Whole Foods‘ American parent is testing lower-priced stores in an effort to expand its customer base. If successful, the concept could come to Canada as part of its intended 40-store Canadian rollout in the coming years. The new American stores will be located in lower-income neighbourhoods. The first test store opened Wednesday June 5th in Detroit and two more will open this year in New Orleans and on Chicago’s South Side.
The stores will differ from regular Whole Foods stores in the following ways:
- Lower prices (as is the store’s goal),
- Fewer employees per store,
- More frozen and pre-packaged food, and
- Increased product concentration of its in-house label, ‘365’.
The goal is to bring healthy food to lower-income shoppers who might not otherwise be able to shop in regular Whole Foods stores. Whole Foods has fought a reputation of being ‘too expensive’ and, to its chagrin, some have nicknamed it ‘Whole Paycheque’.
The retailer’s American stores earn a gross margin of between 34% and 36%, compared to Walmart and Target‘s 24%-29%. Lowering prices and quality could still positively affect Whole Foods’ bottom line.
Whole Foods may have to be concerned about their brand perception, however, if it chooses to roll-out its lower-cost stores globally. The store’s current high-quality, higher-priced status could be compromised if the concept isn’t handled properly by company management.
Whole Foods currently has 9 Canadian stores and expects to open 40 more locations in the coming years, according to the Financial Post. The company intends on eventually having Canadian sales of about $1 billion. It has about 350 American stores with about $12 billion in sales. It has said it wants as many as 1,000 locations eventually, according to its CEO John Mackey.
