In a bid to shake off its reputation of a wallet buster, Whole Foods eyes millennials, promises to slash prices, and offer unbeatable deals to budget-conscious people in a new chain slated to be launched the following months.
The move is designed to provide the grocery chain with a competitive edge in a business that is already very crowded. Last fall, the company announced another decision designed to revive sales. It planned to focus more on its prepared foods section and offer more deals to longtime customers.
But the launching of the new chain is expected to be a game-changer. The chain dubbed 365 will cater the tastes of younger people on a low budget including Millennials and other health-conscious people.
Analysts are currently concerned that the recent decision would create unwanted competition between the supermarket chain’s two brands of stores. But Whole Foods has a big stake despite the risk.
On Wednesday, the company’s latest financial results report showed that though sale volume has risen 3 percent over the last quarter, sales volume in stores that are older than one year slipped 1.8 percent. The retailer explained that the decrease was caused by both a lower number of transactions and a lower value of the products purchased on every transaction.
The latter problem may be linked to the company’s recent strategy to be more aggressive with discounts including three-day sale of discounted products. Plus, the promotions are still available, so the situation won’t get better any time soon.
The company also announced other ways o cut prices including providing digital coupons to their customers via the smartphone app.
The rise of the overall sale volume may be tied to the fact that the chain has recently running more stores than in the past, although the expansion is slowing down. Since January, the chain has opened 38 new stores, and has plans to add extra 30 by the year’s end.
Whole Foods currently focuses on slashing prices because many competitors including Walmart and Target have organic foods at more alluring prices on display. Yet, opting for discounts in 365 stores may seem paradoxical because the store will target less affluent customers seeking a more personalized shopping experience.
Yet, the only solution to prevent the new chain from devouring the rest of the business is to make the new stores differentiated enough. co-CEO John Mackey announced this week that the main business would remain a place for innovation, focusing on prepared food and customer experience, while the 365 branch would focus on convenience and customers’ particularities. Reportedly, the 365 stores would include tattoo parlors for their Millennial clientele.
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