There are other threads that suggest to use the old version of outlook. When you switch back to the old, it uses local folders but other features are not available. The old outlook does not work with apple iCal. Ideally, I would like to use the mac/iOS contact list to be consistent across my devices. At a minimum, I require the ability to create email groups.
Overall I like the new version for Mac, but the lack of group functionality is frustrating.