The Thyme of Their Lives

It has been heady times at Fresh Thyme Farmers’ Market. The chain is adding about 20 stores a year, expanding into new states throughout the Midwest and posting strong double-digit sales growth. It is also gaining traction with shoppers, who see the chain as a more affordable option to other natural and organic supermarket operations in the area.

Overall, not bad for any supermarket operation, especially in an economy where many industry gurus say that growth opportunities are limited for food stores and most retailers are hunkering down, looking for any edge to capture the consumers’ hearts, mind and, most importantly, dollars. 

Oh, did we mention that Fresh Thyme did not exist three years ago?

That’s right, the Downers Grove, Ill.-based supermarket operation was simply a glimmer in the eye of its founder, CEO and president, industry veteran Chris Sherrell, just a few short years ago. Now, the chain, according to Sherrell, is raking in more than $500 million in annual sales. It is also adding stores in key metropolitan areas across the Heartland—from Ohio to Nebraska—becoming a well-known alternative for shoppers looking for more natural and organic products than they may find at traditional supermarkets, and more price-friendly than they may find at that 800-pound gorilla, Whole Foods. 

“We want to bring a natural and organic alternative to the masses in the Midwest,” says Sherrell. “We want to offer them an affordable place to buy their products in this area of the country. [Our stores are] based on value, assortment and convenience. We may not be for those shoppers who look to Walmart for the bulk of their purchases or those who are high end. But we think we can attract as much as 80 percent of all shoppers and that is plenty for us.”

It is because of this growth, as well as the excitement the chain is generating in the marketplace, that has made it so easy for Grocery Headquarters to choose Fresh Thyme Farmers’ Market as our 2016 Natural/Organic Supermarket Chain of the Year.

While Fresh Thyme has burst onto the scene throughout the Midwest, it comes as no surprise to anyone that has watched this development. The company has the mighty muscle and financial clout of the Grand Rapids, Mich.-based Meijer supermarket chain, its sole investor, to help support its robust growth strategy, which calls for as many as 151 stores within seven years. “I think Meijer is viewing this as a grand experiment to determine whether a natural/organic supermarket chain can succeed in the Midwest,” says one industry observer. “It is a perfect way to test the concept without getting their hands too dirty.”

Sherrell concurs: “Meijer understands the grocery industry and I think they see an opportunity here.”

Right now, all things seem to be moving forward nicely. Sherrell says that the chain is filling in stores in key metropolitan areas of the Midwest, including Chicago, Detroit, Omaha and Cincinnati, while pondering moves into other areas in the near future. “We just think that the Midwest needs this option,” he notes. 

Sherrell, himself, appears to be the catalyst for Fresh Thyme. He has a strong background working for natural supermarket chains, including starting behind the deli counter at a Wild Oats store in Scottsdale in the early 1990s. “I made $5.25 an hour making sandwiches,” he says. “It was a great way to learn the business.”

He worked his way up the Wild Oats ladder, becoming a meat manager and then a grocery manager. At the tender age of 24, Sherrell became a store director of a Wild Oats unit in Phoenix. He joined Sunflower Farmers Markets in 2001, became its COO in 2005 and eventually became its CEO about a year before it was sold to Sprouts Markets in 2012. He turned down the opportunity to continue on with Sprouts to start Fresh Thyme.

“I saw that we could build the same type of concept that Sunflower had in our territory in the Midwest,” he says. “Eventually this concept was going to come to this region, either through Sprouts or Lucky’s and there was no reason for us not to beat them to the punch and deter them from entering these markets. We reached out to a number of private equity firms and venture capitalists and, ultimately, came to terms with Meijer to be our investor and fund the project. Then it was off to the races.”

The first store opened in Mount Prospect, Ill. in May 2014 and eight others followed in the first year. Another 18 stores opened in the second year followed by about 20 more this year. “How do we do it?” he says. “Well, first we do not build $50 million stores. We spend a lot less on these stores than some of our competitors and that savings is passed on to our shoppers.”

A unique assortment of merchandise truly makes Fresh Thyme stand out. Consumers are not going to find Tide, Twinkies or Crest toothpaste in a typical Fresh Thyme store, but they may find Campbell’s soup and Cheerios. It is a uniquely curated assortment of popular conventional items mixed with natural, gourmet, organic and specialty products. 

