By Annie Gasparro
Whole Foods Market Inc. said it would use one of its house
brands, "365," as the name for a new sister chain of lower-priced
grocery stores it hopes will attract younger customers.
The chain, to open next year, will be called 365 by Whole Foods
Market, and will be led by Jeff Turnas, who has worked at the
Austin, Texas-based chain for 20 years, Whole Foods said
Thursday.
Whole Foods hopes the new chain will revive sales growth that
has suffered as mainstream grocery retailers like Wal-Mart Stores
Inc. and Kroger Co. have increased offerings of natural-and-organic
foods, often at lower prices. Some analysts say Costco Wholesale
Corp. recently passed Whole Foods in organic-food sales, knocking
the industry pioneer from its pedestal as the largest seller in the
country.
Whole Foods for years has being trying to rid itself of its
"Whole Paycheck" reputation for high prices, but those efforts
caused its gross profit margin to suffer and sales haven't picked
up as much as it hoped.
Whole Foods says 365, which is also the name of its lower-priced
private label brand, will let it tap into those consumers who avoid
shopping at its existing stores. Announcing the plan last month,
executives said these new stores would have a trendier atmosphere,
with high-tech ways of interacting with shoppers that help keep its
costs down.
Some retail analysts said the value-focused chain, which is
expected to largely carry private-label foods, could help Whole
Foods compete with Trader Joe's, which tends to attract younger
shoppers who want affordable, natural foods. But other analysts say
the sister chain will simply steal customers from the company's
existing Whole Foods brand.
The company has said it still plans to eventually expand to
1,200 stores in the U.S. from 400 now.
Write to Annie Gasparro at annie.gasparro@wsj.com
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