As inflation persists, studies are showing consumers are less willing to spend on higher-priced organic produce. While this doesn’t look good for specialty grocery chains, one supermarket specializing in natural foods has been showing promise after struggling with sales.
Sprouts Farmers Market has reported positive growth in the second quarter of the year, with a 5% sales increase compared to the same time last year. The news came after the natural grocery chain recently announced two closures in California that were likely due to underperformance, and an earnings report detailing a 10% decrease in total sales last year, according to Supermarket News.
Currently, the chain has 378 stores, having closed 15 locations over the course of the year.
While the supermarket has seen its recent marketing strategy make gains, it remains cautious about its economic outlook given the current environment.
“We are cautiously optimistic that we can continue to successfully navigate the remainder of the year during these highly inflationary times while simultaneously pushing forward with our long-term strategy which is supported by our strong cash generation,” said Chip Molloy, the chief financial officer of Sprouts Farmers Market in an earnings report.
Convenience is where Sprouts has found its edge as it had an uptick in sales with its grab-and-go and deli items. Other sections generating growth were the dairy and bakery departments. Additionally, online sales have gained traction with a 15% increase this quarter.
Sprouts isn’t the only grocery chain making headway in tough economic times. Albertsons, which operates more than 2,200 stores with that name along with Safeway, Vons, Jewel-Osco, Acme, and more, reported “better-than-anticipated” earnings on July 26. Prior to the increased traffic to its stores, Albertsons had a series of slumps that included a 10% sales decline a year ago and in 2016 all of its stores were sold off in Florida as it left the state.