Chad Miller, Vice President, Produce Procurement, Sprouts Farmers Markets, shared the philosophy behind Sprouts, his own career and thoughts about organics during the OPS Retail Roundtable.
Chad: I am the Vice President of Produce Procurement at Sprouts Farmers Market. We are celebrating our 15th year, this year, of existence. I’ve been with company since 2004 but worked for the original founders under the Boney’s and Henry’s brands in San Diego since 1997, so 20 years. I’ve seen a lot of change and a lot of growth within the industry. Our business five years ago was a very small scale of organics, and today we have about 35% penetration with over 200 SKU's with the consumer demand looking for more each and every day. We operate 277 stores across 15 states. We actually opened three new stores yesterday, so rapid growth. We self-procure and distribute all our own produce throughout four distribution centers across the country. We have 14 produce buyers that work for us regionally and do a tremendous job at finding these products for us. They’re excited to continue to develop new relationships with yourselves and grow that business to meet the demand of the consumer.
OPN Connect: What has been a home run or biggest success for your stores in organics and what product(s) have not worked and why do you think this is so?
Chad: We were like everyone else, we started with baby carrots and bananas because they were the easiest things to procure and the things that had supply and so we focused on these items for three years, then we realized that wasn’t enough. We built our initial success off our salad business with some of our core grower partners and our wet veg business then we started to entrench ourselves around that. We’ve had tremendous success with anything in the juicing category, it’s been a phenomenon. We’ve seen the cooking greens and beets have been incredible and we continue to see that path grow. The biggest opportunity as a grower is land diversification and that’s been our biggest struggle is supply. In most cases, demand exceeds supply. We don’t know as retailers when we can see that end. So, land diversification would be a big piece for us to ensure supply to account for that growing demand. The other one is probably the fruit category. There just aren’t enough organic farmers expanding the fruit category. I would like to see the berry and citrus segments mirror conventional product in availability.
OPN Connect: There are so many labels today in the “good food” space – natural, local, sustainable, and regenerative. As you all know, only one – USDA Certified Organic – is federally regulated with enforceable standards. Does that matter? And if it does, how can we better help your shoppers understand the depth of integrity of the certified organic seal?
Chad: I think it’s an interesting question, when you look across the country, every market we operate in has a different approach. If you take Colorado for example, local supersedes organic when available and they’re really into their local product. In California, we see more organic consumption drive our focus than local itself. The USDA seal has given tremendous value for us because when that consumer comes in looking for Non-GMO Verified products, we can point them in that direction. We teach our stores, we do a lot of training of our employees to direct of consumers that way. We do a lot of social media, we have published statements on our website that we direct people to. We work with growers to try and ensure they understand the importance of that seal and we have had a few folks that we discontinued business, then help them move forward over the next 6-12 months with that seal so that we can bring them back in, so we can ensure that our customers have the best quality.
OPN Connect: How is e-commerce part of your marketing plans – now and what do you see in the future?
Chad: Obviously a few things have transpired as of late. We currently have a Prime delivery program with one of those companies that are involved, it’s an interesting dynamic of how that changes. We are seeing tremendous growth in e-commerce. Honestly, we look at it more from a grocery perspective, almost all nonperishable, although milk, yogurt, and eggs are growing in e-commerce. When it comes to produce, I still think there is validity that the consumer wants to come in and actually see and touch their own produce and choose what they want. I think there’s been a lot of e-commerce happening and there’s been a lot of tired product, as Dave eluded to, and the early days of what organic meant to our stores delivered to those homes. So, I think the consumer is really wanting to come in and pick what they want off of the stand.
OPN Connect: So here you are with the opportunity to share your thoughts in front of the top organic produce brands in the country, what is something you want to say or share with this audience? What are we getting right? What are we missing?
Chad: Like I said before, diversification and conversion of more land. We need more supply because this isn’t a fad, it’s growing. If we looked at organics with our business 10 years ago, we may have thought it was a fad, but it’s real. The consumers are changing their habit very day, they want healthier food options and as that supply goes up, the price will come down which makes it more economical which, in turn, will create more consumers purchasing of organics.