Smaller is Better: Sprouts Farmers Market Achieves Success with Reduced Store Footprint

Sprouts Farmers Market has found success with a smaller store format, a strategy aimed at catering specifically to health-conscious shoppers. By reducing its typical store size from 32,000 square feet to a leaner 20,000–25,000 square feet, Sprouts has been able to focus on “tighter box economics” that optimize space and efficiency without sacrificing product variety. This model has contributed to Sprouts’ positive financial performance, as reflected by a 12% year-over-year increase in net sales to $1.9 billion in Q2 and an all-time high stock price of $118.

Key Aspects of Sprouts’ Strategy:

• Targeted Demographic Focus: The shift to a smaller footprint aligns with Sprouts’ pivot to prioritize a specific consumer segment—health enthusiasts—over a broader customer base. This focus, while reducing overall customer numbers, has attracted dedicated shoppers who value curated health-conscious selections.
• Store Layout and Department Adjustments: In the smaller format, Sprouts has streamlined departments, placing high-traffic areas like produce, frozen foods, and the meat department in prominent locations near the front. The bakery section has been relocated to the back but is reportedly performing better under the new layout.
• Trial and Innovation: Sprouts has built innovation centers into each store to test new products. This system allows Sprouts to adjust offerings based on real-time customer feedback, ensuring only the most successful items become permanent.
• Increased Customer Engagement: Smaller stores and targeted assortments have led to higher foot traffic, with visits up by 13.3% in February and 11.9% in March, according to Placer .

The Industry Trend Toward Smaller Formats

Sprouts is part of a broader trend of retailers experimenting with smaller store formats. Whole Foods introduced “Daily Shops” with locations under 14,000 square feet, and Hy-Vee has launched Fast & Fresh stores, measuring about 10,000 square feet. This shift is mirrored in other sectors, such as home furnishing and consumer electronics, where brands are reducing store sizes post-pandemic to meet changing consumer expectations.

In Canada, Loblaw Companies Limited is piloting a No Name small-format store model with stores between 11,000 and 15,000 square feet, focusing on essential SKUs at reduced prices. The stores aim to minimize costs through limited assortments, fewer deliveries, and shorter hours.

Sprouts Senior VP of Real Estate, Dan Croce, emphasized that Sprouts’ 20,000–25,000-square-foot stores offer the perfect balance, or as he put it, the “Goldilocks solution”—not too big, not too small, but “just right” for Sprouts’ brand and customer base. This model allows Sprouts to be more nimble in selecting new locations and expanding the brand nationwide.