Monday, October 27, 2008

Retail Memo: Sprouts Farmers Market Store Number Eight Sprouts in Texas; Deep in the Heart of Whole Foods Market Country

Fast-growing, Arizona USA-based natural products retailing chain Sprouts Farmers Market opened its newest store in Whole Foods Market, Inc.'s home state of Texas on Friday (October 24) in a new 570,000 square foot shopping complex, Murphy Marketplace, in Murphy, Texas. Murphy is a suburb of Dallas.

The new Murphy Marketplace Sprouts is the natural grocer's eighth Texas store. It has additional natural markets set to open in the Lone Star State, where supernatural foods retailer Whole Foods was founded and is headquartered, in Austin. The national and international natural grocery chain currently operates 15 stores in its home state of Texas. Sprouts Farmers Market currently has stores in Arizona, California, Colorado and Texas.

The new Murphy, Texas Sprouts Farmers Market unit opened on Friday. But a big grand opening celebration by the grocer and the developer of the shopping center is planned for this Wednesday, October 29.

The $90-million Murphy Marketplace shopping and lifestyle destination center of which the new Sprouts natural market is a part is owed and was developed by Langford Property Company. The center is located at the intersection of FM 544 and Murphy Road in Murphy, which is in East Collin County. The Sprouts' store is the first natural-specialty market in the county, according to Eric Langford, president of the development company.

Langford says the joint Sprouts-Murphy Marketplace grand opening event will kick off with a ribbon-cutting ceremony at 10:30am at the Sprouts natural market. In conjunction with the ribbon-cutting ceremony, Langford says the center will dedicate a special clock tower, which was donated for the shopping center by the area Chamber of Commerce. The tower cost $10,000 and adds a historic flair to the lifestyle shopping center, Langford says.

The new Sprouts' store will hold all sorts of grand opening activities on Wednesday, including food tastings, special promotions and events tied-in with the clock tower dedication ceremony.

Like its other natural products markets, the new Murphy Marketplace Sprouts Farmers Market store specializes in farm fresh produce, purchased from local growers when possible. Sprouts also offers a large selection of vitamins and supplements, all natural meats, fresh seafood, bins full of bulk foods, an extensive selection of natural, organic and specialty grocery items, imported cheeses, deli meats, prepared foods and more.

Sprouts Farmers Market stores average about 15,000 square feet.

The Sprouts' natural market is the retail food anchor of the new Murphy Marketplace center which covers about 76 acres. Among the center's other retail tenants include: a Lowe's big box home improvement store, 24-Hour Fitness, Wachovia Bank, Saxby's, Massage Envy, Monarch Dental, Red Brick Pizza, Smoothie Factory, Planet Tan, Mattress Giant, Azura Nail Spa, Firehouse Subs, Cristina's Fine Mexican Restaurant, T-Mobile, Whataburger and more, according to the developer.

Being the only natural-specialty grocer in the county gives Sprouts a competitive advantage in this fast-growing and changing part of Texas. In fact, Sprouts has been locating a number of its Texas stores in regions in the state where no natural-specialty markets exist but where the emerging demographics and growth patterns offer good current and near term opportunity.

For example, According to the City of Murphy, the median household income for the city is $111,000-plus. Nearly 90 percent of the city's residents are college-educated. College-education is one of the key demographic variables that correlates to prime natural foods consumers. In fact, education-level is the top criteria Whole Foods Market uses in terms of locating one of its stores in a city or neighborhood.

Murphy's population has more than quadrupled since 2000, from 3,000 residents to more than 14,000 in early 2006. East Collin County, where the city is located, also is one of the fastest-growing counties in Texas. The new shopping center is regional in its scope, so the Sprouts' natural market is expected to draw from a much larger population base than just Murphy's 14,000 residents.

According to research conducted by the city, county and the developer of the new shopping center, FM 544 (the highway where the center is located) supports traffic of nearly 40,000 vehicles per day. In other words, at least 40,000 vehicles drive past the Murphy Marketplace daily.

The city of Murphy was established in the late 1800s during the time the railroad was extended into the area. It quickly became a shipping hub for the local farming and ranching families. As it did for other Texas towns, the railroad gave Murphy residents the opportunity to import building materials that were not locally available. Bricks that were mass-produced in Bedfordshire, United Kingdom and slates from North Wales were incorporated into the construction of new buildings.

