According to the Chicago Tribune, Whole Foods, the leading organic and natural grocery chain, plans to open smaller, value-focused stores starting in 2016. The Austin, Texas-based retailer has not said where the stores will be or what they will be called, but says it is already negotiating leases and building a team solely focused on the new concept.
“Offering our industry-leading standards at value prices, this new format will feature a modern, streamlined design, innovative technology and a curated selection,” said Walter Robb, co-chief executive officer of Whole Foods Market. “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 upscale chain has been struggling recently with slowing sales growth. In fact, second-quarter sales at long-standing stores rose just 3.6% this year, down from gains of 4.5% and 6.9% in the 2014 and 2013 periods, respectively. This could be the result of increasing competition from other retailers in the organic and natural category. For example, Kroger’sSimple Truth brand has already hit $1.2 billion in sales in fiscal 2014 and continues to grow at a double-digit rate.
The new format could help Whole Foods appeal to those shoppers who may have previously felt intimidated by Whole Foods’ higher-end feel and premium price perception. The two concepts could allow the company to go after more price-sensitive shoppers without eroding its margins much at its traditional stores.
