Sprouts Farmers Market is becoming cool for younger shoppers

There is a new wrinkle in Sprouts Farmers Markets’ customer demographic.

The Phoenix-based natural and organic grocer is seeing more 18- to 34-year-olds walk through its doors.

“I think increasingly it’s clear that the people that are getting interested in this get more and more interested,” said Sprouts CEO Jack Sinclair during the grocer’s third quarter earnings call on Wednesday, according to a transcript from financial services site AlphaSense. “That 18-to-34 cohort is one of the ones where we’ve seen the strongest growth.”

What’s pulling in the younger crowd? Social media is playing a big role. Sprouts’ marketing team has found influencers and celebrities joining in on the health-food craze, and real-life testimonials from customers are also helping in a big way.

“We’ve gone from millions to billions of impressions,” said Sinclair. “We’ve had some support from some really interesting celebrities, which clearly drives a lot of product and interest in our products.”

One Sprouts product that has gone viral on social media is sea moss gel, which is being pushed by social media influencers.

“I’m not quite sure what we all do with the sea moss, but they’re buying it and it’s doing some real positive things in terms of coming from a social media post,” Sinclair said.

Make an event out of it

Customer-centric events have taken off for Sprouts. The grocer debuted Sprouts’ brand Discovery Days, which featured stores putting up big displays and sampling stations that carried such items like coconut rolls and fall seasonal products.

A back-to-school event focused on healthy school snacks and lunch offerings along with prepared meals for the busy evenings that tend to multiply when school is back in session.

Sprouts’ annual conference, SPROUTSCON, attracted over 1,500 vendors to discuss products. Store and department managers also learned about the grocer’s business initiatives, received leadership development training, and were introduced to new products.

The loyalty following

Sprouts has been working on a loyalty program for over a year and has test markets in Nashville and Tucson, Arizona, executives told retailers on Wednesday’s earnings call.

Sinclair said sign-ups and scans are slightly exceeding early goals, and the plan is to test a couple of more markets in early 2025 before rolling out the program later in the year.

“We’re learning how to understand the customer that’s coming from that information and coming from the scanning data,” said Sinclair. “And we’re taking the time to really learn to create the kind of program that’s very unique in the marketplace.”

The denser the better

Nine Sprouts Farmers Market stores opened during the third quarter, and 33 new locations are scheduled to be powered up as 2024 comes to an end. The original goal was 35, but the impact of Hurricane Milton has delayed store openings in Florida until the first quarter of 2025, the grocer said.

In addition, around 110 new store sites have been approved and more than 70 executed leases are in the pipeline.

Sinclair believes density matters when opening stores. Sprouts has opened more stores in some of the larger markets, where word-of-mouth helps launch locations before they are even open. It also doesn’t hurt to have multiple stores in a relatively small radius.

“When you go to new markets, it’s better not to have one store, we better have a lot of stores ready to go so it can all come alive appropriately,” said Sinclair.

Sprouts is eyeing expansion in areas it has yet to conquer, like the Midwest and Northeast. Distribution centers are also needed. Sprouts had to close a facility in Atlanta, but now the grocer believes it needs to make a return to Georgia. New distribution centers in the southern portion of the Midwest, the Mid-Atlantic, and Northern California are also being considered.

Existing stores have also been enhanced. Sinclair noted during the earnings call that Sprouts stores have more prepared meal cases than ever before and enhancements in the vitamin department.

Sprouts also continues to expand its range of organic produce, which is experiencing faster growth than conventional produce, according to Sinclair. Organic produce now comprises more than 46% of total produce sales for the retailer..

The grocer’s protein program has also expanded with a larger offering of antibiotic-free chicken and pasture-raised products.