Sprouts Promises Lower Prices; Sourdough Already $4

PHOENIX—Sprouts Farmers Market told investors Wednesday that its recent performance "is not where it needs to be," then said it will roll out a new pricing strategy nationally in January. The organic sourdough, at $4, said it had been ready since spring.

According to Grocery Dive, Sprouts' third-quarter net sales rose 5% to $2.3 billion on new stores, while comparable-store sales fell 0.9%, the third straight negative quarter. The company now expects full-year comparable sales to fall about 1.7%. It opened a record 15 stores in the quarter, and online sales grew 12%.

Incoming CEO Nick Konat, now president and chief operating officer, said the plan adds more affordable entry points and lower prices on high-frequency items. "This is not a shift to broad-based discounting," he said. He also said, "Sprouts must evolve faster."

This is not a shift to broad-based discounting…

What Shoppers Mean By An Affordable Entry PointShare of fictional shoppers, by interpretation, asked at the front of the store

What Shoppers Mean By An Affordable Entry Point
A pile of something good by the door	41%
The $4 sourdough	27%
A smaller basket	16%
The bulk bins, emotionally	10%
The actual entrance	6%

Source: The Daily SKU Retail Desk; 700 fictional shoppers, one front table in Tempe

I managed a supermarket for a long time, and I can tell you what an affordable entry point looks like on the floor (produce, front table, just inside the doors). It is a pile of something good at a price that makes a person slow down. It is the oldest trick in the store, hon, and it still works.

"I have been key since 1998," said a fictional bulk bin of raw almonds at a Sprouts in Tempe, when asked whether it expected to be one of the key value items. "Nobody has ever told me my value."

A fictional shopper with a basket smaller than last year's said she will come back in January for the prices and stay for the bread. "It is four dollars," she said. "It is the only thing in my life that is still four dollars."

For the Ledger: on Tuesday, at a fictional supermarket outside Mesa, I logged a gingerbread house kit next to the Halloween pumpkins (seasonal, aisle 1, endcap facing the door). That is page 32. Eight pages left. I will not start a second notebook.

Marjorie Pell has worked or covered American stores for 40 years and still knows where the paper towels are. More from Marjorie Pell ›