Natural- food-store chain Sprouts Farmers Market continues to expand and is poised to begin to compete with Whole Foods in some areas. Last year, Sprout’s bought Henry’s Farmers Market and a merger with Sunflower Farmers Market was announced this week, making a total of 139 stores under the Sprouts banner. Sprouts Farmers Market is based in Phoenix and Sunflower Farmers Market is headquartered in Boulder, Colorado.
“By the end of this year, we’ll have 150 stores. The goal for the next several years is to add 15-plus per year,” the company’s president and CEO Doug Sanders said. The combined company is projected to have 2012 annual revenues approaching $2 billion, which will make it the third largest natural-foods grocer in the United States in terms of sales.
Both Sprouts and Sunflower emphasize natural foods and fresh produce at lower prices than upscale grocers like Whole Foods. The two chains are similar in store designs and layout. Sprouts stores were already in California, Arizona, Colorado, and Texas. The latest acquisition extends the brand to Nevada, Utah, New Mexico, and Oklahoma.
Although some consumers have expressed fear that the new merger could lead to higher prices because Sprout’s will no longer be competing with Sunflower, Sanders said that “low pricing is a core value.” “I actually think this merger could really enable them to have even more buying power in the market so they can be more aggressive with their pricing,” said Carlotta Mast, editor in chief of Natural Foods Merchandiser, a trade publication.
“Offering value pricing in the smaller stores that baby boomers prefer, Sprouts will probably be a threat to Whole Foods Market in some areas, said Phil Lempert, a consumer behavior expert. “I think you’re going to be seeing Whole Foods really going out of their way to offer more promotions, more specials and really up the ante,” Lempert said.
