How Discount Grocery Stores Keep Their Prices So Low

Discount grocery stores manage to keep their prices low through a variety of strategic approaches. One of the primary methods is maintaining a no-frills shopping environment. By minimizing store decor and shelving, using basic packaging, and often requiring customers to bag their own groceries, these stores significantly cut operational costs. They also tend to carry a more limited selection of products, focusing on high-turnover items that can be bought in bulk, which allows them to negotiate lower prices from suppliers. Private-label or store-brand products are another key factor, as these are typically cheaper to produce than name-brand items. Additionally, discount grocery stores often operate with smaller staffs and shorter hours, further reducing overhead costs. Efficient supply chain management plays a crucial role too; by streamlining logistics and reducing inventory waste, these stores can pass savings onto customers. Lastly, they may employ dynamic pricing strategies, adjusting prices based on demand and seasonality to ensure competitiveness. By combining these tactics, discount grocery stores create a shopping experience that focuses on value, allowing them to offer lower prices while maintaining profitability.
Advertisement

Differing grocery business models

Most conventional grocery stores and supermarket chains operate under a familiar business model. They procure products from a diverse range of suppliers, including well-known national brands and more specialized options, and offer them to customers seeking a convenient shopping experience while comparing prices. Shopping at these stores is the simplest way to access a wide array of brands and products, but it also exposes you to potential price increases from certain brands and occasionally from the store itself.

If you're a smart shopper, you may already know about bulk retailers, such as Costco or Sam's Club, where you can save money by purchasing items in larger quantities. Many of these stores require a membership, generating a significant portion of their income from membership fees in addition to retail sales. Costco's Kirkland Signature brand enables the retailer to maintain higher profit margins while keeping prices relatively affordable.

Discount grocery stores take a different route. Rather than focusing on bulk sales, they offer savings to customers by selling overstocked items that they acquire at a fraction of the usual retail price. This approach helps prevent waste and allows shoppers to buy products at substantial discounts. However, even Grocery Outlet acknowledges that it sources essential items like milk through traditional means and simply prices them as low as possible.

How much can you save with discount shopping?

According to Grocery Outlet's 2023 Impact Report, customers enjoyed an average savings of 40% compared to traditional grocery store prices, with the brand estimating that shoppers collectively saved nearly $3 billion in 2023. Notably, several items were offered at discounts exceeding 50%, including a pet food brand facing an oversupply issue and two million units of packaged beverages that would have otherwise been wasted due to approaching expiration dates. Grocery Outlet even prints the savings amount on the bottom of your receipt, and by submitting your receipt to their "Win What You Saved" sweepstakes, you could win a gift card for that amount.

The sourcing strategies used by Grocery Outlet often result in a selection of lesser-known brands or products that may seem unusual. Loyal customers have affectionately dubbed it the thrift shop of grocery stores, sharing their finds and experiences on TikTok. In one video, a shopper showcases ice cream pints with whimsical names like "Frobert," "Crémily," and "Creamalicious Aunt Poonie's Caramel Pound Cake." There are also incredible deals to be had, such as Wagyu beef for $6 or vegan products at a fraction of their usual retail prices. If you approach your shopping with an open mind and steer clear of common grocery shopping pitfalls, a discount store like Grocery Outlet can lead to significant savings.

Recommended

What Excess Container Juice Means For Your Rotisserie Chicken

The Reason You Should Avoid Buying Pre-Cut Meat At The Grocery Store

The Best Deal On Fresh Sushi Happens At Whole Foods But Only On Fridays

How To Choose A Cut Of Prime Rib At The Grocery Store

Next up

Advertisement