Groups in Outlook

In order to access your Contact Groups you must click on the people icon in the left hand navigation pane.

To create a new group click on the New Contact Group. This will create the group in your local contacts.
You can search from an existing group by searching in the contacts.
This will bring up your group and you can double click on it to modify it.
From here you can add or remove people from your group.
Make sure you select From Outlook contacts to get your local contacts list.