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Natural Foods Merchandiser

Fresh Thyme Farmers Market chain to debut in Chicago suburb

Former Sunflower Farmers Market CEO Chris Sherrell is now leading the high-growth vision for Fresh Thyme Farmers Market, a chain that plans to launch 48 stores in five years across the Midwest.

A new farmers market-style chain will sprout in the Midwest under the leadership of former Sunflower Farmers Market President and CEO Chris Sherrell and a team of co-workers from the business that last year merged with Sprouts Farmers Markets.

The “well capitalized” Fresh Thyme Farmers Markets formed quietly last year and began to coalesce early this year. The march to 48 stores in five years took its first concrete step this week with the announcement of its inaugural store in Mount Prospect, Ill., a Chicago suburb, scheduled to open in January.

Sherrell, an enthusiastic leader, talks here about his mission of taking affordable, healthy food to the masses in America’s heartland. He declined, however, to talk about the chain's investors, which Natural Foods Merchandiser identified via public records as leaders of the Grand Rapids, Mich.-based Meijer Companies.

Natural Foods Merchandiser: Can you describe the Fresh Thyme Farmers Market vision?

Chris Sherrell: I just fell in love with the farmers market segment and thought that it aligned with trends and the state of the economy. It’s a space that’s done really well over the last 10 years.

We’re the natural and specialty store of the future. There’s not a farmers market-type concept in the Midwest. The idea was to start one and get one going. We’ve established geography and have a good start on a team. The concept was really defined throughout my 20-year career working in the natural and specialty foods industry.

NFM: Can you describe the farmers market concept?Fresh Thyme Farmers Market chain to debut in Chicago suburb

CS: Size is the biggest differentiator from a Whole Foods Market, which is starting to open some smaller stores. We’re not focussing on 40 percent food service. We’re looking at an everyday natural farmers market where 40 percent to 50 percent of our sales are going to be in perishable departments—produce, meat and some of the other health food service areas—but not really as high profile a food service area as Whole Foods may have.

But really it's the value, it’s the price image, the affordability. This concept’s done really well throughout the years, and we’re going to continue that trend. We’re bringing a natural option to the Midwest with incredible values and trying to make the natural lifestyle affordable to the masses. This is really going to be our goal.

NFM: You’ve called the new chain a specialty-farmers market hybrid. Can you tell us more about Fresh Thyme’s unique selling proposition?

CS: We’re a bigger mix of that natural side, of that organic side of it, where some of the traditional farmers markets don’t focus as much on organics. So that’s why it’ll really be that hybrid in between some of your larger Whole Foods of the world and some of your more traditional farmers markets. When it comes to prepared foods, we’re certainly not going to make 40 percent of our store food service, but we’re going to create a great deli and great fresh bakery program. We will have more of a cafe, not huge, but five to eight gourmet sandwiches with some soups, pizza with fresh dough, just a little more emphasis on the food service department.

We’re going to start really focused on culture and getting involved in local. Granted, with the expectation that 25 percent of our sales is going to be produce (that’s what a traditional farmers market sells), we know the Midwest limits the ability of produce from a seasonal standpoint. But throughout that season, we’ll absolutely support it.

NFM: Could you describe the differences in center store and health and beauty?

CS: The natural living, the vitamin area, will be very similar to a traditional Whole Foods/farmers market concept. That’s a department that really didn’t change a whole lot throughout the evolution of the natural/specialty store. We won’t have large general merchandise departments, but absolutely a traditional vitamin department, body care department with basically your traditional natural foods set, if you will. In the grocery, frozen and dairy departments, we’re really similar to that. We’ll certainly focus a little more on local in some of the dairy departments and grocery—start to put a little more emphasis on organic—but very similar to a traditional farmers market set.

NFM: What size stores do you plan?

CS: Between 24,000 and 28,000 square feet.

NFM: And what markets are you targeting?

CS: We’re targeting the Midwest, the Minneapolis/St. Paul area down through Wisconsin—Milwaukee, Madison—and then Chicago and some suburbs and other Illinois cities, such as Champaign, and then over to St. Louis. We’ll kind of go around the lake into Indianapolis and then over into Ohio, in cities such as Cleveland, Akron, Columbus, Cincinnati. The estimation is 15 to 18 in Chicago, eight to 12 in Minneapolis, six to eight in St. Louis, maybe 10 in Ohio.

NFM: So, the larger cities in those states.

CS: From a marketing and branding standpoint, you really need to work on some synergies. When we want 45 to 50 stores in the Midwest, we need to focus on the areas where we can put the majority, and then we’ll sprawl into some of the smaller college towns and other outskirt cities that won’t support more than one or two stores. It’s hard to build a brand on a bunch of one-store cities to start with.

