Dive Brief:

• Sprouts Farmers Market plans to use its upcoming loyalty program to dramatically boost the amount of first-party data it gathers about its shoppers and allow the company to enhance its offerings to them, Sprouts executives said Tuesday during a panel at the annual Roth Conference. 
• The executives noted that the loyalty program will operate on a point-based system, allowing for “constant information” on its customer base. 
• The specialty grocer will pilot the loyalty program at two locations this summer with a full launch set for sometime next year.

Dive Insight:

Sprouts loyalty program will be an “investment in the future” and a path to increasing the collection of first-party information, CEO Jack Sinclair said during the conference panel. 

By boosting the amount of consumer data it collects, Sprouts will be able to better manage promotion investment and provide consumers with relevant information and advertisements. The specialty grocer also aims to increase the number of trips its shoppers make to stores and improve its ability to hold on to those shoppers long-term.

“At the moment, we have the danger of trying to sell grass-fed beef to vegetarians, which is not a smart move,” Sinclair said. 

The specialty grocer currently obtains first-party data manually for just 11% of its shoppers, according to Sinclair, adding that most grocery companies in the U.S. gather data on more than 80% of its customer base. 

CFO Curtis Valentine said that Sprouts plans to eventually be able to collect data on somewhere between 11% and 80% of its customers over the next few years after the loyalty program is up and running. 

Sprouts will pilot the loyalty program in two markets in Q2, then expand to an unspecified number of additional markets before the full launch. 

Sprouts has made some key changes over the past few years to improve its operations and distinguish its stores from the competition, including shrinking its box size, boosting private label and offering more emerging brands in its stores. Sinclair said the new loyalty program will help further differentiate the company.

“I don't want it to be like anyone else's loyalty [program],” he said. “It's not going to be giving fuel away … it's going to be about how do we actually play with the community that does love Sprouts in the first place and build that loyalty on the back of just getting a few more dollars an hour or a few more visits from those customers?”