365 By Whole Foods Makes its Much Anticipated Debut
After nearly a year of speculation, the first 365 by Whole Foods opened in the Silver Lake neighborhood of Los Angeles. This is a store, not even opened, that has garnered much discussion. The early consensus has been largely negative—this is a risky venture for Whole Foods that risks diluting the brand.
I have been largely silent on this debate until now. The store needs to be seen and understood, not simply speculated upon. To be sure, Whole Foods has a lot riding on this new concept—sales are stalling, competition is rising and the company is struggling with negative public relations perhaps for the first time. They are no longer the golden child of food retail.
I have been a fairly staunch defender of the company. They are a great retailer, capable of delivering spectacular customer experiences and have been driven by a strong set of core values that have guided them and created true innovation and leadership. Like all great retailers, however, they will only be measured on what they can deliver going forward—not on the past.
365 by Whole Foods has a number of risks. The premise is that they can reduce operating costs, reduce capex in the buildout and reduce prices for customers while maintaining their quality position. A delicate balancing act, particularly while the company is struggling with their core proposition. While Silver Lake is the first example, 19 more 365s are in the works.
Silver Lake is a 28,000 square foot store in a former Ralph’s location. It is a trendy neighborhood that certainly feels like it could support a full Whole Foods. For this reason alone, it will be interesting to see what their neighbors think of the lower cost option. Perhaps they will be expecting more.
So, what are my first impressions?
- It’s going to take some getting used to…. This is a very different type of store. It has elements of a Trader Joe’s, Sprouts and Whole Foods combined together. It even reminds me a bit of Fresh & Easy, which might be a scary comparison but nevertheless picks up on some of their self-service elements.
- It is raw in its look and feel. The store is purposely under-finished…it actually makes me wonder what took them so long to build, as it is really about deconstructing a store, as it leaves open the ceiling and opts for rough fixtures and finishes. It is quite different than the refinement of a Whole Foods. The store is very open so it feels bigger than it actually is.
- It will rely heavily on self-service to reduce costs. There is no service meat, seafood, bakery or deli. The deli relies on self-service ordering of items like pizza, salads and bowls but it is a bit difficult to make the connection there today. While self-service is a common element in many stores, the customer won’t get the same feel of selection and service as they do at Whole Foods.
- Pricing seems less expensive but it is difficult to do the direct comparison to Whole Foods. While there is abundant private label, they also seem to consciously avoid direct comparison to Whole Foods selection.
- Technology is used to drive efficiency. Electronic shelf tags, self-service kiosks, wine and beer finders and Whole Foods first all-digital loyalty program show up in 365. My 365 Rewards is a digital program offering “punch card” offers for key product areas as well as electronic couponing. There are also some fun features like a Teabot that blends teas on site that add a little pizazz.