The Fresh Market is expanding its use of targeted direct-mail offers — to encourage greater frequency of store visits — following positive consumer responses from its initial tests, Craig Carlock, president and CEO of the Greensboro, N.C.-based chain, told analysts Thursday.
Carlock also said the company expects to add more than 70 new stores over the next three years, half of which will be in the Southeast; and it is evaluating its supply arrangements in advance of its contract with a third-party distributor expiring early in 2016.
Talking about the direct mail campaign, Carlock said the chain has been pleased with the response rate and the positive return-on-investment following tests during the first three quarters of the year.
“Given these positive results, we are expanding our efforts. We have refined our offering and are extending the mailings to more homes — targeting customers and potential customers whose demographics and proximity to The Fresh Market stores scored the highest in our tests.”

The primary goal of the direct-mail effort is to drive increased frequency, with a secondary objective of attracting new customers, he explained.

“Our greatest opportunity lies more in increasing the frequency with which [existing] customers shop our stores than in acquiring new customers. Research shows less than 2% of our customers shop at The Fresh Market on a weekly basis, so only a few more trips per year across our active customers would result in a significant increase in comp transaction growth over time.
“And as consumers move up in frequency, we observe a positive correlation in their spending per trip.”
With regard to new-store growth, Carlock said The Fresh Market expects to achieve annual unit growth of 12% to 15% per year, although 2015 will be a transitional year “to redeploy resources from the Western U.S,” he pointed out. Approximately half of all new locations will be in the Southeast, where the chain hopes to double its store base, he said.
The Fresh Market operates 164 stores in 27 states, including approximately 75 in the Southeast.
Carlock also said The Fresh Market is exploring its supplier and logistics options prior to the expiration of its distribution contract with Burris Logistics, Milford, Del., in February 2016.
“Over the long haul we’re going to add stores, grow comps and negotiate good supply arrangements, not just with our primary supplier but also with produce suppliers and specialty grocery suppliers,” he said. “We’re going to be able to fill up trucks better, and we’re going to have more leverage with those who sell us the food. And I firmly believe all of these things will help us sustain and build our margin over time.”