Bottom-Up Branding at Sprouts Farmers Market

Operating in eight states and set to expand, Sprouts Farmers Market (NASDAQ: SFM  )  describes itself as a neighborhood grocery store specializing in healthy living for less. CFO Amin Maredia joined the Fool to talk culture, margins, growth, and more. A CPA and Harvard Business School alum, Maredia joined Sprouts in 2011 after serving at major companies including PricewaterhouseCoopers and Burger King.

In this video segment Maredia says the Sprouts approach to advertising is focused on consumer education; letting people know what the company offers and showing them the value. As a result, more than 3,000 customers email the company every year to ask when Sprouts will be opening a location near them.

A full transcript follows the video.

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Brendan Byrnes: How about advertising? Some would say that advertising is evil because it eats into margins in an already low-margin business. Some would say that branding is important, it's so competitive in this space. How do you view advertising at Sprouts, and how does that factor into the capital allocation process?

Amin Maredia: Advertising is really interesting at Sprouts. Prior to Sprouts I was at a couple of big brand-name companies who had massive advertising programs. Sprouts, over the last decade, has really been a brand that's built from the bottom up. The biggest voice of the brand today is the consumer, and I think there's no more powerful way to build the brand than the consumer speaking.

I give the example, when a customer says, "I love Sprouts," those are the things that get us excited and make the brand work. As we move forward, when we think about advertising, we think about advertising as, first, letting customers know what we sell and educating them on what we sell. Two, showing them that we're value, and we're not value in one department or another department; we're value across the store.

I think a lot of people are, still today, looking for simple ways to eat healthier and it's a huge opportunity for us to continue to engage with that customer, in the store and outside the store, and build on that. A lot of that is part of our advertising platform.

We've actually recently combined our advertising; our CMO and our CIO is one position now, because of what we're seeing happen in the digital world.

Byrnes: Word of mouth is the most powerful advertising, right?

Maredia: Absolutely. When we talk about, our brand is really built from the bottom up, we get over 3,000 emails from customers a year saying, "When are you coming to this area of town?" or "When are you coming to my town?" That's the most powerful compliment that you can get from a customer.

Byrnes: How about challenges at Sprouts? What keeps you up at night, as CFO?

Maredia: I think you hit on it earlier; maintaining our culture is important as we grow as a company. It's an opportunity to continue to expand on that culture and maintain that culture, and that's very important in who we are. We take hiring very seriously; when we're hiring, we're looking for certain attributes from people.

Of course you want smart people, but you also want hard-working people. I think you guys call it the "motley value." To me, one of the biggest motley values would be curiosity. We have 14,000 employees today. If you could have 14,000 curious people, that's pretty powerful.

I think these are the things that we continually focus on, and as we're growing, even more important for us to continue to build on.

Byrnes: Great discussion. Thank you so much for your time today.

Maredia: Thank you.


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