Despite its convenience, focus on sustainably-raised and GMO-free foods, and comfortable design, whole swaths of grocery store customers avoid Whole Foods for one reason: its high prices. Late yesterday, the company announced it would appeal to those customers by introducing a new brand of less expensive stores.
In a release, Walter Robb, co-CEO wrote, "[W]e are excited to announce the launch of a new, uniquely-branded store concept unlike anything that currently exists in the marketplace. Offering our industry leading standards at value prices, this new format will feature a modern, streamlined design, innovative technology and a curated selection. It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great prices."
The new cheaper Whole Foods will only require you to show 3 years of W-2’s instead of the normal 5 years before allowing you to shop there.— samir mezrahi (@samir) May 7, 2015
Late last year, the Austin-based company began struggling with less-than-stellar sales. To combat the decline, Whole Foods announced that it would begin to offer discount codes. While coupons and discounts are de rigueur in the grocery business, this was the first time in Whole Foods' 35-year history that it saw the need to offer its customers a deal.
The company is currently negotiating leases on new spaces, but has not revealed what it will call the new Whole Foods offshoot. Less-than-Whole Foods? Half Foods? Per the release, the new stores will open next year, and further details will be released before Labor Day of 2015. So far, Whole Foods seems to be making a bit of a play for Trader Joe's business, though their model is quite different.
Fortune notes that the news comes along with more signs that Whole Foods' bottom line is struggling, "The grocer reported same-store sales rose 3.6% in the 12 weeks ended April 12, below Wall Street expectations for 5.3% growth."
The Wall Street Journal spoke with co-founder (and co-CEO) John Mackey about the move. Explaining away the doubt investors might be feeling, Mackey said, "You have to be willing to evolve with the marketplace. You can't not do that because it might possibly take sales from your existing flagship brand." And on staying ahead of the competition, Mackey noted while on a call with the WSJ: "We're doing all we can, but the reality is, there's more competition. Everybody is jumping kind of on the natural- and organic-food bandwagon, and that's really, frankly due to our success."
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Will broke yuppies flock to the new Whole Foods experience for their organic quinoa and dinosaur kale? Whole Foods is betting its Whole Paycheck on just that.
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