Sprouts' partnership with Amazon Prime Now could expand to half the store network, predicts CEO

Sprouts expands partnership with Amazon Prime Now

The partnership with Amazon Prime Now could ultimately expand to almost half of the Sprouts store network, predicts the Phoenix-based retailer, which posted a 1.4% rise in same store sales in the latest quarter while rival Whole Foods Market has continued to see its comps decline. 

In a call with analysts after posting a 15% rise in sales to $1.2bn and a 10% rise in net income to $41m in the second quarter, CEO Amin Maredia said: “We will be delivering Sprouts products through the Prime Now serviceto over 20 locations across many of our major markets by year-end…

"We think that that number could be somewhere in the one-third to 40% range maybe to half of the stores, but the key point there is it helps us extend our trade area.”

Asked whether the growth of ecommerce meant Sprouts would ultimately open fewer stores than originally anticipated, he said: “Over a five, 10-year period we'll certainly be smarter about placement of stores, but at this stage, we don't think that we would have a smaller network of stores than the 1,200-plus stores that we always thought of sitting here today.”

As to how many Sprouts stores the market can sustain in future, he said: “Our view has just become that number just keeps going up over time. And I think the key there is we're operating as a convenient, healthy grocery store and it's a fuller shop…

“The leverage that we see in our mature markets when we open more stores has been incredible.”

Sprouts… a destination store for deli, meat and seafood?

As for addressing growing demand for grab & go prepared foods, he said that the enhanced deli program “is now in more than 120 stores and is driving more lunch-time and dinner-time traffic… I'm very pleased with our fresh team's progress in this department.

Data is showing that more and more customers are viewing Sprouts Deli as well as the Sprouts meat and seafood department as their primary destination for these items.”

Sprouts Farmers Market, which started in Arizona in 2002 and now operates 279 stores (the bulk are in Colorado, Texas, Arizona and California), has a mantra of 'helping customers live a healthy lifestyle at an affordable prices.’

*Under the tie up, Amazon Prime members get free two-hour delivery on groceries from Sprouts Farmers Market using Amazon Prime Now (the minimum order is $20).

“Sprouts’ accelerating comp sales and strong top-line growth during this competitive grocery environment demonstrates the power of our brand.” Amin Maredia, CEO, Sprouts Farmers Markets

Sprouts stores - which are generally between 28,000-30,000 sqft - use a ‘flipped’ conventional food retail store model, positioning produce at the center of the store, surrounded by groceries. Typically around 15% of the square footage is dedicated to produce, while the stores are designed with open floor plans and low displays, enabling customers to view the entire store. 

Asked how the price war between Walmart and Lidl on the east coast might impact Sprouts, CFO Brad Lukow said: “We've all certainly seen the headlines of Lidl and Walmart in certain pockets of the country, and that doesn't really impact Sprouts. That's a discounter model that historically has not been our shopper.”

Related News

Sprouts now has more than 2,100 items in its private label range

Private label is a growth engine at Sprouts, says CEO

Sprouts enhances private label deli offer

Sprouts enhances private label, deli offer: 'We want to be a ready-to-eat destination'

Online beverages sales have been increasing according to Amazon's Q1 2017 financial report. ©iStock/jahcottontail143

Amazon acquisition of Whole Foods adds 'locally relevant face to the Amazon machine'

Photo: iStock/RazoomGames

What Amazon’s meal kit service means to category’s future and competition with grocery retailers

Bernstein on impact of Amazon Whole Foods deal on private label

Bernstein: ‘By acquiring Whole Foods, the 365 brand becomes instantly available as part of Amazon’s online offering’

Picture: istockphoto-jahcottontail143

Amazon's US grocery sales surged 50% to $420m in Q2; perishables up 110%

Amazon ‘does not solve all of Whole Foods' woes,’ analyst

Amazon ‘does not solve all of Whole Foods' woes,’ analyst

Amazon/Whole Foods merger could push more shoppers to ecommerce

Amazon’s acquisition of Whole Foods Market could help push more shoppers to ecommerce


GNC CEO: ‘Amazon is not a death knell for brick-and-mortars, but a great advertising platform’

Photo: Whole Foods Market

'Amazon has moved squarely onto the turf of traditional supermarkets and poses a much more significant threat,’ says analyst as ecommerce giant pays $13.7bn for Whole Foods

FOOD VISION USA: What does the Amazon/Whole Foods deal mean

FOOD VISION USA 2017: What does the Amazon/Whole Foods deal mean for everyone else?

Supermarket guru Phil Lempert on what's next for grocerants

The future of grocerants? Deliveries, humanoids and a good dose of life-hacking, says supermarket guru

Green Chef on meal kits, organics and the Amazon Whole Foods deal

Green Chef CEO: ‘The Amazon Whole Foods deal has absolutely rattled food retailing and CPG markets’

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.