Whole Foods plans new chain to court millennials

This March 27, 2014 photo shows shoppers in the produce section at the the Whole Foods Market in Woodmere Village, Ohio. Whole Foods reports quarterly financial results on Wednesday, May 6, 2015. (AP Photo/Tony Dejak)

NEW YORK (AP) — Whole Foods is planning to open a new chain of stores that courts millennials with lower prices as it faces intensifying competition as a purveyor of organic and natural products.

The company said Wednesday it’s building a team to focus exclusively on the new concept and that it’s already negotiating leases. Stores are expected to start opening next year, followed by a “fairly rapid expansion,” it said.

Walter Robb, co-CEO of Whole Foods, said the stores will also appeal to younger customers with a “modern, streamlined design, innovative technology and a curated selection.”

A name for the new chain wasn’t disclosed; the Austin, Texas-based company said more details will be shared before Labor Day.

The plans come as Whole Foods — which has more than 400 locations — has seen its sales growth slow as organic and natural foods become increasingly mainstream. That is pressuring the company to draw a sharper distinction between itself and competitors. Last year, for instance, it launched a program that ranks produce and flowers based on their environmental impact.

At the same time, Whole Foods is trying to appeal to a broader audience by combatting its “Whole Paycheck” image and keeping prices down. But that push is expected to nibble away at its profit margins.

The new chain tailored toward younger consumers could also pressure margins, given its focus on lower prices. But during a conference call, Whole Foods co-founder and co-CEO John Mackey said it will broaden the company’s reach with a new generation of people interested in natural foods.

Mackey dismissed the suggestion that it might cannibalize sales at existing Whole Foods stores; he said he still thinks Whole Foods can triple its number of locations in the U.S.

The company said it will not need a new distribution network for the new concept.

For the three months ended April 12, Whole Foods said sales at established locations rose 3.6 percent, or 3.1 percent when excluding the benefit of the timing of Easter this year.

The figure, a key metric of health, fell short of the 5.3 percent increase analysts expected, according to FactSet. For the current quarter so far, the figure is up 2.8 percent.

Shares of Whole Foods Market Inc. dropped more than 11 percent to $42.40 after-hours.

Total sales were $3.65 billion for its second fiscal quarter, also falling short of the $3.71 billion analysts expected, according to FactSet.

Profit rose 11 percent to $158 million, or 44 cents per share. That was a penny more than expected.


Follow Candice Choi at www.twitter.com/candicechoi

  • bill9860

    Or, you could just lower the prices in the current stores save save all the cost of more locations competing is the same areas

    • Fritzer

      Yeah, lower your prices. Now my favorite thing from there are their onion rolls, which are pretty darn good for making sandwiches.

  • Boss Hogg

    The store attendants are all on notice to call the police if anyone over the age of 30 enters the store. Likewise, no one under 30 will henceforth be allowed in a “normal” Whole Foods.

    The attendants in the millennial Whole Foods must be over 50 and remind the shoppers of their parents. They must appear to be dumb, fumbling, out-of-synch and too poor for the taste of the shoppers. The attendants in the 30+ Whole Foods must be under 30 and remind the shoppers of the idealized version of what they had hoped their children had turned out to be. Ivy League educations won on academic or athletic scholarships, bright, cheerful, gloriously beautiful and all in a non-competitive way that just reeks of beatific perfection.

  • Mike W.

    This sounds like the sort of panicked, emergency planning a supermarket CEO does after someone tells him about Wegmans.

  • Empowered

    Millennials my behind! WFM prices are high, and every age group shops there. They could stand to lower their prices on some of that tasteless organic stuff. What are they going to do card you when you go through check out and tell you, you can’t purchase less expensive items because you’re too old? Give me a break!

  • lastfirst1701

    Last time I stepped in a Whole Foods was probably over 5 years ago, not really impressed. Not only that, with a Wegmans nearby….who needs Whole Foods, Giant, Shoppers, Safeway, Harris Teeters, etc.

  • abigail

    Haven’t been to a whole foods in a while. Every time I go in there I get super stressed and feel under dressed :)

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