PHOENIX, AZ - Smaller formats in the retail space have been on the rise as consumers continue to opt for healthier options in-store. Sprouts Farmers Market announced in March 2021 that it will be throwing its hat into the ring as it planned for a new format to hit the retail landscape. The wait is soon to be over, as the retailer made it known it will open 20 new stores by 2022.

In Sprouts’ Q2 2021 Earnings Call, Chief Executive Officer Jack Sinclair explained that, though results were down compared to last year, the grocer’s year-to-date 2021 sales are up 9.5 percent, and profit is up 56 percent compared to the pre-pandemic period in 2019.

“The creation of innovation centers through dedicated merchandising displays, an increase of seasonal and local produce, the opening of two new fresh distribution centers, and the opening of our first new format store in July [are] among many changes that are driving our strategy forward,” Sinclair commented. “Plans are now in place to roll out our innovation centers to all our new stores and many of our existing stores in the back half of this year.”

In light of the pandemic, consumers are gravitating toward healthier products, especially fresh produce and plant-based offerings. As part of its business ideology to bring fresh produce to equate a farmers market feel, Sprouts is focusing on greener sectors in the store such as organic produce. According to the company’s release, organic produce is up to 35 percent of department sales. With the opening of its Florida Distribution Center (DC) running alongside its Aurora, Colorado, DC, Sprouts is honing in on its farmers market heritage; more than 85 percent of its stores are within 250 miles of its DCs to ensure the freshest produce possible.

“[At] Sprouts, [our] sourcing practices, paired with our strong relationships with our local growers, are a part of how we bring the freshest products to our customers all year along. With the addition of the Colorado DC,” Sinclair continued, “we have already noticed an uptick in produce sales in this region, as fresher produce and larger local selections are being recognized by our customers. Specifically, our ripening rooms for bananas and avocados in Florida and Colorado have contributed to significant improvement and sales for these products in these regions.”

The smaller size format is more efficient and keeps produce at the heart of the store, while maintaining the grocer’s familiar open layout and treasure hunt shopping experience. In addition, they cost 20 percent less to build, with the expectation to have similar sales and higher returns. To bring the new stores to fruition, Sprouts has invested $27 million in capital expenditures, net of landlord reimbursement, primarily for the new locations, the earnings call stated.

“Our 20 new store openings for 2021...may not be completed by year-end due to difficulties in securing certain equipment from third parties, because of supply chain delays that have been complicated by the pandemic,” Denise Paulonis, Chief Financial Officer, explained. “At this time, we [have] about seven store openings that may be delayed to 2022, although we continue for options to open these stores by the end of the year.”

For more information regarding the new store openings as well as the Quarter 2 earnings, click here.

ANUK will keep a pulse on the newswire as the landscape continues to evolve.

Sprouts Farmers Market