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Grocery Outlet plans move to Safeway site.

Byline: Joe Mosley The Register-Guard

Mike and Elizabeth Griego have seen opportunity turn to misfortune and back again since taking over a year ago as owner-operators of Eugene's Grocery Outlet store on River Road, about a half-mile north of Beltline Road.

First, their lease on the store wasn't renewed because the property owner plans to redevelop the site for a Walgreen's drugstore.

But then Safeway officials decided last fall to walk away from their store just south of Beltline. And Grocery Outlet stepped forward.

The California-based chain - which bills itself as the nation's largest "extreme-value grocer" - is now renovating the former Safeway at 2060 River Road; the Griegos will move their operation into the larger storefront by this fall.

"It's just more of a godsend than anything else," Mike Griego said. "It all fell into place."

Grocery Outlet has operated from its current, 13,000-square-foot store at 2750 River Road since the chain entered the Eugene-Springfield market in 1996. The 24,000-square-foot former Safeway store - on the opposite side of Beltline from Grocery Outlet - is more typical in size for the 124-store chain. It is slightly larger than a Springfield Grocery Outlet that's run by separate owner-operators.

Griego said the new store may not seem that big - especially when compared to conventional supermarkets, which tend to be at least double the size. But the new location will have a fresh meat counter - which the old store doesn't have - and will also offer more spacious, inviting wine and cheese sections, he said.

"I think (customers) are going to see a brand-new store," Griego said of the top-to-bottom remodel at the former Safeway. "I think you'll see better presentation, because the store's new and this (current) one is so antiquated.

"It's good for us, because we get to set it up the way we want to."

Griego said Grocery Outlet will open at its new location sometime around the end of August, but he declined to be more specific. The store is conducting a contest, inviting customers to guess the grand opening date and offering a $25 gift certificate to the winner.

Grocery Outlet, founded in the San Francisco area as Cannery Sales stores in 1946, does business with more than 2,500 food producers and manufacturers, taking advantage of factory overruns, inventory imbalances and closeouts.

The privately held company has annual revenues of more than $600 million.

All Grocery Outlet stores - in six Western states, but primarily concentrated in California, Oregon and Washington - are run by owner-operators, through arrangements similar to franchise agreements. A store's operators buy the license to operate it from the Grocery Outlet chain, which retains ownership of the store and its fixtures.

Melissa Porter, vice president of marketing at the chain's headquarters in Berkeley, Calif., said Grocery Outlet was looking to upgrade its Eugene presence even before the current store's lease problems arose.

"Eugene is a great market for us," Porter said. "We were incredibly, urgently wanting a new location there. It was a priority for us to find something, and we think (the new store) is going to be great. I think in the end, it's going to turn out well for us."

Porter said sales throughout the chain have been robust, with the nationwide economic downturn playing into Grocery Outlet's strong suit.

"With the economy the way it is, more and more people are looking to spend less money," she said. "We are seeing ... people who didn't know anything about us before, and it's nice to have the opportunity to serve more people."

Eugene commercial real estate broker Tim Campbell, who is handling leasing for the owners of the former Safeway property, said the inside-and-out renovation of the grocery store is just the first phase of redevelopment. Two "pad sites" in the parking lot area will be developed in 2009 as a pair of buildings that may be as large as 3,000 square feet each.

Potential tenants for those buildings include restaurants and banks, he said.

The property was sold by Safeway in March for $3.1 million to a group of local investors operating under the name R&R Ventures Limited Liability Company, according to Lane County property records.

Safeway opened the River Road store in 1968 and remained in business there until last September. Company officials said the store was "underperforming," and was too small to fit into the grocery giant's long-term plans.

"I don't know how well or not well Safeway did in that location, but Grocery Outlet's happy to be there," Campbell said Tuesday.

Griego couldn't agree more. Not only will the remodeled store be a step up in size and amenities from the current Grocery Outlet, but it's in the same neighborhood.

"We wanted to stay near the area where we're at," Griego said. "We can do this (move) without having to make a gigantic change for the customers who have been so loyal."
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Title Annotation:Business; Business is booming for the grocery chain, which specializes in discount foods
Publication:The Register-Guard (Eugene, OR)
Date:Jul 24, 2008
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