Sprouts Farmers Market’s two-prong strategy to stock innovative products from startups and private label items with trendy callouts, like no seed oils and high protein, is paying off for the retailer, which plans to double down on attribute-based options going forward.
The company’s sales increased 17% in the second quarter, driven in part to its “strength in identifying trendy offerings, providing fresh and quality food and launching innovative products rich in health driven attributes,” CEO Jack Sinclair told investors last night during the company’s second quarter earnings call.
“Innovation is a cornerstone of our strategy, and our consistent launch of new products keeps our selection fresh and exciting,” he added.
Sprouts courts startups to drive foot traffic
He explained the company’s branded “innovation centers,” which it introduced in stores that opened in 2021 and 2022, have become a destination for shoppers interested in treasure-hunting and exploring a rotating selection of trending products from emerging brands.
He added the sales from innovation center items continues to grow and baskets that contain innovative items often are twice as big as the overall company basket.
Wanted: More enterprising startups
“Our energy is all about how do we bring new innovative entrepreneur driven products into the marketplace,” Sinclair said.
The answer is by sending out a fleet of foragers to conferences and events “around the world,” and by “creating a reputation with the young entrepreneurial people that we are bringing new products to the marketplace, and we’re hoping they are coming to us first,” he said.
He added “tens of thousands” of entrepreneurs apply to the company’s portal every year, and the company is exploring “how do we bring more of them in.”
Protein and no-seed-oils claims emerges as ‘competitive dynamic’
At the same time, Sprouts Farmers Market is focused on filling out a selection of private label offerings that are differentiated with trendy attributes, Sinclair said.
“The Sprouts brand continues to excel with plans to release over 350 new products this year alone,” he said.
The majority of these focus on the categories and attributes that matter to Sprouts’ consumers, with strong growth around claims for no seed oils and high protein.
“Protein is going to be a really important part” of the company’s selection going forward, he added.
He explained: “If you go around some of the shows and the exhibitions, protein is one of the biggest and most clear driver of attributes and change in diets as people push that. We’re very well placed in the number of protein products that we’ve got in our business and we continue to expand it and we’re excited about it and we’ll be talking a lot more about it going forward.”
The company currently offers more than 3,700 high-protein products with 450 new items set to be released this year, Sinclair added.
To support these launches, the retailer will increase in-store signage and talk more externally about why people should come to its stores for protein, he said, adding: “It is going to be a competitive dynamic going forward.”
