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Sprouts Farmers Market

I live in West Hollywood, California and Sprouts Farmer’s Market is the place I do most of my shopping, so I thought for my first post I thought I should go with what I know!

What are some basic company facts? Let’s find out…

Sprouts Farmers Market is defined as a “Natural & Organic Grocery Store.” Their headquarters is in Phoenix, Arizona. The store’s ethos is healthy living for less. Their bright and cheery interior is designed to model an old fashioned farmer’s market. They offer name-brand health oriented products as well as their own Sprouts Brand products. They aim to sell minimally processed foods free of hydrogenated fats, artificial flavors, colors, sweeteners, and preservatives. They are known for their sizable bulk foods, produce, and vitamins/supplements sections. There are currently 277 with plans of opening more.

Without history there is no meaning, so let’s check it out…

It began simply enough, with a man selling peaches on a street corner, and evolving over the years. Escaping the Dust Bowl of Texas in 1934, it was in 1943 that Henry Boney and his second wife Jessie opened a fruit stand in San Diego, California. Henry grew his operations to create America’s first franchised convenience store, Speedee Mart, which sold to 7/Eleven. In the late 1960s, Henry’s sons Stan, Steve and Scott carried on the second generation of stores to create Windmill Farms, which grew to Boney’s Marketplace. Renaming their Southern California chain to Henry’s Marketplace in honor of their father, the Boney family then sold their stores in 1997 to Wild Oats Markets, Inc., which was the third largest US natural foods chain of the 90s. It was Stan and his son, Shon Boney, who went to Arizona in 2002 to start a new Henry’s-style grocery store chain — this time calling it Sprouts.

Henry Boney was a spirited entrepreneur who knew how to put in a hard day’s work. He is quoted in saying that it was never money that drove him, "It was always for the sense of accomplishment and the way this business makes us feel," he told the San Diego Union-Tribune.

21st Century Timeline:

2002 – The Boney Family opened Sprouts Farmers Market in Phoenix, Arizona as its second specialty market brand of stores.

2005 – Sprouts successfully expanded into Texas and California

2007 – Wild Oats, the owner of Henry’s Marketplace among others, is sold to Whole Foods Market, Inc. for an estimated $565 million*. When this happens, Whole Foods divests itself of 35 Henry’s Marketplace stores (and Sun Harvest Market of Texas operated by Henry’s) and sells it to Smart & Final, Inc. for $166 million.

2007 – The private equity firm Apollo Management LP buys Smart & Final Stores LLC.

2011 – Sprouts Farmers Market and Henry’s Farmers Market (two natural food grocery chains that were founded by the same family, but operate under different owners) merges under Apollo

2012 – Sunflower Farmer’s Market, a full-service natural based grocery store, merges with Sprouts under Apollo, expanding Sprouts presence to almost 150 stores throughout eight states: AZ, CA, CO, NW, NV, OK, TX and UT

2013 – Sprouts Farmers Market becomes a public company traded on NASDAQ

*Note: Later on in 2007, the Federal Trade Commission challenged the acquisition of Wild Oats by Whole Foods, believing that it had violated federal antitrust laws. The merger would have eliminated nationwide competition in the premium natural and organic supermarkets industry, which would have ultimately raised prices for consumers. Whole Foods was forced to sell the Wild Oats chain in 2009.

Who owns Sprouts? It’s important to know where the money is going.

Let’s check it out…

Sprouts Farmers Market was launched in 2002 by the original owner’s son. When it merged with Henry’s Farmers Market, the resulting majority ownership fell to the investment firm Apollo Management. The private equity firm Apollo Global Management, LLC owns Sprouts and has a total market value of USD $188.6 billion (2016). Apollo also owns Lloyds Bank, McGraw-Hill Education, Claire’s, Chuck E. Cheese’s, Las Vegas time share company Diamond Resorts International, Caesars Entertainment Corporation, and Hostess Brands, which includes Twinkies. Under the Sprouts umbrella is Henry’s Farmers Market, Sun Harvest Market, and Sunflower Farmers Market. There are approximately 24,000 employees.

Sprouts headquarters is in Phoenix, Arizona. They have a projected $1 billion in annual sales. Their Chief Executive Officer (CEO) is Armin Maredia, 2015 to present. Before his role at Sprouts, he served as a key strategic and finance officer at the Burger King Corporation. The President and Chief Operating Officer (COO) is Jim Nielsen. He was also Henry’s Farmers Market President from 2006 to the merger of 2011.

