California, Texas still on Fresh Market’s radar

The Fresh Market still has plans to expand aggressively in California and Texas, despite a couple of failed forays into those states, the CEO of the upscale, small-format chain told investors.

“We decided we should just leave Sacramento, operate our stores that are successful in Palo Alto and Santa Barbara, and continue looking in Orange County, L.A. County, San Diego County, the Bay Area — those kinds of places,” Craig Carlock said at the Bank of America Merrill Lynch Consumer & Retail Conference in New York. “And we’re just going to leave Sacramento behind us.”

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Carlock made his remarks a few days after the fast-growing company announced its was closing its three stores in Sacramento and one of its four locations in Houston.

Unlike Sacramento, which Carlock said proved to be a more difficult market than anticipated, the company’s Houston locations — acquired from Rice Epicurean Markets — have actually performed well, but the high cost of occupancy, together with close proximity of two of the locations, led to the closure of one of the sites.

“Those are great trade areas,” Carlock said of the Houston locations. “We expected the high population density to offset the absence of brand equity, and it did not.”

He explained that Houston also provides the company with an entry to other Texas markets, such as Dallas, where it has gained some credibility by having executed the Rice Epicurean acquisition. It is also opening a fifth location in Houston “with much more normalized economics,” he said.

Carlock noted that in both Sacramento and Houston, The Fresh Market sought to “jump-start the process of building brand equity.”

“We wanted to cluster stores and open them in a relatively quick period of time to jump-start and accelerate brand-building,” he said — a tactic that might not be neccessary going forward.

Carlock also said the company is testing more prepared foods in some of its California and Houston stores — including gelato bars, smoothie bars, pizza by the slice, and coffee by the cup.

“We’re excited about all of those things,” he said. “We know in our history that we get good comps by running good stores and having new products."

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