpiling groceries during the outbreak and the havoc across supply chains,” the article stated.

The company buys extra inventory when a grocery, convenience or drug store cancels an order from manufacturers, when a manufacturer produces too much of an item or if a supplier changes product packaging. Calling it an “opportunistic buying” strategy, Grocery Outlet secures items from many of the country’s top consumer product and food manufacturers.

Grocery Outlet’s sales accelerated in March as the virus spread and drew new customers to the stores. Analysts expect the grocer “to turn many of these new shoppers into repeat shoppers.”

Once demand returns to normal, Grocery Outlet expects there to be excess inventory in the market. According to cnn.com, analysts said the grocer’s business model puts it in a strong position to succeed during the crisis and beyond.

“Disruption is a positive in the long run,” Grocery Outlet President RJ Sheedy told cnn.com. “This should create opportunity for us long term to continue to buy great brands at significant discounts.”

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