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Fresh Market CEO Sees Room for Specialty Grocery Growth

Written by Tom Ryan

With Whole Foods, The Fresh Market, Natural Grocers and others touting aggressive expansion plans, specialty grocers are increasingly encroaching on each other's territories. But Craig Carlock, Fresh Market's president and CEO, believes the opportunity for the leading specialty formats remains to gain share against conventional supermarkets rather than each other.

At the Goldman Sachs 2012 Global Retailing Conference in early September, Mr. Carlock spelled out three reasons shoppers come to Fresh Market's stores: food quality with its focus on "health, fresh, local, regional," superior customer service and its "neighbor grocery atmosphere."

A particular difference between conventional grocers and Fresh Market is its focus on higher margin perishable categories versus "aisle after aisle of low margin commodity staple items." He added that where Fresh Market overlaps conventional food retailers in staple categories such as milk, flour or sugar, "We want to price very, very competitively. Where we have better products in the perishable food categories, we want to price commensurate with the quality that we're providing."

Mr. Carlock was later asked about the chain's differences versus other specialty grocers, particularly in light of Fresh Market's plans to soon open its first locations in California, a state that already has many premium grocers. He answered, "I think there are a number of specialty competitors and I think each one of us is distinct."

Noting that his chain often gets compared to Whole Foods, he admitted that many customers will likely shop both stores, but contends each has its differences. Whole Foods are more likely to get the customer into the "organic and natural lifestyle" given the chain's strong commitment to those areas. Said Mr. Carlock, "We're going to get folks who have committed to great tasting food. Our store is a little smaller; it's easier to get in and get out. We're going to emphasize perishables."

With its focus on perishables, Fresh Market "almost complements" Trader Joe's focus on non-perishables and Fresh Market would consider opening up right next to them if the opportunity arises.

Regarding Sprouts Farmers Market, Mr. Carlock noted that they target "a different price point" that tends to be lower and also emphasizes produce more than Fresh Market.

Mr. Carlock concluded, "So while the specialty marketplace seems to be getting more competitive, I would say two things: there are distinctions amongst the specialty competitors and I would say that probably all of those feel like we're share takers under the conventional food retailers rather than share givers. So we feel like there is ample room."

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