Natural grocer Sprouts seen landing in S. Philly, Moorestown in nationwide expansion

May 9, 2017

By Jacob Adelman, Philly.com

 

Sprouts Farmers Market Inc., a grocer focusing on organic and natural foods, appears to be eyeing at least two Philadelphia-area locations as it brings its fresh veggies, grass-fed meats, and other munchies for the nutrition-minded to a broader swath of the United States.

The Phoenix-based chain is to be a tenant at the Lincoln Square development at Broad Street and Washington Avenue in South Philadelphia, according to a presentation posted to the website of the development’s owner, Kimco Realty Corp.

Sprouts also has a deal to take space in part of a property formerly occupied by Macy’s at the Moorestown Mall in Burlington County, according to an April report in Food Trade News, an industry publication.

Sprouts, which now has 268 stores in 15 states – though none yet in the Northeast – is in the middle of an expansion aimed at satisfying growing demand for organic and minimally processed foods at prices that are said to often undercut competitors’.

Sales of organic food soared in the United States to $43.3 billion in 2015, from $3.6 billion in 1997, according to the Washington-based Organic Trade Association.

Burt Flickinger III, managing director of the retail consultant Strategic Resource Group in New York, said that Philadelphia, where Whole Foods currently has a near monopoly on the appetites of the kale-munching set, is particularly promising for the retailer.

But competition is heating up, with Mom’s Organic Market about to open its first Center City store after locations in Bryn Mawr and Cherry Hill and existing grocers in the region, including Aldi and ShopRite, boosting their own organic and natural offerings, he said.

Bfresh, a sibling of Giant Food Stores under the Ahold Delhaize corporate umbrella, and Germany’s Lidl also are expected to enter the market soon with stores that lean heavily on organic foods, Flickinger said.

 All this could be good news for consumers, he said: “There will be a price war in Philadelphia of unprecedented proportions.”

Sprouts did not immediately respond to an email seeking details about its planned Philadelphia locations.

Leigh Minnier, a Kimco spokeswoman, said she could not confirm any details about Sprouts’ plans at Lincoln Square, where it would share lower-level retail space with a Target Corp. store and a branch of the PetSmart chain.

Kimco paid $10 million for a 90 percent interest in the South Philadelphia development project, which also will include 322 rental apartments, the New Hyde Park, N.Y.-based shopping-center company said in an April news release announcing its earnings.

Heather Crowell, a spokeswoman for Moorestown Mall-owner Pennsylvania Real Estate Investment Trust, said Tuesday that she could not confirm the Food Trade News report. Officials with the company said last month that a food market was among three new tenants that will take the place of the mall’s shuttered Macy’s store.

Sprouts chief executive Amin Maredia said during a May 4 conference call with analysts that the company has 63 sites approved for new stores and 43 signed leases “for the coming years,” but he did not specify their locations.

Its late 2016 openings included a Raleigh, N.C., store that is now the closest Sprouts location to Philadelphia, as well as a new produce-distribution center in Atlanta, he said.

The company also is said to be exploring a merger with Albertsons Cos., owner of the regionally prominent Acme Markets chain, Bloomberg reported in March.

Robert Gorland, a supermarket-site-selection specialist with Rahway, N.J.-based Matthew P. Casey & Associates, said he doesn’t think Sprouts would be closing in on the two Philadelphia-area locations if it didn’t have bigger plans for the region.

“You would think they might be looking at some other sites, versus opening one store in Pennsylvania and one store in New Jersey,” he said.