Whole Foods Market Inc. has plans to open a new chain of stores that will be geared toward the younger generations. The new chain will have lower prices and will also cost less to run, helping cut down on costs. Co-founder and co-chief executive John Mackey says the new chain will be more “hip, cool, and tech-oriented” to try and attract younger customers who don’t want to spend a ton of money but still want to buy healthy top shelf groceries. Whole Foods is keeping their cards close to the chest, not revealing the name stores or any detailed plans of the new chain, but Mackey is very optimistic, exclaiming “we’re still light years ahead of others, so it’s going to take them a while to catch up”.
A major concern that analysts have is that the new chain will cause cannibalization of Whole Foods existing chain, taking sales and sending gross profit margins downhill. Again, Mackey rebuttals by saying that to succeed one must be willing to change along with the market. Along with this statement Mackey believes that the new chain of stores will only compliment profit margins by attracting a completely different demographic. The goal of the new chain is to have a complimentary chain that targets millenials who are too cost conscious for Whole Foods prices but still want the high quality food.
There has been some speculation on whether or not the new chain will succeed or flop, as Whole Foods’ stock has been fluctuating erratically. To help combat against any cannibalization, current stores are adding more store-branded products and customer-loyalty programs. However, among all the fuss, Whole Foods reported profits increased by 16 million dollars since last year.