Industry observers are keeping an eye on several retailers: many are regional and rapidly expanding, while others are gaining momentum and have proven themselves exceptionally well positioned for growth.
In this Produce Blueprints series, we delve into eight grocery operators experts say are worth watching.
SPROUTS FARMERS MARKET
Although it has had some negative financial news in recent years and underperformed during the pandemic, Sprouts Farmers Market BB #:168563 seems to be turning around with same-store sales growth improving in 2022.
“Amping up the selling culture,” is how CEO Jack Sinclair describes Sprouts’ strategy, and this has been a key factor, along with more technology use, to improve in-stock and shrink numbers.
Ashley Nickle, consultant and project manager at Ashley Nickle Growth Strategies, LLC in Kansas City, KS, says that the chain is also giving local stores leeway in merchandising and implementing display contests, which helps create engagement with both its workforce and consumers. “It’s an old-school approach,” she says.
Sprouts opened over a dozen new stores in 2022 and hopes to return to its previous growth pace of expanding store count by 10 percent annually.
Plans call for the opening of at least 30 new locations during 2023, with the pace to accelerate in 2024. The chain has approximately 375 stores in 23 states as of late 2022.
The company has targeted Florida as one market with growth potential. In 2022, Sprouts opened stores in Cape Coral, Apopka, Homestead, West Palm Beach, Boynton Beach, and Port St. Lucie.
The retailer continues to open stores farther west as well—Dallas and San Antonio, TX; Rancho Cordova, Moreno Valley, and Palmdale, CA; Tucson, AZ; and Denver, CO are among the openings in 2022, the company’s 20th anniversary year.
Among the openings planned for early 2023 are Nashville, TN and Lathrop, CA. Sprouts has refocused on smaller store formats, deemed more cost-efficient but with the same sales potential as larger formats.
The company has been expanding its prepared food and grab-and-go options, and the deli department has been a particular driver of growth in 2022. A video for one of its deli sandwiches went viral on TikTok in summer 2022, generating 10 million-plus views.
That said, produce at attractive price points remains central to the store’s positioning.
The company recently expanded its alliance with Pod Foods, a distributor focused on local and emerging brands, giving shoppers access to new brands and the company flexibility to address supply gaps.
Sprouts had been working with Pod to bring emerging brands to about 130 stores; the expansion takes the effort chainwide, and Pod has opened three new warehouses just for its Sprouts business.
This is an excerpt from the cover story in the March/April 2023 issue of Produce Blueprints Magazine. Click here to read the whole issue.