Whole Foods’ smaller, 365-brand stores set to debut

Whole Foods’ smaller, 365-brand stores set to debut

In a Los Angeles suburb, Austin-based Whole Foods Market on Wednesday is set to debut its new chain of smaller, value-driven stores.

The first 365 by Whole Foods Market store is scheduled to open Wednesday morning in Silver Lake, Calif., followed by a second store in Lake Oswego, Ore., near Portland on July 14 and a third location in Bellevue, Wash., near Seattle in August.

Company leaders have said they hope the 365 stores will help the retailer shake off its “Whole Paycheck” nickname with lower prices, while drawing millennial and older shoppers alike and injecting new life into the Whole Foods’ earnings. Whole Foods is one of Austin’s highest-profile companies, with 86,000 workers in 449 stores worldwide and about 2,500 employees in Central Texas.

To drum up excitement at the new store, Whole Foods hosted a “Party in the Parking Lot” on Sunday that drew hundreds of curious fans with free samples from suppliers, local food trucks, carnival games and live music.

“It’s been amazing. The buzz around the opening of our first store has overwhelmingly positive,” said Jeff Turnas, president of 365 by Whole Foods Market. “For over a year, this new concept has been taking shape and now to finally see it all come together is a wonderfully rewarding experience for everyone involved.”

Whole Foods says, it has signed 19 leases for its 365 stores, with at least 10 of those to open in 2017, including one in Central Texas, in Cedar Park. Future store locations include several more Los Angeles suburbs, along with Houston, Evergreen Park, Ill., Cincinnati, Bloomington, Ind.; Decatur, Ga; and Gainesville, Fla.

Turnas has said the new stores will give shoppers access to a “thoughtful selection” of “high-quality food in a fun and efficient environment” whether it’s for a quick lunch or regular shopping trip. He said the company expects a strong consumer turnout for the first 365 store opening.

“We’re expecting a great turnout with lots of smiling faces ready to shop,” Turnas said. “It will be a day of discovery – new tastes, new foods and an entirely new grocery shopping experience.”

After years as the organic foods leader, Whole Foods has seen traditional supermarkets, big-box stores and online retailers chip away at its market share.

By early 2016, Whole Foods saw its stock fall following a series of disappointing earnings reports. But this year, co-founder and co-CEO John Mackey has said, would be different, thanks to a new game plan that includes 365, among other efforts.

The 25,000- to 35,000- square-foot 365 stores will compete with the likes of Trader Joe’s, Sprouts and other smaller format brands. Whole Foods traditional stores average 40,000 to 50,000 square feet.

There will be plenty of interested observers keeping an eye on the 365 stores’ performance, from Wall Street investors to direct competitors such as Trader Joe’s, which has created its own popular following of its smaller, value-driven stores thanks in large part to its lower-pricing strategy.

“We believe the new concept could be a way to capture share in markets that are too small for a legacy Whole Foods Market store and to gain new value-oriented customers in existing markets,” Rupesh Parikh, senior analyst for Oppenheimer & Co. Inc., said in a recent note. “We suspect the management team is taking a more aggressive approach given a rapidly changing environment and the desire to retain its market leadership.”