CEO: Merger Creates Bigger and Better Natural Foods Chain
Sprouts Farmers Market and Sunflower Farmers Market have announced the merger deal between the two companies has closed, creating a new natural foods chain with 144 stores and $2 billion in revenue. Moving ahead, the company will transition all stores to the Sprouts banner. The company’s headquarters will be located at Sprouts current office in Phoenix.
"In joining forces, we will create a company that is not only bigger, but better, and continue to provide our signature shopping experience with a strong commitment to value and natural products," said Shon Boney, CEO of Sprouts, in a statement. "The customers and employees of both stores have a lot to look forward to as we launch this great adventure."
Sprouts plans to begin remodeling current Sunflower locations in July with conversions to be completed by the end of the year. The chain expects to have 150 stores operating by that time in Arizona, California, Colorado, Nevada, New Mexico, Oklahoma, Texas and Utah.
Discussion Questions
Discussion Questions: What will this merger mean for the new, larger Sprouts Farmers Market and its competitors? Do you see opportunities for the chain to grow beyond its current eight state footprint, perhaps even going national at some point?
This is happening right in my backyard. I have shopped both Sprouts and Sunflower in Tucson and overall I prefer either to Whole Foods, which also does business here.
Since our two local Sunflowers are a bit older, I welcome the news of a spruce-up. The two formats are fairly similar — even down to the arrangement of major departments like bulk foods and supplements.
I believe the Sprouts/Sunflower entity can go toe-to-toe with Whole Foods in its present markets. They are certainly price competitive. Combined they represent an alternative channel for organic farmers in the region, including some south of the border in Mexico.
As for national aspirations — well, I’m skeptical. Sunflower founder Mike Gilliland was a founder of Wild Oats. Stan Boney and Jim Nielsen of Sprouts founded Henry’s Markets, which was sold to Wild Oats. Wild Oats was acquired by Whole Foods in 2007. Call me a cynic, but I suspect all these guys have “rollup” on their minds, not national expansion.
Jamie, you may be right about the end strategy, but these excellent operators are on an upward path. Some call them the “poor man’s Whole Foods” (or “Half Paycheck,” a tongue-in-cheek reference to the big competitor. It’s a good niche and should serve them well.
Great move and consolidation. This means more growth opportunities to grow in more states and bring their successful model to more people. This is clearly the first step of many to go national.
I visited their stores in Phoenix and was not impressed. Boring plus boring equals boring. In my opinion, their best days are over. That’s why they merged. It will make them stronger and take them longer to fall apart.
I think there is a strong niche for this format with that customer who primarily does their major dry goods shopping at a Walmart Supercenter, Target, or Costco. These stores with nice large produce areas and perceived “healthier” perishables are a great fill in. Plus the customer doesn’t have to navigate through aisles and aisles of dry goods that they are not interested in as they do at a conventional.
With that said, based on my experiences with the three chains (Henry’s, Sprouts, and Sunflower), Sprouts was my least favorite. Why? Produce quality was not consistent. Customer service has been, in multiple locations, poor. Pricing seems to be more of a high-low price scheme than Henry’s, or maybe Henry’s was just more promotional (perhaps an old Wild Oats holdover). I had really good experiences with Henry’s on a quality, service, and price perspective, even when Smart and Final owned it. My limited experiences with Sunflower ranged from just okay to great. Sunflower was a bit uneven across markets; I’ve visited them in Oklahoma, Colorado, New Mexico, and California and there are some definite quality differences.
We will see what will happen. I think the format has good potential though. But if Sprouts runs them the way they ran their original stuff, maybe not so much.
I am curious none of them have tried the Pacific Northwest.