“We were just kids back then,” Easler says. “We were having fun and realized we could make some money doing it. The challenge was to be able to take that to the next level.”
Little did the high school pair know then that the path to success would lead them straight from Southern California to metropolitan Phoenix to start Sprouts Farmers Market, an expansion-minded, 18-unit retailer that specializes in farm-fresh produce and organic foods.
Sprouts, which operates in three Western states with its headquarters in Phoenix, is in the midst of an aggressive expansion that will see stores in its existing markets grow to 52 outlets by 2011. The chain now has stores in the Phoenix area and Tucson, Dallas-Fort Worth and Southern California.
Projections call for Sprouts to grow to an estimated $700 million in annual sales in the next four years. Currently, these revenues are about $200 million.
“We like to cluster stores,” says Easler, a Sprouts board member. ”We don’t like a single-store model in one city. We like to go into major cities and build a hub, manage it and grow it. That’s going to continue to be our style.”
In addition to the new stores, plans call for the chain to build warehouses in Texas and California to handle the growth spurt. Sprouts now serves its three-state region with a 50,000-square-foot distribution facility in Glendale.
Easler says employee numbers will increase to 5,000 by the end of the expansion, a dramatic increase from the 1,500 workers now on the job. A major hiring push is now under way.
The expansion will be funded from internal cash flows as well as limited bank loans, he said. The company also just completed a third round of undisclosed financing from private sources.
“We don’t really care about the competition,” Easler says. “We plan to put in as many stores as we can, wherever the deals are good and keep growing.”
That could include a foray into another as-yet-undetermined state by as early as 2008, says Boney, the company’s chief executive and president. An outside industry consultant currently is examining possible expansion sites nationwide.
“We’re looking to expand on our success and see if we can ramp it up a bit,” Boney says. “We’ll see what our best options are and then see where we go from there.”
For now, Easler says the company plans to fill in with a few stores in Arizona, grow as fast it can in the Dallas-Fort Worth vicinity and “grow like a weed” in Southern California. It also wants to stretch into Northern California as part of the expansion.
The company has been on the fast track ever since its debut here in 2002, fresh from California where Easler and Boney worked for Wild Oats Markets. Wild Oats had bought Henry’s Marketplace from Shon Boney’s family. A third executive, Scott Wing, also came to Arizona to help start the business.
Using fresh produce as the draw, Sprouts saw promise in grabbing a share of the vast organic market despite the state’s reputation for being highly competitive. Latest estimates by the Organic Trade Association indicate that this industry sector has skyrocketed to $15 billion annually and has been growing at a 20 percent rate for the last five years.
Not only are natural food stores like Whole Food Markets and Wild Oats competitors, but so are typical supermarkets like Fry’s Food Stores and retailing giants like Wal-Mart.
“We use produce as our calling card—that’s how we get people in the door,” says Easler, who estimates that produce accounts for as much as one-third of the company’s sales. “Everybody eats produce and if you do a great job with produce, people will drive for it. They will make an extra stop for good produce at a great value.”
The typical customer stepping through the doors is a 35-year-old female, with an average or above average household income and slightly higher education level. There are the empty nesters, young professionals and elderly people looking to eat healthier.
A typical store spans 25,000 to 35,000 square feet, packed with produce, healthy foods, all-natural meats, bulk items and a large array of vitamins and supplements. There is no Coke or Pepsi to be found in the aisles of these stores. That’s just not what Sprouts is all about.
Company officials say they prefer build-to-suit spaces because it is easier and less costly to open. An average store approximately costs $2.5 million and takes four months to open. Easler says Sprouts has no plans at this time to acquire any companies to help fuel its growth.
Neil Stern, retail analyst and senior partner at McMillan-Doolittle Consulting in Chicago, says there appears to be more than enough room in an industry that is on the move these days and poised for more in the next several years.
“It is an industry right now and one that is going to be able to sustain multiple competitors within the niche,” Stern says. “There’s a big opportunity out there for someone.”

www.sprouts.com