Sprouts outlines strategy for future

[klkla]

Interesting article. They're going to build smaller stores, build distribution centers closer to stores and focus on their key demographics.

I like their stores but they're terrible at execution. They always have a lot of out-of-stocks and their customer service is terrible. They have no service culture at all.

https://www.supermarketnews.com/retail- ... and-future

[storewanderer]

Interesting article. They're going to build smaller stores, build distribution centers closer to stores and focus on their key demographics.

I like their stores but they're terrible at execution. They always have a lot of out-of-stocks and their customer service is terrible. They have no service culture at all.

https://www.supermarketnews.com/retail- ... and-future

The small store strategy is interesting and we will see how it works out. I remember the first "Sprouts" I went to (actual Sprouts) had no service departments other than a tiny little 3.99 sandwich counter and very very limited bakery/deli. It was when they got Henry's and Sunflower who ran actual service departments that they realized they had to do it too. Frankly they do a lousy job at the store level despite what seem to be good programs (Boar's Head, lots of nice sausages in service meat, etc.). A couple management teams ago was when Sprouts started to expand center store mix and start having service bakery, service deli, and service meat and they needed the larger stores to make all that work. I am getting the vibe the current management team is not impressed with the results from those areas. The only reason there are issues with Sprouts service departments is because they are not being run properly.

I really wish Sprouts had not taken out Sunflower and Henry's as both were superior operators to Sprouts.

I've gotten some really good service at the Reno Sprouts and I've gotten some terrible service. It seems like they have more than a bit of employee turnover and new employees show up and have a great attitude but that quickly changes and then they are gone. There are a handfull of employees who have been there more than about six months who have a great attitude but it is so few that they aren't even always present in the store. The past year or so the meat department has been steadily full of odd brown meat and "reduced" meat. It is so bad I do not buy meat there anymore because of it, even if it looks fresh. This is a high volume Sprouts in a good location. There is no excuse for this brown meat. The produce department is routinely out of stock on various items, especially the past few months. Bakery/deli has bad execution; the last time I bought lunchmeat there (Boar's Head) I got it home and it tasted rotten so I went and returned it. I took it up to the store director at the time (who knows if he is still there; based on how the store is, he probably is) and his response was an indifferent expression and a "go into any line for a refund" then he walked off. Complete indifference, no apology, did not even look at what the product was. I do not trust any fresh product from that store based on the brown meat and that attitude.

I go into Sprouts maybe twice a month and spend around $5 each time. Usually a portion of whatever produce I buy is no good and I end up throwing it away. This is a store I was really excited to have come into the area, but has been a major disappointment for me. I know a lot of other people who really like it, so it seems to be working for them and that is great.

[pseudo3d]

Most of the Sprouts I've visited have been around 30k square feet. Unless they dispense with service departments entirely, you can't go lower than 30k square feet before significant cuts are made in center store or the department sizes. With the exception of stores extremely large to begin with (100k+ sq. ft., Garden Ridge/At Home comes to mind), I can't think of a single retailer...much less a food retailer, that has significantly benefited from smaller stores.

[storewanderer]

Most of the Sprouts I've visited have been around 30k square feet. Unless they dispense with service departments entirely, you can't go lower than 30k square feet before significant cuts are made in center store or the department sizes. With the exception of stores extremely large to begin with (100k+ sq. ft., Garden Ridge/At Home comes to mind), I can't think of a single retailer...much less a food retailer, that has significantly benefited from smaller stores.

You can get space in a number of ways. Smaller back room. Smaller prep area for fresh departments. No space inside carts, put them all outside. Single entry door that goes straight into the store vs. a double door foyer set up. Fewer checkstands. Less space between produce fixtures. Downsize or raise the height of the bulk foods department. Go to unisex single stall restrooms vs. the current 3 stall/2 sink model they use. Their center store is already very narrow and very squeezed together, I do not think they can cut any more space there.

[Alpha8472]

They probably want to go the Trader Joe's route. Trade Joe's stores are small, but have no deli or service departments. The stores are tiny, but are very profitable. Sprouts could try to copy the Trader Joe's format, but they will have to get rid of the excessive rows of vitamins and health and beauty items. Trader Joe's does not have aisles upon aisles of vitamins and cosmetics. Those types of items are what Whole Foods is for. The space for vitamins and health and beauty is tiny compared to Sprouts.

Trader Joe's is wildly popular with its tiny stores and limited selection. They know what people like and make lots of money from the few items that they do carry. Sprouts wants be like Trader Joe's, but they will have to be come less of a full selection supermarket.

[BillyGr]

It's actually surprising how much stores can fit in when they have to. There is a blog called Market Report, that mainly covers stores around the NYC area, and quite a number of those are well below the 30,000 Sq. Ft. range (in fact, some of them wouldn't be big enough to house an average drugstore in most places).

They use all kinds of techniques, from very high shelves to narrow aisles to storage areas in a basement or attic and more to fit nearly as much as most markets would if they had twice as much room - in fact, a very common site in these stores is every case (produce, meat, etc.) stacked with paper items on top. If all stores had had a similar scale of space filled with these items, we might not have ever heard of problems with paper goods over the last couple months!

[pseudo3d]

They probably want to go the Trader Joe's route. Trade Joe's stores are small, but have no deli or service departments. The stores are tiny, but are very profitable. Sprouts could try to copy the Trader Joe's format, but they will have to get rid of the excessive rows of vitamins and health and beauty items. Trader Joe's does not have aisles upon aisles of vitamins and cosmetics. Those types of items are what Whole Foods is for. The space for vitamins and health and beauty is tiny compared to Sprouts.

