Specialty grocery stores started booming a year ago. One of these specialty groceries include Sprouts Farmers Market who’s IPO generated $333 million. Enthusiasm surrounded by these specialty groceries turned to a very grim reality as competition increase and over-expansion ultimately led to loss in sales. Fresh Market, another popular grocery store, reported a 90% loss in March in the fourth quarter net income. Fairway is trying to bypass the decline by reorganizing their business to cut high store costs. One of the major problems natural grocery stores are experiencing is competing from heavyweight grocers and their store brand natural and organic food products.
Although the outlook may look disappointing now, analysts believe specialty grocers still have long-term hope. New geographies are becoming more competitive and sales have increased from $6 billion in 1998 to $48 billion in 2012 for natural and organic grocery stores. Whole Foods has tripled their annual sales over the past decade to $13 billion with it’s market value competing with Kroger’s. The next step is to see how much store growth will continue for specialty grocery stores, especially the ones with currently experiencing growing pains.