During the company’s 2024 second quarter earnings call on July 29, Sprouts Farmers Market’s BB #:168563 executive team said the company’s efforts to differentiate in-store continue to bring results.
Differentiation and regionalization in produce has been a key step in the process, said CEO Jack Sinclair, during the call.
“In particular, in our produce business, which is so important to us, it’s very, very seasonal,” Sinclair said. “So, across the country we’ve invested in each distribution center in having close relationships with local farmers so that when things are ready, we are in good shape to take advantage of that. And we’re working pretty hard at that going forward.”
The company is looking to the supply side for more opportunities.
“If we can get more commitments from our supply base, giving 2-3-4-5-year commitments,” Sinclair said. “That’s the kind of thing we want to work out so that we’re in a better place to do that going forward.”
Sprouts has significantly changed its produce pricing strategy, from a loss leader to bring in value-driven customers to a more attribute-driven consumer.
“We went away from the type of customer that’s responding to that coupon clipping that we had many years ago,” Sinclair said. “So our produce pricing is in good shape, our mix of produce is evolving to emphasize our differentiation and being organic in produce. We’re working very close with growers so we can get more of that available going forward.”
Organic produce continues to drive growth.
“We pay a lot of attention to produce pricing,” Sinclair said. “We’ve been very encouraged particularly on our organic produce pricing. We’ve widened our gap in organic produce, which is why our customers were here: 45 percent of our produce business is organic produce. That’s something that continues to grow and we’re encouraged by it.
Sprouts also pointed to unexpectedly strong results for fresh produce in e-commerce.
“Fresh produce in our e-comm business is probably much stronger than you’d find in most food retailers using that,” he said. “So that encourages our assortment and our product offering.”
Phoenix-based Sprouts reported a 12 percent year-over-year increase in sales for the second quarter, which ended June 30. The company’s same-store sales were up 6.7 percent compared to the same period last year.
It opened five new stores in the quarter, with 30 more planned for the year.