Trader Joe's is wildly popular with its tiny stores and limited selection. They know what people like and make lots of money from the few items that they do carry. Sprouts wants be like Trader Joe's, but they will have to be come less of a full selection supermarket.

Trader Joe's merchandise mix is well-tailored, with fan favorites, basic essentials, and a rotating selection of new items. Sprouts just isn't, and I remember when I did live in an area with Sprouts, I went once for a few items including white bread (Trader Joe's white bread brand is pretty good, Sprouts not so much), and even the produce was disappointing (wanted kumquats, only found them in a pre-packed container that didn't look particularly good and was twice as expensive as normal).

If Sprouts wants to go smaller, they'd better re-tailor the store merchandise first, as trying to take the same things and go small will only lead to disaster.

[storewanderer]

They probably want to go the Trader Joe's route. Trade Joe's stores are small, but have no deli or service departments. The stores are tiny, but are very profitable. Sprouts could try to copy the Trader Joe's format, but they will have to get rid of the excessive rows of vitamins and health and beauty items. Trader Joe's does not have aisles upon aisles of vitamins and cosmetics. Those types of items are what Whole Foods is for. The space for vitamins and health and beauty is tiny compared to Sprouts.

Trader Joe's is wildly popular with its tiny stores and limited selection. They know what people like and make lots of money from the few items that they do carry. Sprouts wants be like Trader Joe's, but they will have to be come less of a full selection supermarket.

This is the problem with a company that has too many management changes and every management has different strategies.

The "old" Sprouts (3 management teams ago, before Henry's and Sunflower) was more like Trader Joe's with no service departments and more limited SKUs. They still had a ton more SKUs than Trader Joe's (and back then I'm not even sure they had a private label) but they had substantially fewer SKUs than they have today.

Because one of the initiatives of a previous management team was to add more SKUs including private label and that involved raising the height of shelves in center store and making aisles more narrow to add more SKUs and really Sprouts center store mix is quite nice, it is a well curated mix of both natural and specialty items. I think pricing is not good at all and suspect they are having movement problems on these items as when I go into Sprouts the center store area usually only has a few customers while the fresh areas like produce, deli, meat, bulk, and dairy may have 30 customers between them. But the center store "portion" of the basket was what was missing from the Sprouts customer basket. Observing their baskets they were having really low basket sizes because people were going in and shopping fresh departments but then not buying much or any center store there. So that was an initiative of previous management trying to improve their sales and get more share from the customers who were already coming in by offering them more center store items. I don't think it worked.

Sprouts Vitamin/HBA program is probably something some management team is going to need to make a tough decision about. The items do not sell well. The items are frequently shoplifted. Yet they are sort of a key component in Sprouts "format." It is labor intensive and subject to spoliage due to the high number of very slow moving SKUs. The items are available online at substantially cheaper prices. I would buy Vitamins at Sprouts but I can get them so much cheaper online there is just no reason. I've tried to pair Sprouts % off sales with tearpad coupons on some multivitamins I use and even after those two promotions stacked I can still do better on a variety of websites online on the vitamins, Sprouts pricing is just so so far off. Last time I ran out of something I forgot to order and tried to go buy it at Sprouts (they had it in the past) and they didn't even have it anymore, it was discontinued, so I had to go to Whole Foods or Vitamin Shoppe (same parking lot, can't remember where I bought it) instead.

I think Sprouts is stuck in an ugly middle. They do not offer much that a good conventional store does not already offer and the conventional stores are getting better and better at natural/organic with every category reset they do. They have private label items but the prices are quite high. They are lacking in a lot of things a conventional store offers. The typical Sprouts customer probably has to also go somewhere else to complete their shopping. Sprouts needs to figure out a way to keep its customers from having to go somewhere else to complete their shopping. The old Henry's chain they bought sold Coke and Oreos alongside all this nutrition stuff, maybe they need to try that. Maybe they need to display some pallets of private label bath tissue and toilet paper up front and sell them at a low price to get more share in those household categories. They need to make some changes. The problem is when that somewhere else meets the natural foods needs of the customer good enough in addition to meeting their other needs, it leaves little reason for a customer to go to Sprouts.

The main space I see for Sprouts is around poorly run conventional stores that are behind in the natural/organic category or don't know what they are doing. But even the worst conventionals are getting better and better at these categories.

[klkla]

Some of these posts are comparing the new store size to Trader Joes. TJs maxes out at around 15,000 sq. ft. but Sprouts will still be opening stores up to 25,000 sq. ft.

From the article linked in the initial post: “Going forward,” he said, “our new stores will be smaller, 21,000 to 25,000 square feet."

[storewanderer]

Some of these posts are comparing the new store size to Trader Joes. TJs maxes out at around 15,000 sq. ft. but Sprouts will still be opening stores up to 25,000 sq. ft.

From the article linked in the initial post: “Going forward,” he said, “our new stores will be smaller, 21,000 to 25,000 square feet."

I think a difference to consider here is Trader Joe's has no meat room, deli room, bakery ovens, etc. in its stores. So the Trader Joe's space is very heavily tilted toward sales floor. Sprouts space has more non-sales floor use. So really the sales floor on the stores will be quite similar in size. Until Sprouts changes its mind again.