Premium content from Denver Business Journal - by Dennis Huspeni
August 12, 2011
Despite a public relations nightmare this year, Boulder-based Sunflower Farmers Market continues to break into new markets and hasn’t strayed from an aggressive growth plan to hit $1 billion in sales within five years.
The private natural-food chain opened its first California store in Roseville in May. Its first Oklahoma store opens in Oklahoma City this month, and a second California location opens in Modesto in October. That will raise the number of chain stores to 36 in eight states by year’s end. Colorado has 12 of those stores.
“We’re really starting to hit our stride in branding the company, and we’ve set ourselves up well for the future,” said Chris Sherrell, president and CEO.
Sunflower prefers to place new stores in existing retail spaces of between 25,000 and 30,000 square feet, rather than build them from the ground up, and also to keep frills to a minimum. That enables the chain to offer natural and organic foods for about 20 percent cheaper than its competitors, Sherrell said.
“We’re trying to be reasonable and value-oriented,” he said. “There’s really not many bells or whistles.”
Michael C. Gilliland, founder and former CEO, was arrested in February in Arizona on suspicion of soliciting sex from a police officer posing as a 17-year-old. He quickly resigned from the company and is awaiting trial.
Sherrell, then president and chief operating officer, was named acting CEO. In May, the company’s board of directors made the appointment permanent.
“Honestly, I thought all hell was going to break loose, and we were bracing for losses of 2, 3 or 5 percent,” Sherrell said. “But surprisingly, business was not affected that much. Yes, it was flat for a couple of weeks while the news was hot, but other than that, there’s been no change.”
Marv Rockford, principal with Denver-based Rockford GrayLLC., said a couple of things happened to work in Sunflower’s favor. His firm specializes in crisis communication for businesses.
“As long as the damage to reputation attaches itself to a person ... and they quickly exit and have no more relationship to the brand, the consumer, if they value that brand, will continue to purchase it,” Rockford said.
He added that it also helps if the alleged wrongdoing had nothing to do with the sales or operation of the company.
“People will make that distinction,” Rockford said. “If the business has a product selection the consumer values, they have a reason to forgive and forget.”
Sherrell agreed.
“One person’s [alleged] actions doesn’t represent that of the 2,600 others in the company,” he said. “We continue to be family-oriented and a socially responsible company.”
The recent merger of Sunflower competitors Sprouts Farmers Market and Henry’s Farmers Market created a chain of more than 100 stores with 7,000 employees in four states. But Sunflower officials believe the natural-foods sector has plenty of room for growth for everyone.
“Look, the health kick is going crazy,” Sherrell said. “It’s going to continue to do so, whether it’s for obesity, dietary restrictions or whatever it may be. It’s bubbling up faster than it ever has in that natural-foods space.”
Sherrell said Sunflower has deals signed for eight stores to open next year and “huge plans going forward,” including nine more stores in 2013 and 10 in 2014.
“We’ve got the infrastructure to do it,” he said. “And this concept is very successful.”
