Sprouts expands reach with Amazon delivery partnership

Amazon’s first, just-opened brick-and-mortar store may be a direct competitor to supermarkets, but Sprouts Farmers Market is still enjoying the benefits of a home delivery partnership with the online retail giant.

“We're in the midst of ongoing discussions with Amazon in connection with how we both move together and expand this relationship, as clearly both parties are happy with the relationship,” Sprouts CFO Brad Lukow said during an investors conference Monday.

Sprouts now offers delivery via Amazon Prime Now — the one- and two-hour delivery service — in nine stores in four markets in two states. Lukow said the partnership helps Sprouts gain relevance with Millennial customers.

“And at the end of the day, this is an ongoing trend where the consumer is telling us that they want to engage with the company in an omnichannel strategy, fashion. So, whether it's in the store, whether it's e-commerce, whether it's home delivery, perhaps click and collect, we will do and deliver to the customer what they're asking us to do,” said Lukow.

Analysis of home delivery order locations could influence how many stores Sprouts opens in new markets, as delivery allows the retailer to reach customers who might not shop in the physical store.

“If you have an expanded trade area with partnering up [with] some form of home delivery that gives you that broader reach, we'll continue to look at that going forward,” said Lukow.

Lukow also provided a brief update on Sprouts’ mobile app, which launched earlier this year, saying the retailer has seen “some pretty terrific take-up with our customers in terms of the development of known customer IDs.”

“I think there's a lot more that can be done,” he added. “We're pushing out relevant digital coupons to our customers. We are seeing the click rates through. We're pleased with where we've come in such a short period of time.”

Editor's Note: This article has been updated to clarify that Sprouts offers delivery through Amazon Prime Now, the online retailer's one- and two-hour delivery service.