What's the Fate of Whole Foods' 365 Small-Format Stores?

July 18, 2017
The fate of Whole Foods' value-oriented, smaller-format stores seems to be up in the air while the retailer awaits the closing of its sale to Amazon.

Whole Foods Market is delaying the opening of several of its small-format, less-expensive 365 stores, reports the Chicago Business Journal. Its suburban area Chicago location, set to open in November, is now being pushed into 2018.

The fate of the value-oriented, smaller-format supermarkets from Whole Foods seems to be up in the air while the retailer awaits the closing of its sale to Amazon.

It’s unclear at this point whether the sites will indeed get the green light to progress as either the lower-priced 365 concept as originally planned, or become traditional Whole Foods stores, or something else.

Other 365 outlets — including those in Bloomington, Ill., Indiana and Toledo, Ohio — have also been pushed or put on hold, according to the Chicago Tribune.
Officially known as 365 by Austin, Texas,-based Whole Foods, the lower-cost concept was intended to attract shoppers on tighter budgets in an increasingly competitive grocery landscape. So far, four 365 stores are currently open, but 22 more remain in the pipeline, company executives have said. In some of those towns, there's uncertainty on when and if the stores will open as planned.

In Toledo, Ohio, the opening of a 365 store slated as the anchor tenant of a $140-million redevelopment in a popular retail corridor has been pushed back to next year, even as other mall tenants open for business.

Whole Foods informed Todelo officials of the delay before the announcement of the Amazon deal, said Brandon Sehlhorst, manager of real estate for Toledo.
"We remain hopeful," Sehlhorst said.

In May, on an earnings call with investors, Whole Foods CEO and co-founder John Mackey reportedly voiced optimism about the 365 stores, even while acknowledging that two of the four stores open hadn't performed to expectations. Going forward, the company at that time planned to ramp up the number of openings while fine-tuning the model, Mackey said. "It doesn't have all the bells and whistles that Whole Foods has, but it also has a significantly lower capital cost."

Obviously much has changed since then. Many industry experts expect Amazon to help Whole Foods remove back-end costs and drive down prices even in the larger-format stores often nicknamed "Whole Paycheck" by some shoppers.

Whole Foods has more than 460 stores in the U.S., Canada and the U.K., according to the company's website.

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