What It’s Like Running Grocery Stores During Coronavirus
(Bloomberg) -- After taking the reins of Sprouts Farmers Market Inc. last year, Jack Sinclair set out a clear vision for how to revive a grocery chain that had seen growth stall.
The chief executive officer, who previously ran Walmart’s U.S. grocery division, wanted to add distribution centers and push into lucrative markets in Florida and California. Then coronavirus hit in March and everything changed in a few weeks.
Panic buying ensued. Social distancing measures came to stores with masks and plexiglass barriers. Next came worries about meat shortages. All while the masses cooked from home like never before and turned toward healthier fare as the pandemic’s death toll mounted.
Sinclair says Sprouts, which has 344 stores across 23 states, is well suited for the shift toward healthier lifestyles. Stores are loaded with organic produce. There’s a butcher and a fish monger. They also have aisles of vitamins and health supplements. The chain is often compared to Whole Foods, a unit of Amazon.com Inc.
In the first quarter, sales rose 16% to $1.6 billion, Sprouts’ best growth since 2015. That’s left Sinclair, a Scotsman whose other retail stops include 99 Cents Only Stores and Safeway in the U.K., trying to adapt and leverage the moment. For starters, the company plans to add 20 stores this year.
There’s been a lot of headlines about masks. What are you seeing?
In Los Angeles, for example, all customers have got to wear masks when they come into the store, and that's created some behavior issues in communities we serve.
Some people clearly don't like wearing masks.
What happens to all this PPE, plexiglass barriers and deep cleaning in the future?
I am fairly convinced that the safety procedures are here to stay. They are a good thing for the industry going forward. The scope of where we clean and how often we clean has dramatically ramped up.
Masks are a really interesting one in terms of how society is going to view that going forward. It’s clear some of our customers don't like wearing masks when they come in to store, but certainly it’s here for some time to come.
There is a lot of speculation about how the virus will alter grocery shopping. What have you’ve witnessed?
We are seeing very significant shifts towards organic.
Exactly the same trend in grass-fed beef, specialist chicken.
There’s also the shift to online grocery shopping. What has Sprouts seen?
The overall e-commerce trend has grown significantly. We had to recruit a lot of people, alongside Instacart hiring people. But the demand kind of reached a peak and is flattening off now. We are seeing a little bit of an uptick in pickup because of these newer stores we have added offering curbside pickup.
It’s fairly small at this stage. Our April business in terms of e-commerce was 13% of sales.
So what does the U.S. reopening look like so far?
I have been surprised at the pace of consumer change not moving that fast in places like Georgia and Texas. What we are watching for is a return to normal. Transactions are going down, but the baskets are going up dramatically, so we are ending up with very strong comp sales.
Saturdays and Sundays are a little bit weaker than they were.
The lockdown has been a boon for grocery stores. What has that meant for Sprouts?
Building a lot of stores over the last couple of years, some stores took a bit of time to get moving. People are coming in now to those stores. And because almost everyone is out of stock, we are getting customers discover us for the first time.
Customers are saying: "Wow, I didn't know you were here."
But won’t they just go back to Kroger or Walmart whenever the virus fades?
Why will they keep spending more with us?
I think there's a fundamental trend which has been accelerated by customers—sensitivity to what you eat. There's a tailwind behind that. More people are going to be interested in that going forward. If you look around our shelves, we sell things which nobody else sells.
Editor’s note: This interview has been edited and condensed.
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