Whole Food’s New Concept: A Millennial’s Point of View
When I think of Whole Foods I think: trendy, healthy, and expensive. The company’s success began in 1980 when it opened its first store in a niche market that hadn’t yet been explored; since then, it has had a dominate position in the natural and organic arena. They now have more than 400 stores and annual sales of $14.2 billion. There is no question the company has been successful and was a true disruptor to the supermarket industry. In the years since its origin, other companies have rushed to add healthy options and other ‘Whole Foods like’ incentives. Because Whole Foods was one of the first, no one really noticed or minded, or at least made a fuss about the prices. But as more companies have developed their own organic lines, or new health store concepts have appeared in the market, customers have begun to notice and have started stopping elsewhere. As Anthony Davis, a marketing professor at the University of Southern California’s Marshall School of Business puts it, “Whole Foods has come under criticism for having high prices, the famous ‘Whole Paycheck’ idea of Whole Foods — charging prices that a lot of people can’t afford. And that’s not been particularly good for Whole Foods’ image. That price issue has been a thorn in their side. And if that’s keeping some people away, because they feel it’s too expensive, that new format addresses that issue.”
Last week when Whole Food’s second quarter results were announced, CEO John Mackey dropped a bomb on how the company plans to get things back on track: it is developing an entire new store concept and it wants to open 500 of these stores by 2016. The theory behind it? Mackey explained, “we think a streamlined hip, cool, technology-oriented store unlike any store anybody has ever seen before that has lower capital, lower cost, perhaps little labor cost and lower prices is going to be very, very attractive to that particular generation.” Why announce now? The company is apparently already signing leases where the new stores will operate. While they haven’t announced what the chain will be called or much information about it at all, Mackey did say that it will be geared towards millennials with a focus on technology. Personally, as a millennial, I think this all sounds amazing and I hope they open one in Tampa, but my main question is: besides the price, isn’t Whole Foods already geared towards millennials? What will make it more geared towards my generation than it already is?
While at this point we can only speculate what the store will be like, some analysts have brought up the potential issue of self-cannibalization. Others have argued that this will never work and it will end up like Fresh & Easy or a wanabe Aldi or Trader Joes. While I agree, this is definitely possible, I also think we need to give the company some credit. They came into the market and completely dominated the industry’s natural and organic section. They have a unique store format that is unlike anything else, and they not only know their brand, but they also know their customers. So while some say the company won’t execute it properly, I don’t think they would make such a huge investment and risk if they couldn’t execute properly. Customers’ main complaint with Whole Foods is the price, so they are fixing that and making a hip and trendy supermarket for the generation that has the largest buying power. This could easily be the next niche market that others will flock to.
While any guess goes right now and there are countless speculations on what the company will do and whether it will succeed or fail, the company has said that they will hold an official press conference before Labor Day. As a millennial, I will be waiting with anticipation and excitement to see what the company has in store.