NFM: Why focus on the Midwest?

CS: Primarily it was that this concept is not really in the Midwest. We’re also looking at the level of competition. I don’t think it’s a secret that the conventional leaders in the Midwest are somewhat in flux. We’ve got the Supervalue mixup; Cerberus buying some stores; and then Chicago continues to be in a funk with the Dominickses and the Jewel-Oscoes; and some of the conventional leaders in Milwaukee/Madison are really kind of looking for an identity. We thought that without a concept like this, without this space there, this is a prime opportunity to go up there and take advantage of some of the unknowns from the conventional side of the business and also offer this type of service to the customer there, add some local flair to it and bring natural foods and farmers market concept and a healthier lifestyle to the masses. It’s really what we’ve been trying to do for the last 10 years of my career.

NFM: The stated growth rate of six stores in 2014, six in 2015 seems conservative compared with the likes of Whole Foods Market and Natural Grocers by Vitamin Cottage.

CS: It’s easier to open 20 stores a year when you’ve got 300 or 400 because you’ve got an infrastructure in place, you've got the brand in place. We’re a startup; we’re really well capitalized; we’ve got an experienced team, and I just basically did this for the last 10 years, opened 44 stores in nine years. So it’s certainly not a conservative plan from a startup standpoint, but it's not overly aggressive. I think it’s feasible and that’s what we want when we set goals. When we open a store, if we come out of the gate strong, we’ll speed that up and make it a little more aggressive.

NFM: Can you tell us where those first stores will be and a little more about the timeline?

CS: Chicago is really where we’re focusing to open our first couple of stores.

NFM: With conventionals moving more aggressively into the natural and organic space, independents expanding and chains forming and growing, where’s the saturation point for natural retail?

CS: The important thing to remember is that the natural foods sales percentage is still so small. Like any other business, it’s the cycle of life; there’s always the low-hanging fruit and there’s always the new coming in, the old going out. In this industry, if you’re not looking to evolve and change and create some real excitement, then you’re going to find yourself at the bottom. Some of these behemoths if you will, some of the Safeways and the Krogers and the Supervalues and, of course Walmart—which really is a whole different class—some of them have changed and will evolve. I think there is quite a bit of change in this space, in the natural foods space, and certainly in the grocery space with diet trends and generationally speaking. A lot of younger people are looking to get away from what generations in the past have done with processed foods. It was kind of new to everyone when it came out and then people became educated on it.

We really look at middle America, and as these people become more and more educated, they realize that eating healthier is going to save them thousands in medical bills and they are going to live longer. With the availability of natural food, and especially with the farmers market concept offering healthier, natural, fresher options, there’s no need to buy processed foods.

NFM: What’s the real estate strategy? Are you focusing on existing real estate or building?

CS: We are getting a lot of encouraging reactions from landlords and developers who see how this segment’s really blown up over the last 10 or 15 years while a lot of these 50, 60, 70,000-square-foot grocery stores are in some transition with people’s changing mindsets and lifestyle. We’re not as eager to go shop at a 60, 70, 100,000-square-foot grocery store that focuses primarily on processed foods rather than fresh and natural.

So second-generation space is always great. Not only can you open quicker, it will also help regentrify some of these shopping centers, and that’s where we get tons of excitement from some of these landlords. There’s just not a ton of retail growth. While there’s some excitement going on in the grocery industry and there are a couple of retailers out there still doing really well from a soft goods side, we all know the office space is really being crunched, the electronics space is really being crunched, and so they’re really looking for some excitement in this 25,000- to 30,000-square-foot space. But we’re absolutely looking at redevelopment, ground up, new development. If we can open six stores, eight stores, we’re looking at 2015 and 2016 for ground up and redevelopment. So the next two years we’ll look at more second-generation and existing boxes and maybe some shopping center redevelopments that don’t take as long as ground up.

NFM: Will your headquarters remain in Phoenix?

CS: We will be relocating to the Midwest at some point; most likely we’ll locate in Chicago. We will have some of the executive team spending some time in Phoenix until we establish where that place is going to be, and then we’ll move everybody out there. But right now there’s no point to go until we get six to eight stores open, figure out exactly where we want that to be, and then we'll move.

Quite a few of the executive team have roots in the Midwest. It’s not the most unfamiliar place. It’s not like we threw a dart on the map and said let’s go. We’re very familiar with the Midwest and are really excited to get this thing up and running and get our first store open.

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