Instead, these stores, with an average selling-space footprint of about 18,000 square feet, feature a huge and growing assortment of private label products mixed with an interesting array of national brands, many of which are not stocked at traditional food units. 

Sherrell says that the chain now offers about 500 private label SKUs in its grocery section and more than 700 private label products storewide. That total should increase to 1,000 private label SKUs by the end of the year and even more in the future. “We find that when we introduce a new private label product that it becomes the best seller in that category within a short time,” he says. “They are good quality products featuring better pricing, usually at least 10 percent lower than the national brand equivalent. Consumers see the difference and it becomes quickly apparent to them that this is how we differentiate ourselves from the competition.”

A typical store houses around 28,000 SKUs, with produce getting about 25 percent of the footprint and meat/seafood receiving about 15 percent of space. Grocery gets 30 percent of space in a typical store and foodservice gets about 15 percent of the store. “Our signage leaves little doubt with shoppers where they need to go for a specific category,” he adds. “It is an important part of our merchandising strategy.”

Pricing is designed to entice consumers to visit and keep coming back. Sherrell says that Fresh Thyme price points on produce are always better than every other player in the market, while natural/organic meat and seafood prices are designed to beat other natural players in the area. 

There are little things done to capture the consumers’ interest, including offering natural meats, raised without hormones; seafood flown in daily and locally-roasted organic coffee beans. The chain also offers a broad selection of natural and organic bulk foods, earth-friendly cleaning supplies and a huge array of vitamins and supplements, as well as an impressive body care section. 

Sherrell says that the opening of the chain’s first distribution center, a 315,000 square foot building in Bolingbrook, Ill., will go a long way toward helping the company gain complete control over its inventory, especially with produce. “This center is absolutely paramount to what we do,” he says. 

It will also help that the chain offers a greater selection of locally-grown produce, including the famous Michigan blueberries or Indiana corn. “We will get locally-grown produce whenever we can,” he says. “It adds a lot to what we do and shows our customers that we want to be part of the community.”

Advertising is also done in a unique way. While Sherrell says that the company sends out more than 100,000 sales flyers per store each week, the company has embarked on a “My Thyme” marketing program that is built around an app that will give consumers individualized deals, recipes and digitalized grocery lists. “Ultimately, we want to get rid of paper and get all our customers signed on to My Thyme,” he says. “The savings will be tremendous and it will bring us closer to our shoppers.”

A TEAM EFFORT

Getting consumers involved also means getting employees involved. Sherrell relates that one of the chain’s biggest challenges is finding enough qualified employees to work the store

s, especially with so many new units opening every year. “We started from scratch,” Sherrell notes. “When we opened our first stores we did not have people already here that we could place at the new stores and have them run it and teach others.

“We hired 2,600 employees in 26 months,” he adds. “It is very hard to develop the right culture, but we knew it was absolutely necessary. Great companies have great cultures and they have great employees who are motivated and feel like the are part of the solution.”

That culture starts at the top. Sherrell spends part of each week visiting stores and listening to store employees. “I get involved and make it clear that I want the staff to reach out to me. I listen to them and see how the business is going—and I want the brutally honest truth,” he says. “Everything cannot be going great after adding 40-plus stores in just over two years.”

So where does Fresh Thyme go from here? Sherrell seems very set on a few things. One is making sure that the company has the right employees and that they are happy to be on the team. The second is to continue to fine-tune the merchandise mix, adding national brands where needed and continuing the emphasis on the private label strategy that truly makes Fresh Thyme unique. 

The third is to keep on growing. Besides adding more stores in existing areas, Fresh Thyme officials are looking at the Upper Midwest, particularly metropolitan areas in Minnesota, as well as Ohio and possibly an eastward expansion for future growth. “The goal is 151 stores in our first seven years, but who knows how far we can really go,” he says.

“I am not a traditional CEO and this is not a traditional chain,” he adds. “We are creating something special here and we are doing it as a team. It is the energy of that team that is driving us into the future and I am confident that we are on the right track to becoming a legitimate alternative for consumers in the Midwest looking for natural and organic products at a reasonable price.”