The Motley Fool offers two reasons it believes that Whole Food's new "365" concept - a smaller format with lower prices and a more edited selection than traditional Whole Foods stores, along with features designed to appeal to millennials - will be successful.
First, "More than any other supermarket chain, the new 365 seems to resemble Trader Joe's, the alternative grocer that has grown to nearly 500 stores nationwide." Since Trader Joe's clearly "is doing something right," the analysis suggests, "mixing the Whole Foods brand with the Trader Joe's operational model should be a winning combination."
Second, "when Whole Foods first announced its Friends of 365 program, it was mocked for suggesting the idea of tattoo parlors in its stores, but its plans for the first store make it clear that the company will include mostly food and beverage concepts in the new stores, which seems to be the most logical addition." Expect that the sum of the parts will be greater than the whole, the analysis predicts.
First, "More than any other supermarket chain, the new 365 seems to resemble Trader Joe's, the alternative grocer that has grown to nearly 500 stores nationwide." Since Trader Joe's clearly "is doing something right," the analysis suggests, "mixing the Whole Foods brand with the Trader Joe's operational model should be a winning combination."
Second, "when Whole Foods first announced its Friends of 365 program, it was mocked for suggesting the idea of tattoo parlors in its stores, but its plans for the first store make it clear that the company will include mostly food and beverage concepts in the new stores, which seems to be the most logical addition." Expect that the sum of the parts will be greater than the whole, the analysis predicts.
- KC's View:
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Maybe.
On the other hand, if 365 is seen as imitative of Trader Joe's, it may not be seen as a long term and sustainable business model. Whole Foods has been arguing that this format will be innovative, and while there's nothing wrong with trying to compete with Trader Joe's for a specific customer, it would be an enormous mistake to just imitate another retailer. It has to give people a compelling and differentiated reason to not shop at TJ's.
Plus, it remains to be seen whether the Friends of 365 concept will work ... and we won't have any sense until after a few of these puppies open for business.
