Millennial shoppers to spawn a cheaper, trendier Whole Foods chain

Whole Foods announced plans to open a new chain of lower-priced, 'hip, cool, and tech-oriented' stores next year. The target: Millennial shoppers. 

(AP Photo/Tony Dejak)
Shoppers in the produce section at the the Whole Foods Market in Woodmere Village, Ohio. Whole Foods announced plans to open a new, cheaper retail grocery chain targeting Millennial shoppers.

Whole Foods is ditching its "Whole Paycheck" image.

The natural foods purveyor is planning to open a new chain of lower-priced, "hip, cool, and tech-oriented" stores next year – and consumers have Millennials to thank for the new chain.

“It will deliver a convenient, transparent, and values-oriented experience geared toward Millennial shoppers, while appealing to anyone looking for high-quality fresh food at great price,” Walter Robb, co-CEO of Whole Foods, said in a statement. “We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand.”

Robb also said Whole Foods' new sister store, which has yet to be named, will target younger customers with a "modern, streamlined design, innovative technology and a curated selection."

According to the company, stores will start opening next year and expand rapidly, potentially rivaling the original 373-store Whole Foods.

With its new chain of lower-priced, trendy natural foods stores, Whole Foods is responding to two changes in the market place: the proliferation of lower-priced competitors, and the maturation of the Millennial market.

Whole Foods' announcement comes as sales growth has slowed in recent quarters. Sales at stores open more than a year were up just 2.8 percent over the past five weeks, down from historical averages of 7 percent to 8 percent, according to the Wall Street Journal.

That's in large part due to competition the chain faces from mainstream rivals who are offering organic and natural foods – the Whole Foods' niche – at lower prices.

The company is losing market share to rivals like Sprouts Farmers Market and Fresh Market, as well as mainstream stores like Kroger and Walmart, which are offering a variety of organic foods and relatively low prices, according to Fortune.

The new chain is Whole Foods' plan to fight back. And the company hopes to find a secret weapon in Millennials.

Millennials – broadly defined as young people born between the early 1980s to the early 2000s – are one of the newest, and largest, sectors in the market today, and they are a "foodie" generation. 

“There are roughly 80 million of them. This makes Millennials the biggest generation thus far. And one thing is for certain, based on research, they are definitely changing the landscape of the food industry,” Chelsea Davis wrote in a blog for TraceGains, a company that provides food manufacturers with the technology to promote quality and safety in the food supply chain.

As The Christian Science Monitor's Cristina Maza wrote recently, millennials "care deeply about where their food comes from and how it is produced. They are more likely to seek out locally grown produce, environmentally sustainable meat, and nutritionally dense superfoods."

Businesses are taking notice.

A slew of fast-food chains and food companies are reformulating their offerings to make them more appealing to food- and health-conscious millennials. Most recently, Panera said it would eliminate 150 additive-ingredients from its menu by next year, McDonalds is considering adding kale to its menu, Chipotle has said it is banning GMOs from its restaurants, and Kraft is removing artificial colors and flavors from its iconic mac and cheese.

“We’re still light years ahead of others, so it’s going to take them a while to catch up,” Whole Foods co-founder and co-Chief Executive John Mackey told the Journal. “You have to be willing to evolve with the marketplace.” 

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