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Q&A With Sunflower: Organics For The Masses

Mike Gilliland

Sunflower Farmers Market is one of those regional companies that know how to generate national buzz. For one thing, founder and CEO Mike Gilliland has an impressive track record: He started Wild Oats in 1987, taking it from a single store to a $2.2 billion business before stepping down as CEO back in 2001. For another, with the launch of the Boulder, Colo.-based Sunflower in 2002, he's emerged as a pioneer in the value segment of the natural and organic foods business. And as the economy has sent consumers scurrying for food bargains, Sunflower's "Serious food ... silly prices" positioning is more relevant than ever. Marketing Daily caught up with Gilliland for an update.

Q: So, here's a twist on private labels: You just announced that Sunflower had started its own farm -- the first commercial farm owned by a chain. Why?

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A: Yes, we bought the 40-acre property about 10 months ago, and hope to add another 10 acres next year. Right now, we've got greens and a lot of root crops going. The idea is to use it as an educational tool -- we just had our first open house. We've got some farm animals, too, and hope to have a greenhouse by the end of the year. We're thinking we may add beehives, chickens, and eventually do our own cheeses -- maybe even our own beer! It will probably only supply about 1% of our products, but it's a good way to introduce people to what we're trying to do.

Q: How have you differentiated Sunflower from other chains, like Whole Foods Market?

A: We're after different customers. We don't go after the top 10% of consumers that Whole Foods pursues. And while about 25% of our customers overlap -- we think of them as refugees from Whole Foods' prices, and they're very well educated and well informed -- most of our customers are only casually interested in natural foods. They account for about 50% of our base. They understand there are some benefits to these foods, but they are people who need an education in how to cook tofu -- and they are never going to shop at Whole Foods, because of the cost. That's always been my interest -- how to educate these casual users so they become interested in healthy, and maybe even organic, foods. And the final 25% couldn't care less about organic or sustainability labels -- they just want cheap produce, period. We're very conscious of all three groups, and that we're going after this middle ground -- that's why we call it a farmers market, not a natural-food store.

Q: Some people would say your real competition is Wal-Mart Stores.

A: It is, and we beat Wal-Mart on conventional produce prices everyday.

Q: Has that diverse base insulated you from the recession?

A: No. Our customer count is up nicely, but basket size is down, which I know is true at other chains. We are vulnerable, just as Whole Foods is. People are saying, 'I can skip that artisanal bread, or the $10 piece of Jarlsberg.' They are trading down. I hope that kind of spending comes back soon.

Q: How would you describe your marketing?

A: I'd say we have a fairly conventional approach -- including weekly fliers. But because a lot of customers aren't very well informed about, let's say, Fair Trade Coffee, there's a real opportunity to educate them in stores. So we try to do that.

Q: Many supermarkets have pursed private-label organics, and expanded their natural food offerings. Are they cutting into your share?

A: It's a mixed blessing. On one hand, the more organics the better -- when people buy an organic item they like, the next question is: 'Where can I get more?' and we hope we're the answer to that. On the other hand, it's rough on prices -- Kroger, especially, has been hyper-aggressive on pricing, and our customers are aware of that.

Q: What are your expansion plans?

A: We just opened our seventh store this year, and will open 10 [more] next year, continuing to fill in the Southwest area.

3 comments about "Q&A With Sunflower: Organics For The Masses ".
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  1. Dori Pitzner from andCulture, October 13, 2009 at 8:41 a.m.

    Kudos and good luck to Gilliland. I applaud the approach and strongly believe that many more people would prefer organics if the premium was not so great. Trader Joe's has had great success with this approach (in their case, more non-GMO, not all organic, and certainly with some bumps in the road). We will be waiting for you in Pennsylvania with open arms!
    --Dori P., Harrisburg, PA
    http://www.twitter.com/doriorio
    http://ollieollietoxinfree.blogspot.com

  2. Bill Roth from NCCT, October 13, 2009 at 11:37 a.m.

    "Serious food, silly prices" is a home run with Concerned Caregivers seeking "less cost, more meaning" solutions that protect the wellness of their loved ones.
    Bill Roth, http://www.earth2017.com/

  3. Jeff Hershey from jeff hershey consulting, llc, October 13, 2009 at 12:58 p.m.

    Sunflower Mkt is a great store, however, Mike forgot to mention that he first learned of the concept from Boney's/Henry's Marketplace in San Diego. The bought that chain while at Wild Oats, then utilized the same concept once he sold Wild Oats

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