Whole Foods Set to Debut New Small Format Store

Whole Foods Market announced plans to introduce a new “quick-shop store format” named Whole Foods Daily Shop, with the first location slated to open later this year on the Upper East Side in Manhattan. Ranging between 7,000-14,000 square feet in size, the new small format banner will be comparable in size to a Walgreens or CVS store footprint and approximately a quarter to a half of the size of a typical Whole Foods.

According to the company announcement, the Daily Shop stores will focus on convenient grab-and-go options and grocery essentials and showcase its first Juice & Java beverage-forward foodservice concept. In addition, we can expect Whole Foods customer favorites including “an ample selection of fresh, seasonal produce, meat and seafood, prepared foods like sandwiches and pre-packed meals, breads, alcohol, and supplements, as well as a handpicked range of local specialties and [the] 365 by Whole Foods Market brand.”

Whole Foods Market Daily Shop. Photo Credit: Whole Foods

Whole Foods has experimented with other store formats in the past with varied success. McMillanDoolittle first reported on the 2016 launch of the 365 by Whole Foods Market concept, which was positioned as “a smaller-store concept where value meets quality”, and intended to offer natural and organic products to cost-conscious millennials at lower prices than traditional Whole Foods stores. Amazon’s acquisition of Whole Foods in 2017 contributed to the demise of the 365 concept. After the deal, Amazon began slashing prices at Whole Foods through its Prime Deals promotions, effectively narrowing the price gap between the Whole Foods and the 365 brands and diminishing the latter’s strategic positioning and raison d’être. In 2019, it was announced that all nine 365 stores would be converted into the standard Whole Foods banner.

365 by Whole Foods Market. Photo Credit: McMillanDoolittle

Earlier this year, our team visited Ideal Market in Denver, an outlier in the Whole Foods company portfolio with only two locations in Colorado. The original Ideal Market opened in Boulder, CO in the ‘40s and became a beloved staple in the Boulder community. The store was sold to Wild Oats in the ’90s under the condition that Ideal Market would retain its name & exterior. Several acquisitions later – Whole Foods acquired Wild Oats in 2007 before getting acquired by Amazon in 2017 – a second Ideal Market outpost was opened in Denver (pictured) to test how small-scale neighborhood stores would perform compared to large city-center stores. Since the opening of the Denver location in 2020, no other stores under the Ideal Market banner have been launched, suggesting less than ideal results.

Ideal Market Denver. Photo Credit: McMillanDoolittle

Parent-company Amazon has also struggled to gain traction in brick-and-mortar grocery with its conventional Amazon Fresh concept, whose stores have functioned largely as glorified, customer-facing distribution centers for order pickers. While the company is in the process of recalibrating Amazon Fresh’s growth strategy, it makes sense for them to lean on the well-established Whole Foods brand name to launch the new urban, convenience Daily Shop format and drive continued brick-and-mortar growth. Other retailers such as Target, Walmart, and Nordstrom have also expanded through the launch of smaller format stores, enabling their entry into dense urban markets that lack the real estate to support traditional 100,000+ square foot large format locations.

Amazon Fresh Naperville. Photo Credit: McMillanDoolittle

The core Whole Foods and Daily Shop stores could in theory coexist within the same markets by serving different customer needs, addressing the full basket shopping trip and grab-and-go shopping occasions, respectively. The additional smaller outposts will also be well-positioned to broaden the company’s network of grocery pickup locations, which could concurrently support its Whole Foods, Daily Shop, and Amazon Fresh banners. Notably, the company has not mentioned whether Daily Shop will include Just Walk Out technology, à la Amazon Go, but we could potentially see this integration in future iterations as they continue to refine the concept.

Whole Foods Market Daily Shop. Photo Credit: Whole Foods

The first Whole Foods Market Daily Shop is expected to open later this year at 1175 Third Ave on the Upper East Side of Manhattan. With five additional New York City leases reportedly signed and earmarked already for the Daily Shop concept, Whole Foods appears to be setting its sights on the Big Apple and potentially beyond.

Contact us to discuss your company’s store growth strategy and explore options for new store format development. Also check out McMillanDoolittle’s recent coverage of Aldi’s first-of-its-kind automated checkout store and Chicago’s Asian-inspired Gangnam Market.