The Bay Area is becoming a magnet for grocers that want to expand existing operations or launch new ventures. Safeway, Walmart, Foods Co., Whole Foods and Grocery Outlet are among those seeking to muscle up in the region. Sprouts Farmers Market is attempting to beef up its efforts though acquisitions of rival grocers Henry's Farmers Market and Sunflower Farmer's Market.
Sprouts, with sales in the $2 billion range, has sites in Dublin, San Jose, Sunnyvale and Fremont, and will open additional stores in San Jose and Walnut Creek.
This newspaper spoke to Shon Boney, Sprouts co-founder and CEO, about his grocery company and its strategy. The interview was edited for length and clarity.
Q What got you interested in the Bay Area for expansion?
A We looked at the entire Northern California market. The Bay Area and the rest of Northern California are very key for us. We always wanted to be there. We thought the concept would work well.
Q Did the economic cycle help you expand?
A When the economy slowed down, that created a bunch of real estate vacancies. We were finally able to make an entry into the market. We created a base of stores that we could grow over time. The lifestyles in California really work well for us.
Q What is it about the lifestyle that works for you?
A People across the nation focus on health and how to live a healthier lifestyle. California is one of the leaders in that lifestyle
Q How do you assess the competitive landscape in this region?
A It is very competitive. Safeway has the No.½1 market share. Our main competition are the conventional stores like Safeway. Whole Foods is secondary.
Q Where do you see yourselves in the marketplace?
A We are somewhere in the middle between Whole Foods, Trader Joe's and the conventional supermarkets. Usually our customers are more of an everyday food customer, not the health foods supermarket customer. We do everything at a discounted price. Our produce is more of what you would find at a farmer's market, but we aggressively price our produce. Our vitamins are like you would find at Whole Foods.
Q What are your expansion plans in the Bay Area?
A We have three more openings this year, in San Jose, Mountain View and Walnut Creek. In 2013, we will open numerous stores nationwide. We want to add 15 to 20 a year nationwide. The Bay Area is definitely an area of focus for us.
Q Has this wound up being a good time to expand?
A The economic problems really gave us some opportunities. We went into old Comp USA, Circuit City, Borders, PW Markets locations. We are backfilling a lot of vacant real estate.
Q How many jobs do you create with your stores?
A Each store has just under 100 employees.
Q Annie's just went public in March. Its stock is doing well. What about your IPO plans?
A People ask if we are going to go public. It is something we will consider when the time is right. At present we are focused on our large acquisition of Sunflower. We are focused on integrating the stores and getting our systems right.
Q How have the acquisitions gone?
A The integration of Sprouts is right on track. The re-branding process is going well. We will open some of the stores we got through the acquisition as Sunflower stores. Later on we will re-brand them as Sprouts.
Q How do you assess your timing for expansion?
A Healthy and organic foods are definitely a growing trend. The baby boomers are getting older. They are focused more on health and nutrition. Everybody is moving in that direction. We feel we are in the right place at the right time.
Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.
Birthplace: San Diego
Company: Sprouts Farmers Market
Residence: San Diego
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