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Which Products Are Driving Smart & Final’s Store Sales?

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Jun. 6 2016, Updated 11:10 a.m. ET

SFS offers a wide variety of product sizes

Smart & Final’s (SFS) stores under its Smart & Final banner offer products in a wide variety of sizes, ranging from standard-sized products available at conventional grocery stores such as Kroger (KR) to bulk-sized offerings available at larger box warehouse clubs such as Costco (COST).

As per the company’s internal survey, ~42% of its revenue came from the sales of products of sizes that weren’t found at conventional grocers.

Smart & Final offers a selection of ~2,500 club pack–sized items in Smart & Final and Extra! stores. These items are priced to deliver value on larger purchases to both household and business customers.

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Perishable products: A key category

SFS also offers a wide selection of perishable products. Perishables represented 37% of total SKUs in Extra! stores and 29% of total SKUs in Smart & Final stores in 2015. In the company’s Cash & Carry stores, perishable item sales accounted for around 46% of total sales.

Perishable items, especially organic and natural food items, are becoming an important category for the entire food retail industry. Costco has recently overtaken Whole Foods Market (WFM) to become the largest organic food seller in the United States. Costco’s fresh foods segment has been the fastest-growing product category for the company over the last five years.

In 2015, Kroger also registered high growth in its perishable segment at 17.2% year-over-year, accounting for 22% of its total sales. SFS has also been increasing its focus on organic and natural food in order to meet increasing demand. The company has its own private label organic product line called Sun Harvest.

SFS makes up 0.26% of the SPDR S&P Retail ETF (XRT) and 0.05% of the iShares Russell 2000 Value ETF (IWN).

In the next article, we’ll find out more about the SFS store style.

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