Fresh Thyme brings new dynamic to Twin Cities grocery market

With the opening of Fresh Thyme Farmers Market in Bloomington on Wednesday, the Twin Cities grocery market will add a new, fast-growing chain that's trying to capitalize — particularly in the Midwest — on increasing demand for natural and organic food.

Chicago-based Fresh Thyme plans to open 10 to 12 stores here in the next four or five years, with deals signed for six more Twin Cities locations beyond Bloomington.

Fresh Thyme is among a new breed of grocery chains that features smaller stores focusing on produce, fresh meat and dairy and mostly eschew traditional packaged food brands. Indeed, fresh produce accounts for 25 to 30 percent of sales at Fresh Thyme compared to 12 to 15 percent for larger grocery stores.

"That seems to be the trend in growth at supermarkets — more fresh and organic," said David Livingston, a supermarket consultant in Wisconsin.

Stores operated by Fresh Thyme and similar concepts have less than 30,000 square feet, Livingston said, while traditional supermarkets usually have more than 50,000 square feet.

Fresh Thyme stores are a hybrid of Whole Foods and Trader Joe's. One side of the Bloomington market features a "Butcher Shop," "Fish Market" and "Kitchen," the latter of which includes prepared foods such as salads, sandwiches and pizzas. There are plenty of dry bulk goods and a big vitamin selection.

The new Fresh Thyme, just south of the intersection of Penn Avenue and American Boulevard, is the chain's 23rd store since its first outlet opened in April 2014. In Minnesota, the company next expects to open a store in Apple Valley and then another in St. Louis Park, both during the second or third quarter of 2016, said Dave Bernier, Fresh Thyme's vice president of operations, who was in Bloomington for Wednesday's grand opening.

Fresh Thyme also has plans for stores in Coon Rapids, Plymouth, Savage and Minneapolis near the University of Minnesota, Bernier said.

Most of Fresh Thyme's stores are in Illinois, Indiana and Ohio, and the company is also expanding into Missouri, Iowa and Wisconsin. It seems to have plenty of capital: Its majority owner is Meijer, a large, privately owned hypermarket chain based in Michigan.

Fresh Thyme was founded by Chris Sherrell, the former CEO of Sunflower Farmers Market, a similar grocery concept purchased by Phoenix-based Sprouts Farmers Market a few years ago. Sprouts and North Carolina-based Fresh Market — both publicly traded companies — are leaders of the farmers-market-themed grocery business, with 212 and 176 stores, respectively, nationwide.

But Sprouts is concentrated in the West and Fresh Market in the Southeast, leaving the Midwest up for grabs.

"There's nothing like us per se here, though we are not coming in with a huge ego," Bernier said. "We have to earn our business."

Fresh Thyme has a big challenge. The Twin Cities sports several Whole Foods and Trader Joe's outlets — prime competitors — as well as more upscale grocery chains such as Lunds & Byerlys and Kowalski's, which are chasing similar customers. Plus, the Twin Cities is a hot spot nationally for food co-ops like the Wedge.

On sales per square foot, Whole Foods, Trader Joe's and food co-ops generally have outpaced farmers-market style grocery stores such as Fresh Thyme, Livingston said. And while farmers-market chains have ginned up a lot of investor interest, the stocks of both Sprouts and the Fresh Market are trading well below their highs.

The Twin Cities grocery market also features a new dynamic — Hy-Vee — that could affect large chains like Cub Foods and Target all the way to more niche players like Fresh Thyme. The West Des Moines, Iowa, chain, which opened its first two stores here in September, would likely have about 20 stores here in the long term if its expansion plan succeeds.

Mike Hughlett • 612-673-7003