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Business Observer Friday, Feb. 16, 2018 9 months ago

Fare Warning

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Being different in a fiercely competitive market, like groceries, leaves little room to skimp on the brand and mission.
by: Mark Gordon Managing Editor

Frank Scorpiniti started his career dispensing antibiotics.

Now he runs a nimble, fast-growing grocery chain that steadfastly refuses to sell any product that comes from an animal given antibiotics.

A onetime pharmacist, Scorpiniti, CEO of Ashville, N.C.-based Earth Fare, sees his career evolution as another step on a long road of making America healthier. That mission includes the west coast of Florida, where Earth Fare has opened three locations in the past year, in Oldsmar, Seminole, and, most recently Lakewood Ranch in east Manatee County.

The company now operates 46 stores nationwide, with a large chunk in the Southeast. And while it was founded in 1975, back when it sold organic dried bulk goods in wood barrels, most of the expansion has happened in the past five years. “Earth Fare has the ability to change the health status of any community we go into,” Scorpiniti says. “And that's an awesome mission, one that helps get us out of bed.”

Scorpiniti was named CEO at Earth Fare in January 2015. With a doctor of pharmacy degree, he worked his way up through several retail pharmacy chains prior to moving to grocery. Two pharmacy gigs that shaped his business belief system, he says, were helping lead brand transformations at Rexall Pharma Plus in Canada and Duane Reade in New York City.

Scorpiniti says even in the low-margin, high-volume grocery business, the mission to help people live healthier lives is viable. Earth Fare, backed by New York private equity firm Oak Hill Capital Partners, does that through a boot list. That's where it gives anything with non-natural stuff (high fructose corn syrup, bleach or bromated flour and added hormones, to name a few) a permanent boot out of the store.

“I will put my team on an airplane to anywhere in the U.S. to sit down with a grocery management team and give them our food philosophy and lessons learned to help them come clean,” Scorpiniti says. “America is in a bit of health care crisis. Our life expectancy is going the wrong way, and that doesn't make any sense. It's not like we're the richest country in the world.”

Scorpiniti, recently in east Manatee County for Earth Fare's latest store opening, sat down with the Business Observer to talk about the industry, the company and his career. Edited excerpts:

How do you keep your brand and mission from being diluted while growing so rapidly?

Earth Fare had humble beginnings in 1975, when just finding natural and organic products was an extraordinary challenge. And this year we will open more than 10 stores. But keeping the brand in the spirit of what we stand for is one of the most important things we can do. A year ago we launched a brand campaign, Live Longer with Earth Fare. This messaging was so important to us that we called it renewing our vows to ourselves. This was our manifesto.

And before we went out into the market and greatly expanded, we brought all of our store managers, multi-unit managers and many department managers to Asheville, N.C. We rented an auditorium and I personally read our vows, which is we would go forth and grow this company, but we would never, ever waver from our commitment to our food philosophy, which is what we pledge to our customers.

As Earth Fare grows quickly into new markets, how does it guard against the risk of losing customers because the food policy is so rigorous?

There's good news and bad news. Over the years we've been known in the vendor community as the cleanest. Maybe that means we are the strictest in what we will allow in products that make it to our shelves. But over time, a broader swath of the American public has moved over to want to live this lifestyle. So it's become more prudent for product suppliers and manufacturers to get on this bandwagon.

Of course, we'd love to sell the next big thing. We are a retailer. But if the next thing doesn't comply with our food philosophy, it's not going to be here. We will find other ways to help our customers live a healthier lifestyle.

What are some other challenges you face at Earth Fare and how do you address them?

The percentage of growth is a pretty big challenge. We have 46 stores and will open 13 on top that over the next year. That's 25% unit growth. It's pretty massive. It really requires unwavering commitment to the business.

Retail isn't an 8-to-5 job as it is. We are already running an extra turn of the crank every day, so to put an extra pressure on that is a big challenge on the team. They have a spirit and a heart for what the brand is. If it was a more ubiquitous kind of retail environment, I don't think they would have that focus.

How do you address competition in all of Earth Fare's markets, given the Amazon-Whole Foods deal and new entries on the west coast of Florida, such as Lucky's Market and Sprouts Farmers Market?

The Amazon acquisition of Whole Foods was significant occurrence in food retail. As we look at it strategically, we see a few things (that help us.) Clicks need bricks is one. You need to touch products, smell products and enjoy products.

Whole Foods is a fantastic competitor. We respect what they do. But it creates the burning platform inside our stores every day that we are going to get 10% better every time we open a store. Sometimes that competition helps you focus. It makes us think about how we are going to be more relevant for every community where we open. How will we go to a market three months before we open to create an advisory board, people who will tell us things we should do differently in Lakewood Ranch versus another place? How will we get and maintain the sights and sounds and tastes in the store you can't get on a mobile app? How will we train employees?

It's not easy. But this pushes us harder.

How do you brand build loyalty in the grocery business when customers have so many options?

We are philosophy driven. Our philosophy is, we are going to have the cleanest assortment in North America. We're going to create an experience so high reaching we can stand on this table and say Live Longer with Earth Fare. That's a differentiating experience. We take it so seriously that you can shop this store blindfolded and be assured you never take anything home to your family deleterious to their health. We believe that focus will be a loyalty driver.

How do you combat the perception that healthy-eating grocery chains, on average, are more expensive for customers?

We believe we have a moral obligation for us as a business to figure out how we can feed families from any size budget a clean meal every night for $10. That's $2.50 a person for a family of four. That's called clean food security. Food security, of course, is about having continuous and predictable access to nutrition. We think that's a laudable goal. But what we think is a more important goal is clean nutrition, which is a substantial step above that.

We asked our team to figure out how are we going to get mom to drive home for work, kill the drive-thru, come to Earth Fare and get a prepared meal for her family $10. It's the next level of clean. You can't do that in a drive-thru.

How did your career shift from pharmacies to groceries?

The Duane Reade experience was a great brand transformation. We differentiated ourselves from the early Duane Reade to where we weren't quite just a drugstore anymore. That attracted the attention of Walgreens, which saw us as the potential to become a petri dish for the rest of their business. After Duane Reade I went to Canada, did a brand transformation at a business called Rexall Pharma Plus.

What attracted me here was this is a business with a great mission, with an opportunity to do a brand transformation. Not to overdo it, but we stand on a moral foundation of feeding families healthy food. From that, comes working with team members who strive for a higher mission than sales — though sales drive the business, we know that. But it's that level of engagement we can get that's bigger than the sale.

What are some lessons you've learned in the three years running Earth Fare?

It's a fantastic and incredibly rewarding business to be in a position to put food on a community's table morning, noon and night. It's a hypercompetitive environment. But what've learned is we need to stick with our differentiating food philosophy. We aren't striving to be the biggest. But we are striving to be different.

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