Is New Extreme Value Grocery Store Latest Biz Disruptor?

ByPYMNTS

Posted on July 25, 2016

A NEW PLAYER HAS ENTERED THE VALUE SUPERMARKET BUSINESS. 

Will discount grocery stores like ALDI, Costco and Sam’s Club soon be facing some serious competition?

Well, that’s what LogicLane, a new startup that offers discount wholesale groceries on its eCommerce marketplace, is certainly hoping. LogicLane recently opened its online marketplace to consumers and businesses after first beta testing it with an invitation-only period and can now connect customers to everything from a box of cereal to an entire pallet of cases of cereal boxes (the company is offering free shipping on orders over $1,000 in an effort to get customers to purchase larger orders).

The company also opened its first brick-and-mortar location, called Mill Street Merchants, in Uniontown, Pennsylvania, both as a way to expand its brand presence and to offer the solution of an affordable grocery store in a town not serviced by very many options.

Mill Street Merchants opened in early July after John Gabriel Sr., a 27-year veteran of the retail fashion business, decided he wanted to take on and (hopefully) shake up the wholesale food industry, according to Pittsburgh Post-Gazette.

Gabriel gathered together an experienced group of merchants, former execs at national discount retailers, technology entrepreneurs, venture-backed tech companies and financial sector firms, to build the LogicLane and Mill Street Merchants team to compete in this new retail sector.

“Our Mill Street Merchants business model is simple,” Patrick Esposito, chief executive officer at LogicLane and Mill Street Merchants, recently told Grocery Headquarters. “Tons of great food gets lost in the distribution cycle and goes to waste. Mill Street Merchants helps to eliminate food waste by finding groceries at huge discounts and then passing these extreme discounts onto our customers — both businesses and consumers. Anything that doesn’t get purchased quickly at Mill Street Merchants or online at LogicLane.com gets donated to local charities for use.”

As a brick-and-mortar grocery store — which LogicLane execs have repeatedly stated they plan to open more of — Mill Street Merchants is definitely light on frills but high on value.

The 6,000-square-foot grocery store sells wholesale foods to its customers at a discount of up to 30–70 percent off. The Uniontown store is already stocked with about $100,000 worth of food, although the store keeps nothing in backstock so products move from the shelf — where easy-to-read signs make prices very visible — to a customer’s cart to out the door in a hurry.

“Mill Street Merchants specializes in finding products that are outside of the normal retail distribution process to bring extreme values and amazing deals to customers and, in the process, help to stop food waste,” Gabriel said.

Shoppers at the Pennsylvania store have gotten discounts on everything from a $0.99 tub of Heinz yellow mustard to a $24 case of Slim Jims, while items that are near their expiration date are simply given away for free at the register with purchases.

“We’re not pretty, but I don’t think people will mind jumping over boxes [for a deal],” Gabriel told Pittsburgh Post-Gazette when the paper covered the store’s opening on July 13.

According to a study by the Natural Resources Defense Council, more than 40 percent of the U.S. food supply simply gets wasted and never consumed, which adds up to a disturbing $165 billion annually in wasted food. “Inefficient” distribution and delivery models account for about $40 billion in wasted food in the distribution process between producers, distributors and retailers, which is the model that LogicLane and Mill Street Merchants are targeting with the new venture.

“Mill Street Merchants has a team of experienced food merchants that sources high-integrity, brand name food and beverage products at opportunistic prices from trusted manufacturers and distributors,” Gabriel told Grocery Headquarters.

LogicLane/Mill Street Merchants is certainly an intriguing and innovative business model to keep an eye on, and it should be interesting to see how some of the major value grocery store brands — like ALDI and Costco — react to its presence in the marketplace.

It also should be interesting to see how consumers and even restaurants — who theoretically could use LogicLane as a way to drastically reduce some of their food supply costs and curb excess waste — will react to this new marketplace that lets them purchase food at a steep discount.

If there’s anything the market’s data has been telling us recently, it’s that customers are hungry for a deal or a bargain like never before.

Cheap fast-fashion products have uprooted the model of the traditional American shopping mall, a new study found that the majority of shoppers — about two-thirds — are now making their retail apparel purchases at off-price retailers and outlets, and the private-label or store brand food industry has turned into a booming $118.4 billion annual business that even eCommerce giant Amazon is eager to take a crack at.

In a sea of bargains for consumers as far as the eye can see (slight pun intended), a new player appears to have just waded into the game.