Natural foods chain Sunflower Farmers Markets has opened its first store in Texas, the Austin American-Statesman reports. With stores that are smaller than those of traditional grocers, Colorado-based Sunflower touts its rock-bottom prices, convenience and wide selection of produce.

In addition to the Plano store, which opened Nov. 12, the first of several planned Austin-area stores -- at William Cannon Drive and Manchaca Road -- is scheduled to open in January, followed by a second Dallas-area store later in the year.

Sunflower will be the first significant new grocery player to enter the Austin market in years, and it aims to be a major competitor among organic food stores such as Whole Foods Market, Central Market, Sun Harvest and Wheatsville Co-op.

Customers who had lined up for Sunflower's Plano opening said they were lured by advertisements offering grapefruit at 10 for $1 or natural lean ground beef for $1.57 a pound.

But the real attraction was the free bag of groceries the first 200 customers received, a popular draw for shoppers who said they are watching every penny as the economic downturn continues.

Sunflower wants to lure customers as concerned about price as about organic and natural foods. Sunflower offers a mix of organic and conventional foods, and hopes to undercut even Wal-Mart on its produce prices.

In Austin, Sunflower will go up against market leader H.E. Butt Grocery Co., which owns Central Market and stocks some organic and natural foods in its H-E-B stores, as do Wal-Mart and Randall's.

Started by Wild Oats co-founder Mike Gilliland in 2002, the first Sunflower Market opened in Albuquerque, N.M., though the store is based in Boulder, Colo. Gilliland left Wild Oats in 2001.

With Sunflower Market, Gilliland is targeting the 60 percent of customers he calls "part-time natural foods folks," those who are somewhat interested in natural foods, but not necessarily willing to pay more for them.

In 2007, Sunflower received a $30 million investment from PCG Capital Partners and began rapidly expanding into Arizona, Colorado, Utah, Nevada, New Mexico and Texas. Gilliland said Sunflower has no plans to expand beyond those states and instead will focus on more stores in the states it already serves.

"Serious food. Silly prices" is the Sunflower motto. The market uses its own distribution and delivery system and local food sources in an effort to offer the lowest-priced produce of any grocery competitor.

Industry experts say Sunflower is smart to position itself around the low-price theme.

Whole Foods, which historically has performed well during recessions, is now watching its store sales growth slow and its profits fall. To shore up sales, Whole Foods began a national Whole Deal price promotion, which has included coupons and frequent-shopper cards.

Historically, when a Whole Foods store opened near a Wild Oats, the Wild Oats store would lose 40 to 50 percent of its business, Gilliland said. With the Sunflower stores, that doesn't seem to be the case. According to Gilliland, in Colorado, when a Whole Foods opens near a Sunflower, there's a small effect on sales the first week, and then a week later it is back to normal.