Sunflower Farmers Market is Headed to Modesto as Part of Northern California Push

Boulder, Colorado and Phoenix, Arizona-based Sunflower Farmers Market is headed to Modesto, where Tesco's Fresh & Easy Neighborhood Market opened its first store yesterday. [See - March 23, 2011: Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto.]

In our Northern California Special Report series last year (from April-to-December 2010) we reported that, in addition to Roseville and San Jose, one of the additional Northern California cities the 33-store farmers market style grocery chain was scouting for a store location in was Modesto, which is located in the Northern Central Valley.

Sunflower Farmers Market is opening its first store in Northern California, in Roseville near Sacramento, in May. The grocer previously planned to open what will be its Northern California flagship store in April. But it recently decided to do so in May instead. [See - September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville. Roseville is about 80 miles from Modesto.

Additionally, as we reported in the story linked above, Sunflower is planning a store in San Jose, which will be its first market in Northern California's San Francisco Bay Area.

Sunflower Farmers Market has now confirmed it plans to open a store in Modesto's McHenry Village shopping center (at McHenry and Briggsmore), in October of this year. The store is going into a building being vacated at the end of this month by Philips Lighting & Home, a retailer of home lighting and related products. Philips is moving to a smaller building in the same shopping center.

Sunflower Farmers Market this week posted the Modesto October 2011 opening date on its website. The McHenry Village address isn't listed on the website though. However, a Sunflower Farmers Market source confirmed the McHenry Village site for us this week.

In addition, McHenry Village's marketing staff ran a full-page ad in today's Modesto Bee, the daily newspaper in the city, in which it included a mention that Sunflower was opening as the food and grocery store anchor in the center in October, along with announcing the opening of two other new specialty retailers going into the center.

The 28,000- 30,000 square-foot building that will become a Sunflower Farmers Market in October has historically been home to grocery stores. Until closing in the 1970's a Lucky supermarket (pre American Stores and Albertsons Inc. days) operated in the building in McHenry Village.

In the 1980's a local chain, New Deal Markets, which no longer exists, put a store in what was then the vacant Lucky store building. New Deal, which at the time was owned by Canada's Provigo, operated the store for about two decades before closing it in the early 2000's. The family-owned lighting retailer took over the building a couple years after the New Deal supermarket was closed.

McHenry Village contains a wide variety of retail stores, shops and other businesses, including a CVS Pharmacy, a health foods store, numerous specialty, gift and clothing retailers, restaurants and cafes, a bank, travel agency, beauty salons, a medical office complex and other types of service businesses and commercial offices.

Sunflower Farmers Market will be the anchor tenant in what is Modesto's oldest major commercial shopping center (built in the 1950's), which before the Vintage Fair Mall was built in the city in the 1970's was Modesto's main shopping venue.

The Roseville store opening in May and the Modesto unit opening in October will be Sunflower Farmers Markets' first two locations in California.

The fast-growing farmers market style grocery chain operates 33 stores in Colorado, Arizona, New Mexico, Texas and Utah. Last year, when there were 30 stores, Sunflower president Chris Sherrell said the chain's annual sales were about $550 million.

Thus far 2011 has been a challenging period for Sunflower Farmers Market.

In January an employee of one of its stores in New Mexico was arrested, after an investigation by police, for putting semen into yogurt that was being sampled to shoppers in the store.

And on February 12, the co-founder and CEO of Sunflower Farmers Market, Michael Gilliland, resigned as CEO and chairman of the grocery chain's board shortly after being arrested in a police sting operation in Phoenix, Arizona, in which he has been charged with planning to have sex with an underage prostitute.

In the felony criminal complaint against Gilliland, the female police officer involved in the sting operation says he contacted her from an advertisement the police department placed on a website. The ad offered sexual services from a 17 year-old. After talking with the police officer who he thought was the 17-year old prostitute, the complaint says he arranged to meet the police officer at a Phoenix, Arizona hotel, and to have sex with her in exchange for $100. Gilliland was arrested, along with a number of other men targeted in the sting operation, before entering the hotel.

Gilliland has pleaded not guilty to the charges. His case is working its way through the court system in Arizona.

Gilliland resigned on February 12, 2011, just a couple days after he was arrested. He did so in part at the the urging of Sunflower Farmers Market's board of directors. The grocery chain's president, Chris Sherrell, was named acting CEO on February 12, a position he currently continues to hold.

In addition, Bennett Bertoli, a member of Sunflower's board of directors since the chain was founded in 2002, was elected chairman by the company’s board.

Sunflower's board sent out this news release about Gilliland's resignation and its naming of Sherrell as acting president on February 12, 2011, along with wiping out any traces of Gilliland's tenure as founder/CEO of the chain from its website and social media sites, which before February 12 contained links to numerous newspaper stories and magazine feature pieces about Gilliland.

Gilliland, who also is the co-founder of Wild Oats Markets, which grew to become the second-largest natural/organic foods chain in the U.S. after Whole Foods Market and was acquired by Whole Foods in 2009, was the face of Sunflower Farmers Market from 2002, when the chain was founded until he resigned in February.

For example, he was the go-to-guy for press interviews and other forms of gaining publicity for the grocery chain. He also received numerous awards, which Sunflower touted for publicity purposes, including being honored earlier this year by the Chamber of Commerce in his hometown of Boulder, Colorado, where he divides his time, along with living in Phoenix. (See the stories linked at the end of this piece for details.)

But since his resignation, and with good reason, Sunflower has played down Gilliland's past involvement in the chain, including being referred to by the chairman of the board, Bennett Bertoli, and acting CEO Sherrell, as a non-majority investor in the company, which apparently Gilliland has become after having his ownership diluted by the various multi-million dollar investments that have been made by outside investors over the last few years, which Sunflower Farmers Market has used to fuel its growth.

Sunflower's board and senior management has done a good job of handling Gilliland's arrest and situation, acting fast to gain his resignation, communicating it clearly, and then moving on.

That moving on includes continuing to grow its store count. The newest Sunflower store opened on March 16 in Salt Lake City, Utah.

And with the opening of its first store in California, in Roseville, in May, followed by the acquisition of the Modesto site, the grocer is demonstrating that despite a tough couple months thus far in 2011, it's moving forward under new leadership.

And, based on experience, research and reporting, its our analysis the McHenry Village location in Modesto is going to be a strong one for Sunflower Farmers Market. The McHenry and Briggsmore location is central, meaning the store will draw shoppers from various parts of the city of 205,000. Additionally, the shopping center and surrounding area has a high traffic count already and should grow with the addition of the market.

Further, Modesto doesn't have a major natural and organic foods-focused retailer, such as Whole Foods Market or a similar chain. Sunflower will be the first in the city, although many supermarkets and grocery stores like Safeway, Trader Joe's, Costco, Save Mart, Raley's, Fresh & Easy and others in Modesto offer significant selections of natural and organic products. The city also has a number of independent natural/health food stores, like the one in McHenry Village noted above.

But Sunflower's focus on natural and organic products, including offering an extensive selection of conventional and organic fresh produce, and doing so at discount prices, is a niche currently not being filled in the Modesto market, which is what we said last year when discussing the chain's opportunity were it to locate a store in the city - which it now plans to do not many months after we wrote about it - with the October opening of the Sunflower market in McHenry Village.

Related Stories

December 9, 2010: Launching Sunflower Farmers Market Into Northern California is a 'Second Act' of Sorts For Founder-CEO Mike Gilliland

December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011

September 28, 2010: Grocer-Entrepreneur, Sunflower Farmers Market Founder & CEO Mike Gilliland Honored By Hometown Chamber of Commerce

September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April