Will Sprouts Thrive in Heated Grocery Industry?

Amazon and Whole Foods are putting pressure on organic grocer Sprouts Farmers Market.

September 11, 2018

PHOENIX – With Amazon and Whole Foods taking the spotlight in the industry, it might seem as though specialty grocery stores such as Sprouts Farmers Market are feeling the heat. They are—but they’re also fighting back.

Sprouts is having a solid year of sales and profit growth. An article in The Street cited a second-quarter, same-store sales growth of 2% and earnings growth at 10% higher than the previous year. As a result, the grocer is opening new stores: Its 300th opened this summer in Simpsonville, South Carolina.

In an interview with The Street’s Brian Sozzi, CEO Amin Maredia said that the company operates in a $850 billion industry, in which Amazon and Whole Foods only have 2% of the market share. He touched on the fact that the remaining 98% is open for conventional and specialty grocers—most of which aren’t as focused on health, value and experience as Sprouts is.

The grocer announced it will test curbside pickup in the coming months. Because Sprouts store locations aren’t as close to one another as conventional supermarkets, Maredia said it helps the company’s e-commerce footprint spread since it can reach more customers who are more than seven to 10 minutes from physical locations.

Sprouts is looking to evolve based on health and customer preferences. Maredia noted that 40% of the company’s business was in fresh food and produce—now, that’s up to 60%. The grocer is being innovative around consumer trends and catering to a wide range of taste profiles, such as making the search for gluten-free products easy.