Whole Foods 365: The Next Walmart Express?

Analysts raise questions about the seemingly similar approach between Whole Foods Market and its new 365 format.

February 15, 2016

CHICAGO – This year Whole Foods Market is slated to launch a new chain of smaller format grocery stores with budget-conscious shoppers and millennials in mind, reports the Chicago Tribune.

Called 365 by Whole Foods Market, the grocer’s “biggest gamble” comes as the sales dropped nearly 2% at Whole Foods locations open for more than year, which the company attributes to a decline in both the number of transactions and customer basket size, notes the news source. Whole Foods plans to add about 30 new stores in 2016, which includes the new 365 locations. The chain has also partnered with Instacart for its grocery delivery service.

To boost profits, the news source says the chain is planning to grow its prepared foods business and offer more discounts, as retailers such as Walmart, Target and Kroger “have undercut Whole Foods with their own organics offerings.” The strategy to offer more discounts, however, “is somewhat perplexing” given that 365 is intended to be a more convenient shopping experience with more affordably-priced merchandise. 

“If both concepts are going to be pushing hard to communicate value, are they really going to appeal to different types of customers or different shopping occasions?” questions the news source.

Co-chief executive John Mackey, who spoke at last year’s NACS Show on the topic of conscious capitalism, told investors that traditional Whole Foods stores “would be more experiential, offer more prepared foods and be a destination for innovation. On the other hand, 365 would be more convenience-oriented and offer a tightly-edited assortment of goods,” according to the news source. But the relationship between the two brands, the news source continues, “is starting to sound a lot like the relationship between Walmart and its recently-folded Walmart Express concept.”

Without a 365 store event being open yet, time will tell if the format will fall to the same fate as Walmart Express. “After all, there are surely major differences between Whole Foods and Walmart when it comes to the composition and size of their existing store fleets and in the kind of shopper they are trying to court,” writes the news source.

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