Treasure hunt key to reviving Fresh Market’s fortunes
Amazon.com’s expansion in groceries may be a frightful prospect for rivals, but Larry Appel says he’s confident Greensboro-based The Fresh Market can find its niche by offering lots of ready-to-cook meals and high-quality foods.
It’s been two-and-a-half years since giant private-equity firm Apollo Global Management paid $1.36 billion for Fresh Market’s 176 stores. It’s likely the price would have been lower had Apollo known that, a year later, category-killer Amazon would pay $13.7 billion for Whole Foods Markets, a much bigger rival also vying for discriminating, health-conscious grocery shoppers.
Last year, Apollo hired Appel, a veteran of The Home Depot and Winn-Dixie, to lead the business. It’s been a rocky start: The Fresh Market is down to 161 stores in 22 states and there are no plans for any new ones over the next year. Apollo doesn’t disclose financial results for The Fresh Market.
Appel visited south Charlotte last week as The Fresh Market opened a new 21,000-square-foot store, its last “new” store on the books, replacing a 27-year-old facility. The company’s emphasis is on boosting sales at existing stores.
“We aren’t looking to be a natural grocery story; we’re looking to be a specialty store,” he says. By offering products hard to find elsewhere, along with a huge produce selection, the move represents a return to the roots of the chain started by Ray Berry in Greensboro in 1982. (The Berry family owned more than 9% of The Fresh Market’s shares at the sale.)
Apollo made an estimated 10-fold, $2 billion return on its investment in specialty grocer Sprouts Farmers Market, which it bought in 2011 and sold in 2015. Chances of a 10-bagger at The Fresh Market seem remote, but Appel says “the PE firm believes in this brand, and they bring a lot of expertise that makes us better. They have no specific timeline but they want this business to grow and create value.”
Let other grocers offer online ordering and delivery services; The Fresh Market plans to be old school, he adds. “We need to create a compelling experience for people so they want to come in and explore, not just sit at their computer and order. It’s a treasure hunt; you’re going to find new things and you’re going to expand your eating horizons.”