Chicago - Whole Foods Market, facing slowing sales growth at its supermarkets, plans to introduce a new line of stores targeted at millennials next year and expand the brand rapidly.
The stores will have their own brand and offer products at value prices, the Austin, Texas-based company said on Wednesday in a statement. Whole Foods, which didn’t say what the stores will be called, has filed trademark applications for retail grocery services such as 365, Dailyshop, Clever Egg, Small Batch, Swiftgoods and Greenlife in the past week.
Whole Foods is losing shoppers to retailers such as Kroger and Wal-Mart Stores, which are increasing their organic and locally produced offerings. The increased competition took a toll on Whole Foods’ second-quarter sales, which trailed analysts’ estimates and sent the shares plunging after the close of regular trading on Wednesday. The new millennial-focused concept is aimed at bringing some budget-minded customers back into Whole Foods-owned markets.
“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,” Co-Chief Executive Officer Walter Robb said.
The new markets will be smaller than traditional Whole Foods stores, won’t require as much capital investment and will be “tech savvy”, Co-CEO John Mackey said during a conference call. While there may be some overlap with Whole Foods, the new stores will be “very complementary”, he said.
Whole Foods said it’s building a team to focus on the new stores and negotiate leases. The brand will have a “modern, streamlined design, innovative technology” and a more standardised product assortment, the company said. The retailer plans to share more details on the initiative before Labour Day, which comes on September 7 this year.
The grocer already has been trying to attract shoppers with convenience. Last year, Whole Foods partnered with Instacart to offer delivery in 15 cities, including Boston, Los Angeles and Seattle. It’s helping drive sales in those markets, and the company plans to expand the service to new areas, Robb said in February.
Whole Foods fell as much as 12 percent to $42.10 in late trading in New York after the second-quarter results were released. Revenue in the period was $3.65 billion, while analysts projected $3.7 billion. Comparable-store sales growth slowed to 3.6 percent in the quarter, compared with 4.5 percent in the prior quarter.
Bloomberg