Wild Oats Founder Looks to Grow Sunflower Markets

Mike Gilliland, the founder of the Wild Oats chain, wants to grow another natural-foods grocery concept into a sizable retail player. His Sunflower Farmers Market stores recently secured $35 million in financing, and the outfit is poised to significantly up its store count.

With the economy still in a tailspin, it might not seem like a good time to expand a line of healthy food stores. Concepts that concentrate on organic-food items aren't exactly perceived as inexpensive, and Whole Foods Markets (WFMI), to which Gilliland sold Wild Oats in 2007 for $565 million, isn't termed "Whole Paycheck" by consumers for nothing. Additionally, Tesco's Fresh & Easy Neighborhood Market, a relatively new player in the space, reportedly doesn't draw Walmart-sized crowds.

But Sunflower tries to avoid such Whole Foods-style monikers with its own tagline: "Serious Food...Silly Prices." And if the company is taking a page out of Trader Joe's winning, healthy-but-inexpensive playbook, management might be on to something.

Sunflower currently operates 27 stores, mostly in the Southwest. With its new financing plan, the company expects the chain to almost double, hitting 50 units by 2013. The retailer announced intentions to expand in Santa Fe, N.M., and will open more locations in its existing markets.

As Gilliland tells it in a recent interview, he's betting on consumers remaining focused on natural foods, as long as they're sold at affordable prices. "The good news is that we're pretty well positioned for the angst that's out there," he told Natural Foods Merchandiser. "People who want to shop affordably while shopping naturally are shifting to us."

Now is a good time to for retailers with capital to expand, as shopping-center landlords are apparently giving their tenants good deals in the face of major national store closures. As retail affordability is a top-of-mind priority with today's shopper, as well as healthy living, Sunflower has a chance to make headroads into a profitable niche market, despite the challenges ahead.