The new loyalty program that Sprouts Farmers Markets is planning to begin testing this year will be unique in the grocery marketplace, company executives said at an investor conference on Tuesday.
The retailer only has first-party data on about 11% of its customers, compared with “north of 80%” for many supermarket operators that have loyalty programs, said Jack Sinclair, chief executive officer.
“We need more people signing up to be part of the loyalty program,” he said. “We’re investing in what needs to happen for the future so that we increase the number of people who are giving us that first-party information.”
The company will likely end up somewhere between the 11% and 80% mark in terms of access to first-party data once the loyalty program rolls out and builds momentum over the next few years, said Curtis Valentine, chief financial officer.
“At the moment, we have the danger of trying to sell grass-fed beef to vegetarians, which is not a smart move,” Sinclair said.
As previously reported, Sprouts is slated to begin testing the new loyalty program this summer, with plans to roll it out sometime next year. Sinclair said the company plans to begin testing the new, points-based loyalty program in two markets this year, with additional test markets to follow later in the year.
Much like the company’s efforts to offer a differentiated product assortment that targets health-oriented customers and customers with specific dietary preferences, the loyalty program will also seek to offer a differentiated experience, he said.
“I don’t want it to be like anyone else’s loyalty [program],” Sinclair said, noting that it will seek to create a more personalized experience for Sprouts’ specific shopper niche.
He also said Sprouts was seeing early success with its newer stores in the Mid-Atlantic region, including in Philadelphia and Baltimore. The company will likely look to open a distribution center in the Mid-Atlantic region in about two to three years, said Valentine.
“It really is about the produce volume we do in the stores, but it’ll be somewhere between 30 to 40 stores,” he said. “Once we get that critical mass in that market, it will make sense for us to put a distribution center in the ground.”
In other news, Sprouts on Tuesday said it has added nine more name, image, and likeness (NIL) agreements with collegiate women athletes from schools in the retailer’s markets around the country. The company has now executed more than 150 such deals since it launched the program in 2022, including 45 new agreements that were signed last year.
The new partners include athletes from collegiate basketball, volleyball, softball, gymnastics, and track and field programs.
“Sprouts remains steadfast in our commitment to elevate women’s athletics through our ongoing NIL partnerships with talented athletes,” said Alisa Gmelich, senior VP and chief marketing officer, Sprouts, in a statement.