Sprouts Farmers Market met its goal of opening 30 new stores in 2023 and has no intention of losing its momentum going into the new year — or even the year after that.
As Sprouts rapidly opened stores this year, it also entered less familiar markets and relied entirely on its newer small store format that it first detailed in 2020 — all of which are part of its revamped expansion plan.
The specialty grocer debuted its revised growth strategy four years ago to zero in on two of its target customers: health enthusiasts and selective shoppers, Sprouts Chief Strategy Officer David McGlinchey said in an interview. From there, Sprouts devised a real estate strategy to open stores in areas that are home to those target consumers and located within 250 miles of an operating or planned distribution center.
“It’s kind of led [us] to densify in the existing markets,” he noted. “We have a lot of stores in California and Arizona, Colorado, Texas, etc.”
California takes the cake with nearly 140 Sprouts locations and more slated for early 2024, which the grocer has already begun promoting on its website. Arizona, the grocer’s home state, is nearing 50 locations after opening two this year.
Sprouts does not intend to grow exclusively in these western U.S. markets, however.
In 2022, Florida was the only East Coast state Sprouts expanded further into. Its six stores that year marked the most openings of any state in its expansion plan.
Sprouts put even more emphasis on the East Coast this year, opening a dozen new locations across Florida, New Jersey, North Carolina and Virginia.
Sprouts Farmers Market adds 12 stores on the East Coast
“We have a lot of white space across the country where we can build stores,” McGlinchey said, stating Sprouts will continue to push into East Coast markets like it did during 2023.
Here’s a look at where Sprouts grew this past year and where it intends to focus in the coming years.
Rolling into the Sunshine State
As Sprouts expanded along the East Coast this year, it showed a particular interest in Florida.
Not only did the state gain nine new stores in 2023, but it was also visited by the Sprouts Mobile Truck, which brought staple products as well as music, activities and giveaways to over 50 stops during a 12-week tour.
A growing Florida footprint
The specialty grocer is not alone in setting its sights on Florida, as the region has been a hot spot for grocery growth. From proposed mergers between Aldi and Winn-Dixie as well as Kroger and Albertsons, to Publix’s continued dominance over the state, Florida’s grocery landscape is full of competitive chains and tantalizing storylines.
But Sprouts isn’t worried: “Our CEO always says we really don’t have competition [in Florida], and for the most part, that’s pretty true,” McGlinchey said.
“I think when people want fresh food and they want to eat certain lifestyles, they’re going to come to us and then they’re going to go to other places [like Kroger and Publix] to get all their commodity items that fulfill their full shop,” he added.
Six years ago, Sprouts was nonexistent in Florida, McGlinchey said. But now the state is one of Sprouts’ most populated, nearing even Arizona’s store count, with a distribution center in Orlando, Florida, leaving room for further growth.
The Sunshine State also has a blend of young and older populations that Sprouts’ assortment appeals to, McGlinchey added.
‘From California to the New York Island’
When modifying its expansion strategy a few years back, Sprouts established a 10% growth path and, aside from setbacks due to the COVID pandemic, the specialty grocer plans to continue on that trajectory in upcoming years, McGlinchey said.
Sprouts aims to open 35 new stores in both new and established markets throughout 2024, and anticipates surpassing this goal, McGlinchey said.
While introducing new stores on the West Coast requires little more than planting sites and opening doors, East Coast expansion is a bit more of a lift, McGlinchey noted.
“We’ve got to work real hard in places like Florida or New Jersey where we’re just starting to build stores and people don’t know the brand very well,” McGlinchey said.
The specialty grocer continues to put effort towards educating customers on what Sprouts is and what it offers — like sending a mobile truck on a tour through Florida, McGlinchey added.
Sprouts Farmers Market’s U.S. footprint
In addition to finding markets with its target consumers, Sprouts also seeks out regions that are conducive to its 20,000 to 25,000-square-foot small store format, which the grocer is focusing on exclusively as it expands.
“There’s almost 100 stores in the pipeline. All 100 of those stores will be the new format,” according to McGlinchey.
Sprouts can move into existing retail spaces as well as build new locations, McGlinchey said, adding that it’s easier to build a new store, but not as beneficial timewise.
“Unlike the Northeast, there’s a lot of new builds in Florida because there’s just a lot of dirt where people are starting to develop,” he said, further showing Sprouts’ room to grow in the state.
In preparation for entering new markets further east, Sprouts is readying new distribution centers. The grocer recently closed its Atlanta facility, but plans to open a mid-Atlantic center and will begin scouting cities in the Southeast to look for another distribution center location, McGlinchey said.
In the next few years, as the grocer continues to build new locations, McGlinchey noted the Northeast as well as the Midwest are markets Sprouts has already set its sights on.
News Graphics Developer Jasmine Ye Han contributed reporting to this story.