Whole Foods is Launching a Cheaper Organic Chain That Millennials Can Actually Afford
By Augustine Reyes Chan
May 7, 2015
Face it. We love Whole Foods for its organic and natural foods but balk at its prices, which is why the chain is known as “Whole Paycheck.”
That’s about to change. In a company press release revealed yesterday, the upscale Texas-based grocer will be launching a separate chain that will cater to millennials who want to eat healthier foods but can’t afford Whole Food’s prices.
The new stores, as of yet unnamed, will start rolling out next year and will have a “modern, streamlined design, innovative technology and a curated selection,” co-CEO Walter Robb said. While “aimed at millennials,” the new chain “will deliver a convenient, transparent, and values-oriented experience,” that will also appeal “to anyone looking for high-quality fresh food at great prices.”
All of this sounds great, but how do you promise cheaper prices for healthy foods while still making a profit? Neil Saunders, CEO of retail consultancy Conlumino, explained Whole Foods “still has a problem on price,” and “(Millennials) just don’t have the disposable income to make that their destination of choice for grocery shopping.”
The new chain, with more information about the company and its locations planned for release before Labor Day, will be facing an upward battle. For example, Whole Foods sells a gluten-free cheese pizza that costs $7.49, while Trader Joe’s, Whole Foods main competitor, sells a similar item for $4.99. According to DCist, comparative products at both Whole Foods and Trader Joe’s consistently reveal that Trader Joe’s prices are cheaper.
In addition, by the time the new stores start appearing next year, Walmart and Target will have continued to open up convenient, smaller formats of its stores containing fewer products but with emphasis on fresh foods and snacks. Many mainstream grocers like Stop & Shop and ShopRite have also incorporated natural and organic foods to its offerings.
But Robb is more optimistic, saying, “This marketplace continues to grow and explode and I think we think by creating a second growth vehicle for our company, we can broaden the accessibility to fresh healthy foods.”
We’ll have to wait and see, but for Whole Foods, which has more than 400 stores in the U.S., Canada and the United Kingdom, the new venture might be its best bet.
Once the darling of Wall Street, Whole Foods’ shares were recently down after second quarter earnings missed analyst expectations. Same-store sales increased 3.6% in the 12 weeks ending April 12, but were way below Wall Street’s expectations for 5.3% growth, Fortune reports from facts obtained by Consensus Metrix.
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