Why Whole Foods is going low-budget with a ‘hip, cool’ new chain

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Whole Foods is planning to open a series of “hip, cool, technology-oriented” grocery stores  geared toward young people.


Those were literally the words CEO John Mackey used to describe the new concept on the company's earnings call this week, according to a transcript from Seeking Alpha.

“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,” he said.

Of course, one of the coolest things about Whole Foods is that, at $10.31, they currently have the highest average starting wage of any supermarket in the U.S., according to PayScale.com. They also get relatively high marks on company ratings site Glassdoor.com.

But the Texas-based company is losing its edge on organic food sales. Its revenue has been dropping in recent quarters, and yesterday its share price was too, after it fell short of analysts’ expectations.

So, it’s doubling down on “the millennial generation,” Mackey said, a group he defined as “idealistic” and “quite interested in organic foods,” though they seem to have left out the wage part.

“They're the millennial generation, they’re idealistic, they’re values-oriented, their mission driven, these are all play to Whole Foods Market strength, they’re also very value cautious,” co-CEO Mackey said on the company’s earnings call this week.


The stores will have a “curated,” “more tailored” product mix at “value prices.”

And, again, tech — with things like trying to get more people to buy Whole Foods products on Instacart, and incorporating Apple Pay.


“They will be very tech-savvy stores, and they will be very exciting to, we think, to millennial generation of about 90 million people,” he said.

The company is not yet giving out information about other details like the name of the new stores and where they’ll open, other than to say we’ll know more by Labor Day and that the stores will start appearing in 2016.


But supermarket industry analyst Phil Lemper told Fusion he thinks they’ll be a hit.

“This is a brilliant move to expand beyond their traditional shopper base and frankly could be a great model to build stores in other areas,” he said in an email. “If this clicks, this could be thousands of stores.”


No word yet either on whether “millennials” will have their own secret entrances.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.