HOW SPROUTS IS WINNING THE NATURAL FOOD BATTLE

As Whole Foods Market finds the market tough going, we look at how one of its key competitors is planning for stronger growth.

Exceeded expectations with Q3 performance

With Q3 sales up 18% to $903.1m, and comparable store sales up 5.8%, Sprouts Farmers Market has performed very strongly in a near zero inflation environment. This strong record of growth comes at a time when competitors, such as Whole Foods Market and the Fresh Market, are finding the trading conditions more challenging. This growth is being driven by a number of factors. Sharper pricing of fresh, a key category for the retailer, and creating a more convenient and easy shopping trip for customers has helped Sprouts to continue attracting new customers, with 75% of sales growth driven by increased footfall and 25% driven by higher basket spend.

Sprouts continues to expand, with 27 new stores opening in 2015. The retailer plans to continue opening new stores, with a strong pipeline for 2016 and ahead. Its strategy is for around 70% of this growth to be in existing markets (whilst trying to avoid cannibalisation of sales), and 30% to come from new markets.

Healthy and fresh at the heart

Sprouts has been introducing new and expanded deli offerings, trialling this in new stores and rolling out to some of its existing stores. Features include a new salad bar, full service deli case and an expanded range of prepared meals and side dishes. As more customers embrace the need for a healthy diet, Sprouts is providing them with a well-developed range, at an affordable price. Private label also continues to be an important growth area for the retailer and it continues to introduce new and innovative products, focused on unique flavour profiles and speciality attributes.

Innovation and online initiatives helping to accelerate growth

The management team at Sprouts has a laser focus on keeping Sprouts as an innovator in the natural and organic sector, benefiting from its ability to respond quickly to the market and adapting its offer. The retailer is to accelerate investments in the coming months in areas such as product innovation and enhancing the in store and out of store experience. It recognises the opportunity to increasingly engage with customers through online platforms and in Q3, launched a partnership with Amazon Prime in some areas of California, offering 'Prime now' members the ability to shop online and have it delivered within 1-2 hours.