Connecting with consumers through social media, grassroots efforts and extensive research helped propel the entry of Sprouts Farmers Market into Atlanta, company officials told investors.
“What you saw in Atlanta was just a really hard push upfront through social media and grassroots to get our brand in there,” Doug Sanders, president and CEO, said.
“The level of consumer anticipation around these openings was far more than we had ever experienced in a new market, as evidenced by the 40,000 Facebook fans we amassed before opening our first store and the more than 1,000 customers that signed up for our pre-opening event in less than one hour.
Sanders said the company also benefitted from extensive research designed to understand the customer in the Southeast. “The local products we brought in really gained us a lot of credibility with that Atlanta customer,” he pointed out, “and we’re seeing the benefit of that within the initial numbers.”
Sales at the first two stores in Atlanta “have started off well above our expectations, with continued momentum past the opening week,” Sanders noted.
The Phoenix-based chain opened its first Atlanta-area store in the suburb of Snellville, Ga., in mid-June and opened a second store in Dunwoody a month later. It has scheduled openings in Peachtree Corners in mid-August and John’s Creek in mid-September, with up to 11 more Georgia stores planned.
Sanders said Sprouts plans to maintain a new-store growth rate of 14% a year, “but given the opportunity, we’d flex up to take advantage of an opportunity that came our way.”
Amin Maredia, the chain’s CFO and treasurer, said the company is exploring the possibility of taking over leases of other businesses that could be converted to supermarkets, “but we’re seeing very aggressive rates in certain parts of the country, so we just have to be patient and not get too aggressive because there are plenty of opportunities in the 10 states we’re currently in.”
Asked about the chain’s capital priorities, Maredia said investment priorities include new stores first, followed by sales initiatives and disciplined remodeling activity.
In response to a question, Maredia said Sprouts is looking at online models “because we do have some urban stores, but most of our stores are in suburbs and customer preferences there haven’t shifted as much as if you were in the middle of San Francisco or New York City.
“What our customer base is telling us today is online is not an investment priority. That doesn’t mean we won’t do tests to see how these models work, and if they add significant benefit to the business, we would expand on that.”
Although produce sales account for about 25% of total volume, James L. Nielsen, the chain’s COO, said consumers “are giving us more credit than just being a produce store. They are giving us credit for being a value-oriented grocery store.”
Nielsen also said Sprouts is focusing on “being really disciplined around the customer,” determining what they want from the standpoint of products, services and education. “We think we are good today but we continue to get better by listening to our customers, and we are spending a lot of time [figuring out] what is the next thing we want to achieve over the next several years to be even better."
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