The beloved New York natural products retailer Fairway Market is hungry for regional and even national expansion, but will it launch a successful IPO to fund its growth plans?
Scoot over, Whole Foods Market: another natural products retailer is planning to join you on the public market.
Fairway Market, a well-loved chain of 11 stores in New York, New Jersey and Connecticut, announced on Sept. 24 its plans to go public and raise up to $150 million. The retailer, which got its start as a small New York neighborhood market in the 1930s, says it plans to use the money raised from its IPO to fund its plans to open three to four new stores annually in the greater New York City metropolitan area over the next several years.
As The Wall Street Journal’s Deal Journal blog reported, Fairway believes it could “more than triple” the number of stores in its existing region. An additional 90 stores could be supported in the Northeast market from New England to the District of Columbia, while a total of 300 stores could eventually be supported throughout the entire United States, Fairway says.
Why is Fairway so bullish on its growth prospects?
Fairway has been on a bit of an expansion spree since Sterling Investment Partners acquired 80 percent of the company for $150 million in 2007. The retailer has opened seven new stores since March 2009—with the latest being its Westbury, Conn., location, which opened in August. According to Crains New York, Fairway’s 2012 revenues could hit $750 million.
Like many natural products stores, Fairway started as a family business when it was opened on New York’s Upper West Side 78 years ago. Howard Glickberg, grandson of Fairway’s founder, is the vice chairman of development and former CEO of the company. His 29-year-old son, Daniel, has served as a director of Fairway since June 2010 and is now a member of the Fairway board, reports WSJ’s Deal Journal.
As the retailer’s Yelp ratings and reviews demonstrate, Fairway is known for its high-quality produce and meat and cheese selections (the fresh, hand-pulled mozzarella seems to be a particular hit), as well as for its assortment of other natural, organic and other supermarket-type products. As one Yelp reviewer said of the Harlem location:
"Some of my friends swoon when they talk about Fairway, and one has said it is her favorite thing about living in our neighborhood. I didn't understand all the hoopla about Fairway until I came to this location. It is a real, actual grocery store, where you can get a cart and walk down their big aisles and count on them stocking normal, supermarket things. In any other place, Fairway might not be so amazing... but in Manhattan, it does feel pretty special. Lots of good cheese, and olive oil, and pretty much everything you could want... And the staff is really nice, too. I love going there, especially on a weekday when it's not crowded!"
Shoppers aren’t the only ones excited by Fairway. Matthew Casey, a supermarket consultant, told Crains New York that real estate developers are attracted to Fairway because of the traffic the stores generate. Said Casey: “Fairway has incredibly high sales volumes, with several of their stores generating well over $1 million per week, which is a very high number in the supermarket world.”
Whole Foods Market is one retailer that has performed phenomenally well as a public company. In fact, shares of Whole Foods Market, hit a 52-week high the day Fairview announced its IPO plans. Closing at just over $100 on Sept. 24, the retailer’s shares are up 42 percent to date, according to Supermarket News.
In July, Natural Grocers by Vitamin Cottage debuted on the New York Stock Exchange with an opening price of $15 a share, raising $107 million. In its SEC filing, Natural Grocers said its plan is to expand its store base to at least 1,100 locations.
What do you think of Fairway and its expansion plans? How are you funding the growth of your natural products store? Share in the comments below.