September 08, 2013 • By Georgina Gustin
A new grocery chain aims to build as many as 10 new stores in the St. Louis area — and is banking on a big appetite for fruits and vegetables.
Fresh Thyme Farmers Market, a produce-centric grocery, plans to open its first store in the area, in Fairview Heights, some time next year, then follow up with a few more each year over the next five or six.
The company says it will open 50 stores throughout the Midwest — where it will position itself as a cheaper alternative to Whole Foods and capitalize on a growing appetite for fresh, unprocessed food.
“We’re looking for transitional customers — those that are looking to get into a healthier lifestyle, but may be intimidated by Whole Foods,” said Chris Sherrell, Fresh Thyme’s president and chief executive officer. “It’s not like we’re trading customers. We’re not looking for that top 10 percent of the demographic that shops Whole Foods.”
The company, which formed in 2012, is populated by veterans of the natural-organic grocery category, including Sherrell, who helmed Sunflower Farmers Markets, a southwestern chain of stores similar in concept to Fresh Thyme.
The stores will be smaller than conventional supermarkets and will focus on fresh foods, including produce, meats and dairy.
Referring to traditional supermarkets, Sherrell said, “What drives their business is the center of the store — the Cheerios, the Doritos, the Coke. We’re not going to do that. We’re not going to corner the market on paper products and the hygiene stuff. That’s not our play.”
In a conventional store, Sherrell said, roughly 10 percent of business comes from produce. At Fresh Thyme the percentage will be closer to 30 percent.
“We focus on what the conventionals don’t do very well,” Sherrell said, “and we’ll beat them every single day on produce and meat.”
The model has served Sunflower well. That chain, which launched in 2002, quickly grew to 38 stores throughout the Southwest. It merged with Sprouts Farmers Markets in 2012, and today the company has roughly 160 stores — and is building more.
“They’ve performed better than average — all of these fresh stores,” said David J. Livingston, a Wisconsin-based supermarket industry analyst. “This has been one of the biggest growth sectors. Look at how much Whole Foods has grown.”
The Fresh Thyme concept, though, emphasizes value, with the company keeping costs low by occupying smaller, pared-down spaces, often taking over vacant box stores. The Fairview Heights store will be in an old Kmart, at Illinois Route 159 and Lincoln Trail, that closed last year.
“This is another example of the pressure on the conventional chains, like Schnucks and Shop ’n Save and Dierbergs,” said David Rogers, a retail consultant with Chicago-based DSR Marketing Systems. “These are the sorts of rapid developments that are putting pressure on the industry — and they’re being helped by the glut of available real estate.
“They’re rolling out so fast because they know this can be copied,” Rogers added. “They’re hitting a part of the country that has a dearth of natural-organic markets. They’re seeing a real vacuum and a real opportunity.”
Some analysts say Fresh Thyme’s plans to build 50 stores seem overly ambitious.
“The plans sound a little bold to me,” Livingston said. “You don’t say: OK, we’re going to build a chain. You build one and see if it’s going to work. I’m sure they’ll talk big. They’re going to have their fingers all over the map.”
But some analysts think the Fresh Thyme plans — backed by $50 million in private equity from the family behind the Michigan-based Meijer supermarket and retail chain — have a good chance at coming off.
“When I look at what’s going on in the landscape, and at Fresh Market, which is growing rapidly, what we’re really starting to see is an attempt to combine the excitement and community aspect and the feeling of the farmers market and bring them inside the store,” said Phil Lempert, an industry analyst. “It’s a less expensive alternative to Whole Foods. I think we’re going to see a lot of this.”
Source: St. Louis Post Dispatch