Innovation & Technology Innovation & Technology

Sprouts Farmers Market:
A Case Study in Capturing the Loyalty of Discriminating Millennials

The financial landscape is rapidly changing thanks to new guests who have recently pulled up a seat at the investment table: Millennials.The generation has come into its own, with well-earned spending and investment power that it wields with great discretion. Millennials are placing their capital differently than previous generations, and they often demand that their investments meet socially progressive criteria. The nation’s first socially networked generation is eager for opportunities that are equally focused on generating returns and strengthening a more responsible bottom line.

By Charlton Reynders | Published 9 years ago | About a 3 minute read

The financial landscape is rapidly changing thanks to new guests who have recently pulled up a seat at the investment table: Millennials.

The generation has come into its own, with well-earned spending and investment power that it wields with great discretion. Millennials are placing their capital differently than previous generations, and they often demand that their investments meet socially progressive criteria. The nation’s first socially networked generation is eager for opportunities that are equally focused on generating returns and strengthening a more responsible bottom line.

As such, before making investment decisions, Millennials typically judge a company or industry against three key areas that indicate its impact: positive social change, leadership with a social compass, and financial transparency.

While it appears to be second nature for this generation to let its values guide its investment decisions, previous generations (such as Baby Boomers) did not readily adopt the same philosophy in the early stages of their investment lives. However, that could change as Millennial money flows into socially responsible investments. Their capital will fuel Wall Street’s growing tendency to reward those companies with a sound social strategy, which could bridge the gap for skeptical investors who still believe that investing with a social lens means sacrificing returns.

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Moreover, Millennials are investing in companies and industries that go the distance to prove they are geared to be socially constructive, as opposed to those that lean on buzzwords that present the illusion of a socially responsible mission. Marketing can be a powerful tool, and those prone to “greenwashing” use social responsibility’s popularity to sell products and services. Millennials are the most socially conscious generation to date, though; they typically recognize authenticity and avoid falling prey to greenwashing.

One young company that has built its brand to satisfy the appetite of the millennial investor is Sprouts Farmers Market. The grocery chain’s dedication to transparency and competitive pricing appeals directly to this next wave of shoppers; Gen X-ers and baby boomers flocked to Whole Foods for healthy snacks, but today’s younger shoppers are looking to Sprouts for healthy eating options, recipes, and information on how their products are sourced. Given that Millennials were raised to expect that all answers should be available through a quick Google search, it’s no surprise that they gravitate towards brands that clearly communicate where their products are sourced and which ingredients they contain.

Sprouts is particularly attractive to Millennials because the store enables consumers to eat well without astronomical up-charges; the emphasis on affordability makes it stand apart from its competitors. While other big-name grocery stores upcharge organic or gluten-free options, Sprouts extends its value proposition by consistently delivering lower prices on these traditionally premium products.

In fact, Sprouts’ employees are tasked with making affordability their personal responsibility. According to BloombergBusiness: “Each week, Sprouts’ employees in 20 different markets check the produce of about 35 competitors, then lower or raise prices based on the findings.”

Price flexibility in a booming market is just one way Sprouts continues to both interest millennial consumers and eliminate any threat of a growth slowdown.

Sprouts’ model appeals so much to its customer demographic that demand has been skyrocketing. The company already has stores in 12 states, with new locations sprouting up (pun intended) all over the nation. The chain is expanding so rapidly that it may soon be able to go toe-to-toe with larger supermarket chains nationwide. As investors, we anticipate this brand’s growth to continue in 2015, as it’s a wonderful example of a company appealing to new demands from the next generation.

Sprouts Farmers Market is an excellent example of what Millennials are looking for as they put their investment dollars to work on Wall Street. They have grown up amidst economic downturns, global connectivity, and an emphasis on social change – all of which have created a new investing environment. Millennials are now in an excellent position, with the chance both to shape the landscape and to be empowered by it for decades to come.