Sprouts hopes to grow from 450 stores to about 1,400

The retailer is growing financially, as well, with an 18% increase in net sales to about $4.5 billion in the first half of the year, according to financial statements. Its net income grew from just over $209 million in the first half of 2024 to almost $314 million a year later.

Sprouts, Sinclair said, focuses on a subset of customers he calls health-conscious — they are interested in what exactly they are eating and where it came from. Sprouts is often a supplemental trip for these customers; Sinclair said they spend about 13% of their grocery budget at Sprouts alongside other retailers.

“The U.S. food market … is about $1.6 trillion; we’re focusing in on $250 billion of that number,” he said. “We’re ignoring a huge chunk of the food industry to focus in on those health enthusiast customers.”

The growth will largely depend on the development of new distribution centers.

“We’re trying to go from sea to shining sea,” Sinclair said. “But there are lots of markets where we [don’t have] distribution capacity, and it’s a little bit chicken [or the] egg. … You have to have density around your distribution center, so that will be an evolution as we work through other states in the country and try and get closer to 50 states than 24.”

Building a bigger Sprouts

The stores need to be within 250 miles of its distribution centers, Sinclair said. The company recently built new distribution centers in Colorado, Florida and Southern California, and Sinclair said there are more to come.

“When you’re focusing on a lot on fresh produce as a key driver for your stores, you have to have distribution centers as close to the stores as you possibly can,” Sinclair said, adding that fresh produce is 20% of Sprouts’s sales.

Sinclair said that as the company grows, it is key to hire the right team members who can give advice and talk to customers. He said the company is moving employees who are interested in relocating to new markets to keep its culture consistent.

“That’s one of the biggest challenges of growth for us: How do we get the right team members in front of our customers so that they’re reflecting who we want them to be and who they want to be?” Sinclair said. “The people that join us kind of believe in our purpose: help people live and eat better.”

For example, Sinclair said in its vitamin departments, employees will give guidance to customers on which supplements they should have, which natural products or pain medications they should use, or how to avoid getting sick.

“We don’t have a pharmacy; we’re one of the few grocers that just don’t have pharmacies,” Sinclair said. “We don’t want pharmacies. We want the vitamins and supplements department to help people navigate their health needs.”

Sprouts’s secret sauce

Sinclair, who was previously the chief executive at 99 Cents Only Stores, joined Sprouts as CEO in 2019. He had moved from the United Kingdom to the U.S. in 2007 to work for Walmart, where he led the company’s U.S. grocery business.

When Sinclair was at Walmart, he said he would look all around the country at different retailers. But he said Sprouts, even more than a decade ago, stood out as a unique competitor.

Sprouts has “a really interesting DNA right from the very outset of the company,” Sinclair said. He calls the stores “low-profile,” having a unique floor plan and assortment with produce in the back and meat up front, he added.

“You look and you can see all the way through,” Sinclair said, adding that the sight lines and the lighting make the stores feel more open than others. “A lot of grocery stores, all around the world, … they’re a little bit like rabbit warrens, where they’re very tall and you get kind of caught in the middle of these aisles. It’s efficient, but it’s a bit restricting.”

The stores also have a focus on vitamins and supplements as well as bulk foods such as coffee, rice, nuts and dried fruits. Additionally, Sprouts, since 2021, has been opening branded “innovation centers” within its newer store formats with a rotating selection of trending products and new-to-Sprouts brands. Sinclair said that section will have 30 or 40 new items every month.

“We want to be the place where brands are evolving and developing,” Sinclair said. “They can move on and be in all the other supermarkets two or three years later, but the reality for us is we want to be the founding ground for these new, interesting ideas.”

As the company grows, it is also investing in its loyalty program that will help it collect customer data and drive more personalization. The program launched in a few markets earlier this year and will be in all stores by the end of October, according to Sinclair. The company has been encouraged by how many customers have been signing up, he said.

“Our challenge going forward will be taking that information and taking that data from customers, and starting to be much more personal as people go through this health journey,” Sinclair said. “There’s a lot of diversity in how they think: Some people are gluten-free, some people have dairy allergies, some people are vegan, some people are vegetarian, some people want grass-fed beef. How do we take all of that information and become more personalized? How do we make it come alive for our customers in both how we promote and how we communicate?”

And despite uncertainty and consumer pressures forcing grocers to reevaluate how approach the business, Sinclair said the company remains clear about its strategy and is focused on serving its target customers the best it can.

“If you’re a vegan, you stay vegan, no matter what the price of gas is,” he said.