Whole Foods announces plans for new value-price concept
Whole Foods is starting a whole new business. Yesterday, co-CEOs John Mackey and Walter Robb announced the company would launch a new business next year under a separate banner that will be geared to appeal to Millennials, both in product selection and value prices.
Mr. Robb said the as yet unnamed concept would be "unlike anything that currently exists in the marketplace" and would "feature a modern, streamlined design, innovative technology and a curated selection."
While Mr. Mackey announced that Whole Foods had a record second quarter for sales and still expects to triple the number of stores in the chain, it’s no secret that a wide array of competitors from conventional grocers such as Kroger to specialty chains such as Sprouts Farmers Market are competing aggressively in the organic and natural foods space.
"Over the past several years, we have explored the idea of new formats several times but never felt the time was right, particularly given our accelerated growth plans," Mr. Mackey said on Whole Foods second quarter earnings call. "That issue is now behind us, as we have successfully increased our new store openings for six years. In addition, we now have a successful track record of opening some smaller format stores with a lower cost structure."
Although Whole Foods has not yet named its new business, Bloomberg reports the company filed trademark applications for 365, Dailyshop, Clever Egg, Small Batch, Swiftgoods and Greenlife in the past week.
Whole Foods has begun putting together a team to focus on building the new concept and is already negotiating leases, although it did not specify in which markets. The company expects to be able to quickly ramp up the number of stores it operates since store design and product assortment will be fairly standardized.
"We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand," said Mr. Robb. "We look forward to sharing more details about this exciting new venture sometime before Labor Day."
- Whole Foods Market Delivers Record Q2 Sales and EPS – Whole Foods Market Inc.
- Whole Foods Market’s CEO John Mackey on Q2 2015 Results (Earnings Call Transcript) – SeekingAlpha
- Whole Foods Will Introduce New Stores Aimed at Millennials – Bloomberg
- Whole Foods Plans Lower-Cost Chain – Dow Jones Business News/NASDAQ
What will Whole Foods need to do to fulfill Walter Robb’s promise that its new format will be “unlike anything that currently exists in the marketplace?” Is Whole Foods running the risk of cannibalizing its existing business with a lower priced format?