(There are only men serving in the top 8 positions of Sprouts.)

I Like This…

Over the decades, the family has created and operated a succession of businesses, including grocery store chains Boney’s, Bradshaw’s, Superama, Windmill Farms, Henry’s and Sprouts, as well as Speedee Mart, the first convenience chain to franchise its stores.

What sets Sprouts apart from other grocery stores? Let’s check it out…

Sprouts is a natural and organic grocery store whose direct competitor is Whole Foods. Sprouts differentiation is that they sell their products at a lower price point. They do not have as many “novelty items” as Whole Foods would though. They do however actively incorporate locally sourced foods. They have a prominent line of Sprouts branded products with a plethora of tips and recipes on their Sprouts brand website. Their most differentiating quality is their farmer’s market look and feel. There are no interior shelving units in the central parts of the store, allowing for an open-air feeling. Adding to the character are the barrels used for their bulk foods section. There’s a sense of nostalgia at Sprouts that harks back to a time when food was considered whole and pure; a direct reference to the founder Henry and his honest work mentality.

Who is Sprout’s target market? Let’s see if we can find out more…

Looking at the Sprouts store locations, I did some data mining, and the average household median income for a Sprouts location is about $75,000 per year. The average American household median income is $52,000 per year. It is a clear trend that Sprouts Farmers Market stores are more likely to be located in wealthier areas. Due to their natural and organic reputation, a Sprouts shopper is likely to be a health conscious consumer, willing to pay a bit more for quality food.

How do they function? Let’s see how they conduct their business…

Sprouts is proud to partner with suppliers that align with their values as a store. These suppliers tend to have ethical environmental systems and respect towards human rights and animal welfare. Sprouts will work with third parties to perform independent audits with the suppliers of their Sprouts brand products.

What are the first impressions? Let’s take time to look at the atmosphere of the store…

A Sprouts store feels light and open. The typical high shelving units are clustered together to one side so that when you walk in, you immediately see the whole store. The high ceilings showcase the mural images of an idealized farm-life. The bright lights mimic the sun, highlighting the greens and earth tones of the store and the music is upbeat, too.

What kinds of products do they sell? Let’s check out what you’re spending your money on…

Here’s some fact about the Sprouts brand products

• They carry over 1,800 different Sprouts brand products

• 300+ Sprouts brand products are USDA Certified Organic

• Over 50% of Sprouts brand food products are Non-GMO

• Over 65% of Sprouts brand eggs sold are from cage-free or better than cage-free facilities (i.e., USDA Certified Organic)

You will not find a lot of the big-brand name products at Sprouts like Cheerios, Oreos, Ranch etc. Sprouts stores have a sizable produce section, and they separate the organic from the conventional food. They tend to showcase and stock up on whatever is in season at the time. Then, of course, there is the bulk food section that integrates the organic options with the non-organic. There are around 300 bulk food items that allow you to buy as little or as much as you want. Their large vitamins/supplements section provides many options to customers as well.

A typical store will have a decent variety of products, with at least one or two different kinds of international food sections, with Asian and Latin American being most common. Sprouts also carries a decent amount of vegan-friendly products as well.

Like most stores, there is a beer/wine section, a meat/deli section, a bread section with sprouted bread options kept in refrigeration. Cutting down on their carbon footprint, they do a lot of locally sourced products like honey, produce and eggs.

Prices for health oriented products or organic products tend to be a bit higher, but Sprouts shares lower prices with their customers than some of their competitors.

On the Sprouts brand website, they offer coupons for highlighted products. You can also use coupons that you have for other items in the store.

What does their Point of Sale (POS) look like? Let’s check it out…

Finally, the check out process, let’s check it out…

The only check out option is with a cashier. There are no self-checkout points. Like most stores, there are a couple 15 items of fewer registers. Last minutes purchases or impulse buy products do have a small space at each register; lifestyle magazines, gums and sweets being the most common.

If you live in a state where stores charge for bags, Sprouts will reimburse you 5 cents for every bag of yours that you bring.

Sprouts does not offer any online or mobile shopping.

In conclusion…

Sprouts is a health oriented grocery store selling many alternative brands of foods. Although many of these products still contain preservatives, processed ingredients, and sugars, there is probably less of the “bad stuff” in what they choose to put on their shelves. Sprouts emphasizes their fresh produce and bulk foods, with many items being organic, locally grown, or vegan. Prices are in the middle to higher end. The large produce and bulk food sections contribute to the feeling that shopping here is like going to a farmer’s market, which is the whole point.


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