Whole Foods sells organic and healthy food, premium products for premium prices. Since the store has pretty high prices a lot of the younger demographic like to refer to Whole Foods as “Whole Paycheck”. To try and fix this Whole Foods has announced they will be opening newer and smaller stores that are targeted at millennials. The grocery store chain wishes to add some new technology, so they reduce the prices and will attract the attention of millennials.
With competition such as Trader Joe’s, Kroger, and even Walmart, Whole Foods has been taking a hit from the younger demographic. However, when a store tries to create a new one with lower prices it has a tendency to not work. Retail consultant Jim Hertel, from Willard Bishop, said that “The cautionary tale is, managing two banners for two sets of consumers within one organization is a hard thing to do.” Running one successful store is pretty difficult to do in the first place, but now adding a second may cause problems down the road.
The new technology Whole Foods wants to add to attract millennials will help keep the prices low, since it takes away from having more labor costs. They want to add “smart” grocery carts that can scan items as you go and help navigate the customer around the store, but if the store is already going to be smaller then would they need the smart cart? The younger demographic may think that the smart carts and all the other tech in the store will be interesting to check out initially, but Whole Foods will have to be sure that some of the tech won’t be a one trick pony. They are there to do grocery shopping.
Whole foods made the announcement about the new stores Thursday and after the announcement their stock went down 9%. Maybe some people don’t have the faith in the store like Whole Foods does. These new stores have all the potential to succeed. Lower prices is essentially is what the younger demographic is looking for. They don’t have as much money as someone older because they are not as established. Most of them just got out of college and have survived on ramen for about four years. Healthy organic food at a reasonable price is all they really need.
Hopefully, Whole Foods can juggle both store chains. The new stores are set to open next year.