Sprouts Farmers Market CEO Jack Sinclair was able to shed some light on the development of the retailer’s loyalty program during the first quarter earnings call.
Sinclair said the program, currently being tested in two markets, will create such a detailed reading of the shopper that Sprouts expects to increase share of wallet with target customers.
“We’ve got a measure, some measure of what we are in terms of share of wallet,” said Sinclair. “It’s double-digit, and that’s the context that we will be expecting to drive a little bit more share of wallet from those customers.”
The CEO added the company expects the increase in share of wallet will more than pay for the technology behind the loyalty program going forward.
This year is all about learning about the program and working any kinks out. Sinclair said the first element of the learnings are about technology and marketing technology. The second element, he said, is learning and understanding the shopper so they can stimulate and create a feeling of being part of something special about being a Sprouts customer.
What to do with all the money?
Sprouts Farmers Market’s string of earnings success was also brought up during the Q&A portion of the Q1 report, and Sinclair and CFO Curtis Valentine were asked where they would be investing over the next couple of years.
Again, the loyalty program is considered a multiyear journey so more money will be directed there. Inventory management and talent were the other two areas where more of an investment will be made. Valentine said Sprouts needs to continue to find more store managers and department managers to take care of target customers.
The talent is staying
In terms of talent, Sinclair said during the earnings call that retention rate is at an all-time high and the aim is to have a pool of skilled team members ready for future assignments. Sprouts typically promotes around 60% of store managers from within, and the company has developed Assistant Store Manager leadership tracks where 30 workers graduated this year, and another 50 members entered the program.
In addition, Sinclair said the retailer has really doubled down on communicating the benefits workers receive. The CEO said everybody in the store receives a bonus.
Not like your typical shrink
The topic of shrink came up during the call and Sinclair said the company does not experience as much as the typical retailer because “it’s harder to steal [our products] and sell them, to be honest with you.”
Sprouts has made strides with its Forecasting Allocation Replenishment Management (FARM) which allows for the right amount of inventory in the stores at the right time.
Getting better
Sinclair addressed inflation during the call, stating the company was at a place where it has stabilized in the low-digit range. He said unit sales are still in the negative but moving closer to flat.
