365 by Whole Foods Market, the smaller, less-expensive little sibling of the organic-foods grocer, will be inching up the West Coast this summer.
Its first location is scheduled to open May 25 in Los Angeles, with a second opening July 14 in Lake Oswego, Ore., the company said this week.
The third location, in Bellevue Square, is scheduled to open this fall, though no date has been set yet.
The company plans to open up to 10 additional 365 stores in 2017.
The smaller-format stores, a fraction the size of regular Whole Foods stores and costing less to build, represent Whole Foods’ bid to remain competitive at a time when everyone from Wal-Mart to Costco to Kroger is expanding organics selections and specialty stores such as Trader Joe’s are chomping away at its market share.
Whole Foods’ share price tumbled about 36 percent over the course of the last year, and sales growth at stores open at least a year declined quarter by quarter last year. In an interview with Cox Newspapers late last year, CEO John Mackey acknowledged that 2015 was a “challenging year.”
The 365 stores are part of the Austin-based chain’s efforts to turn all that around.
Whole Foods executives hope the smaller stores will reach a broader customer base, including more value-conscious shoppers and those wanting “a less complicated shopping experience,” said Joe Rogoff, Whole Foods’ regional president for the Pacific Northwest.
No $50 balsamic vinegar
In a bid to counter its “Whole Paycheck” reputation, the 365 stores will include products mostly from value- and moderately priced lines.
“You won’t find a $50 balsamic vinegar on the shelves,” Rogoff said.
The stores will have prepared foods, hot bars and salad bars, but no counter service.
A large produce section — “one of our signatures as a company,” Rogoff said — will also be part of the 365 stores.
But prices on produce and other items will be lower than at the regular, larger store, he said.
That’s because building and running the 365 stores will cost less than the regular Whole Foods stores.
The 365 stores will be about 25,000 to 35,000 square feet. The Bellevue Square store will be about 30,000 square feet.
That’s smaller than the regular stores, which run about 35,000 to 55,000 square feet, most of them at least 40,000.
The cost of building a 365 store is only about 60 percent of a full-size store, since there won’t be a full kitchen, nor the same kind of meat-cutting or fishmongering operations.
The staff will also be smaller: 80 to 100 employees versus 150 to 600 for the full-sized stores.
Each store will also have one or two “Friends of 365” — local vendors who set up shop within the stores.
Tattoo parlors and record shops were among the ideas the company reportedly considered.
Rogoff says that, at least in its first stores, those “friends” won’t offer anything other than food or beverages.
The Bellevue 365 store has space for one such “friend” — “and potentially one more if we get creative. And we’re trying hard to be creative,” he said.
Rogoff said the company is “in conversation with a very well known local restaurateur who has a good concept,” but declined to say more.
Neil Stern, retail analyst with McMillanDoolittle, said the 365 stores may help “reposition Whole Foods in the market as not just a store for affluent customers. And perhaps more importantly, position themselves to better serve millennials.”
It’s unclear to him how well the plan will work.
“A lot of their success hinges upon managing expectations,” Stern said. “Will consumers be satisfied with perhaps a stripped down Whole Foods if they’ve shopped other stores? That said, Whole Foods has been very creative in the past at creating compelling consumer experiences. This will definitely be one of the more closely watched initiatives in retail.”
