AUSTIN, Texas -- Last week, Whole Foods co-CEO Walter Robb announced that the upscale, healthy grocer will soon launch a new, smaller-format, "convenience" store that “will feature a modern, streamlined design … and a curated selection. It will deliver a convenient, transparent and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great prices.”
He promised to reveal more details about the as-yet unnamed format by Labor Day. The company expects to open the new stores in 2016.
But critics have already begun to speculate on the new concept's chances for success.
“I believe they are misreading the millennial consumer if they believe they can steer them to a value concept,” Carlos Arambula, managing partner at MarcasUSA, Los Angeles, told Forbes. “Within the Whole Foods space there is a need for a value concept, but I believe it will appeal to a different consumer, perhaps the Trader Joe's consumer or the consumer Fresh & Easy failed to attract. I don’t believe there will be cannibalization; it will be an entirely new consumer approaching the concept, and it will not be the Millennial visiting their current format.”
British retailer Tesco's Fresh & Easy small-format fresh grocery stores burst onto the U.S. retail stage in late 2007 and eventually grew to be a chain of approximately 150 stores in California, Arizona and Nevada. Despite tinkering, the concept failed to gain the expected consumer traction, however, and Tesco pulled the plug in 2013, selling the stores to Los Angeles-based investment firm Yucaipa Cos. LLC. Yucaipa recently announced that it is selling some of the stores and refocusing the remaining stores to deliver "a new vision of modern convenience."
Cathy Hotka, principal at Washington, D.C.-based retail marketing firm Cathy Hotka & Associates, told the publication, “Trader Joe’s has succeeded with a curated selection and reasonable prices and a distinctive store experience. What can the new Whole Foods brand do to beat it?”
"Possibility expert" Ian Percy, president of the Ian Percy Corp., Scottsdale, Ariz., told Forbes, “Apart from this meaning there’s yet another competitor racing to the bottom, it does run the risk of consumers thinking: a) Whole Foods has been ripping us off all along, or b) this new format offers poorer quality stuff and that’s why it’s cheaper."
And Tony Orlando, owner of Tony O’s Supermarket and Catering, told the publications, “There are tons of formats out there, and Whole Foods needs to hit this out of the park in order to draw a new crop of foodies to their store, because there isn’t a whole lot of growth out there these days. All of us in this industry need to stay sharp and look for new ways to make our own little world better, or risk being cast aside to the foodie graveyard.”
Click here to view the full Forbes report.
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