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As expected, the first "365 by Whole Foods" store opened yesterday in the Silver Lake, California, neighborhood of Los Angeles, the first of more than a dozen that it plans to open up around the country over the next two years. And, as expected, there has been ample media coverage of a smaller, more accessible format that Whole Foods says it hopes will have greater appeal to millennials because of lower prices and greater use of technology.

The Los Angeles Times writes: "By 8:45 a.m., the parking lot at the new 365 store was packed. At least a dozen cars, including a taxi, circled the lot. A deejay played music at the entrance while customers streamed in.

Besides lower prices, the 365 store is also tech-friendly. Wednesday morning, produce lined a display in the center of the store. Scattered around the fruits and vegetables were electronic readers slightly larger than iPads with attached scales where shoppers could weigh their produce, see the price and print labels with all the necessary information for checkout."

And: "The biggest selling point at 365 is lower prices, which company executives hope will attract people who wouldn't normally shop at the more expensive Whole Foods.

"Expect a greater amount of non-organic produce and meat sold in smaller packages. Shelves will feature less variety than a typical Whole Foods, and there won't be any butchers slicing cuts of meat to order."

Reuters reports: "365's messaging is breezier than its serious elder sibling's. One sign offers 'free air guitars,' while a 'silver kale' mural next to the meat case is a fun, foodie nod to the chain's first neighborhood, known for a hipster feel.

"About half of the brightly colored fruits and vegetables at 365 are non-organic, a greater proportion than at Whole Foods. Produce is priced per piece or per package, rather than by the pound as at cult discounter Trader Joe's.

"365 stores will be about a third smaller than the average Whole Foods outlet and carry roughly a quarter the number of products, reducing real estate and merchandise-related costs.

"Staffing is leaner and no longer specialized. An iPad app replaces wine experts, while meat and cheese are in 'grab-and-go' packages, eliminating the need for staff like butchers and cheesemongers.

"While 365 takes aim at budget gourmets and cash-strapped 'millennial moms,' grocery experts said it also must appeal to people who buy from a range of other food sellers, including Kroger, Walmart and, as well as restaurant delivery companies and meal kit providers such as Blue Apron."

And, an MNB user observed: "I was in the store last week while overseeing our set and of course to take advantage of seeing the format beforehand.

"We came away pretty impressed. If they get some density with these stores over the next year or so 365 will take business from Trader Joe's.

"It’s got a lot of things going for it. Starting of course with the Whole Foods level of quality. Big selling point.   The 365 team worked hard to keep the lower pricing the focus - people will be pleasantly surprised at the pricing/quality ratio.

"The store seems well designed with their target shoppers in mind. The aisles are wide enough for strollers that young moms and dads will be using and for older shoppers who will appreciate the space to maneuver.  There’s a pared back aesthetic but industrial chic rather than warehouse approach. Nothing austere about the setting.

"Aisles are low so you can look across the store. And the product edit seems right - you’re not scanning the shelves for 10 different chips etc. And there’s a real emphasis-seen by the cold room and Euro style displays-for produce. Shoppers will love it I’m sure - Inviting.    In my opinion this format - executed by a new team devoted just to 365 - has the capability to bring Whole Foods quality to many more people in an everyday fashion just as they’ve indicated.  WF still has magic."
KC's View:
I won't be at all surprised if the 365 stores are successful in the short term, but I think it is going to take some time to get a sense whether it is resonating in a differential way with consumers without hurting the mother ship.