Stealing the limelight is never easy in a channel long dominated by Whole Foods Market. Yet that’s just what Shon Boney did when his Sprouts Farmers Market announced its merger with regional rival Sunflower Farmers Markets.
It was the second acquisition in 18 months for the Phoenix-based natural food chain and more than enough to land Chief Executive Officer Boney on SN’s Power 50 list for the first time ever.
“We have quite a bit of room to grow here,” he said, describing the scope of the Sunflower deal. “That’s what’s nice about the merger. We picked up four new states that we weren’t currently operating in.”
The Sprouts/Sunflower merger creates a chain of 145 stores generating about $2 billion in sales that is the closest rival to Whole Foods. Boney, whose family has a long history in the food business — a second cousin founded The Fresh Market chain — enjoys focusing on the natural product end of retail.
“It’s always been in our blood,” he said. “I’ve literally worked every position in the stores we’ve had, from bagging to buying to managing. You name it, I’ve done it.”
The Sunflower buyout caps a busy period for Boney and his team. Sprouts was a four-state, regional operator in February 2011, when the private equity group Apollo Global Management took a majority interest in the chain. The deal combined Sprouts with two other natural food banners Apollo already owned, Henry’s Farmers Market and Sun Harvest. In a twist of irony, the Boney family found itself taking on stores they had once owned themselves: Henry’s was created by brothers Stan and Steve Boney back in 1969, and sold 30 years later to then-expanding Wild Oats.
“We almost tried once a year to put the two together ourselves after we started Sprouts in 2002, but the timing was never right,” recalled Boney. Buoyed by Apollo’s cash, Sprouts has quickly carved out an attractive niche in a combative market.
“We’re kind of a cross between a Trader Joe’s and a Whole Foods, but with a greatly enhanced produce offering,” Boney said.
Abundant fresh fruits and vegetables are the gateway that initially attracts Sprouts shoppers. Boney compares his produce displays to what’s found in a Safeway or other large conventional supermarket. The strategy is to retain shoppers by steering them over to value-priced natural and organic foods and supplements found throughout the rest of the store.
“Our big challenge is educating that customer over time to eat a little healthier, to try some of our healthier products and supplements,” he said.
The dust from the merger won’t settle long before Sprouts looks for additional growth. Boney predicts “organic” expansion in its current market.
“We’ll be building in the 15- to 20-store-per-year range. This will probably be the last significant acquisition for us for a while.”