Along with these new materials came the "Victorian" architectural style. The Victorians invented a way to make big panes of glass, called "sheet glass." So Victorian houses had bigger windows. Victorians also loved to decorate their houses by embellishing these large windows and by adding bay windows, iron railings, Flemish bonding and other decorative brickwork patterns. Early Murphy residents were quick to adopt this affluent style into their new homes.

Murphy Marketplace has blended many of these local design elements into the architectural design of the retail center. The center's -- and the new Sprouts natural market's -- design features include the use of soft earth tone colors, simple building lines, colorful canopies, decorative lighting and extensive landscaping in keeping with the community's design theme. Walking paths, shade trees, water features and gathering areas also provide a place to stroll, play and visit with friends, creating a strong sense of place in the center.

Memo to FTC: Whole Foods' Hegemony is baloney

In this October 21 piece, "Retail Memo: Natural Grocers Joining Sunflower Farmers Market in Opening First Stores in Whole Foods Market's Home City of Austin, Texas USA," we wrote about how two other fast-growing natural foods retail chains, Sunflower Farmers Market and Natural Grocers, are joining Sprouts Farmers Market in opening stores deep in the heart of Whole Foods Market, Inc. country -- Texas.

That Sprouts already has opened and currently operates eight natural foods markets in Whole Foods' home headquarters state, with more new stores on the way -- a new Sprouts store is planned to open in McKinney Texas in the summer of 2009 and another in Coppell, Texas in late 2009, for example -- demonstrates the marketplace (and Sprouts) disagrees with the argument by the U.S. Federal Trade Commission (FTC) that Whole Foods Market, Inc. has a monopolistic or hegemonic position in the natural and organic products retailing space as a result of its merger with Wild Oats last year.

Do smaller competitors really open stores in an aggressive manner in the home state of a retailer that has a monopoly in the natural and organic products retailing segment? Of course not. They do so because they see a niche and an opportunity to compete, which means competition exists.

Add to Sprouts the fact Sunflower and Natural Grocers are both opening stores in Texas and the FTC's argument becomes even more silly.

Further add the significant competition in Texas from supermarket chains like H-E-B and United Supermarkets' Market Street banner, Safeway-owned Randall's, Costco, Wal-Mart and a few others in the state (all retailers deep into the natural and organic foods categories) and the FTC's argument looks like pure folly.

And Texas is far from an isolated example. It's the same all over the U.S. Whole Foods Market is faced with stiff (and getting stiffer) natural and organic category competition from regional natural foods chains like Sprouts, Sunflower, Natural Grocers and others, including independents and Co-operatives in some places, and national and regional supermarket chains (and local independent grocers), as we wrote about in this October 19 piece focusing on the Colorado market.

Also toss in the national mass merchandisers and club chains: Wal-Mart; Target; Costco; BJ's Wholesale; and Wal-Mart's Sam's Club. All are deep in the natural and organic products categories -- and getting deeper. Then there is Trader Joe's. And we are just getting started. Tip of the iceberg stuff. There is no lack of category competition at retail for Whole Foods Market.

This competitive fact is true in California, Oregon and Washington State, the Midwest, the South, and the eastern U.S. In all U.S. regions natural foods retailers and supermarkets -- national, regional and independent -- all are challenging Whole Foods in the natural and organic products retailing segment in various ways. We can't find one region in the U.S. where a person with real knowledge of natural products retailing could say Whole Foods has a real monopolistic position. Rather, the supernatural retailer is actually fighting for its life nationally.

Despite this market reality, the FTC plans to hold a new hearing in February, 2009 to discuss what it says is Whole Foods Market, Inc.'s monopolistic position in the natural and organic category retailing segment. This despite the fact every shred of empirical evidence shows it isn't the case. We even wonder how many of the current members of the FTC will be around in 2009 when a new President has taken office following next week's election?

Perhaps it's time to have a Boston Tea Party in front of the FTC offices in Washington, DC as a symbol of how this government agency continues to waste resources and U.S. taxpayer money in its non-marketplace reality-based pursuit of a natural and organic products category retailing monopoly that doesn't exist. We suggest organic tea of course.

There are real monopolies out there after all. Whole Foods Market, Inc. just isn't one of them.

[Editor's note: Natural~Specialty Foods Memo owns no stock in Whole Foods Market, Inc. Nor does it have any sort of business or professional relationship with the company.]

1 comment:

Diane said...

I shop at your Murphy, Texas store today and was disappointed. Purchased cheese curds which was not fresh, hot cross buns which were also not fresh and hard. Found the quality of your strawberries to be poor as well as the blackberries.

Founds your prices to be excessively high in comparison to Central Market or Whole Foods.