Whole Foods, owned by Amazon, abandons expansion of 365 stores

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Whole Foods Market has already had an ambitious plan to increase customer attractiveness with its 365 stores. But now, we say goodbye to the cheaper and more economical store format.

Whole Foods General Manager John Mackey told his employees that the grocery chain would open more new Whole Foods 365 stores, according to an internal email reviewed by Yahoo Finance. The 12 existing stores, the most recent of which opened in Atlanta in December, will remain in business.

Mackey said the main reason for this change in strategy was the prices of Whole Foods. "As we have consistently lowered prices in our main Whole Foods Market stores over the past year, the price distinction between the two brands has become less relevant," wrote Mackey. "As the company continues to focus on lowering prices over time, we believe the price gap will further diminish."

"365's teachings and innovations have been integrated into the Whole Foods market and the company will continue to innovate and experiment," a spokesman for Whole Foods said in a statement.

Amazon offers discounts and weekly offers to Premium members who shop at Whole Foods stores. But in August, 40% of the more than 2,000 Whole Food buyers surveyed by Yahoo Finance said they believe that prices for in-store products are not really lower.

Launched in 2016, 365 stores offer Whole Foods private label products, including 365 Everyday Value products, to attract budget-conscious shoppers who have avoided the high-end stores formerly known as Whole Paycheck. Following the acquisition of Amazon, these brands have become increasingly available in the usual Whole Foods stores, Amazon.com and even Amazon Go.

The team would have focused its efforts on growing the core brand of the Whole Foods market, according to the e-mail. Employees who have been working since 365 will be integrated with other areas of Whole Foods.

Brittain Ladd, CEO of Six-Page Consulting, said that this decision meant that more private label products could arrive at Whole Foods stores, a common strategy allowing grocers to lower prices in a company. at low margins.

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(David Foster / Yahoo Finance)

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Whole Foods has set high expectations for its 365 stores. These were the efforts of high-end retailers to attract cost-conscious millennial buyers. In May 2017, a month before the announcement of the $ 13.7 billion acquisition of the channel by Amazon, Mackey announced to investors that Whole Foods had 22,365 stores in development in the United States and that they would increase that number.

The stop of the 365 stores comes at a time when Whole Foods is considering a national expansion. With support from Amazon, Whole Foods plans to open more stores in locations over 45,000 square feet and attractive sites that were hosting retailers like Sears.

Meanwhile, Amazon has expanded its own small grocery store footprint with Amazon Go. With a cashless payment experience, Amazon Go has been extended to nine locations in the United States over the past year.

"The leaders of Whole Foods Market have made this decision independently and have no connection with Amazon Go," said the spokesman for the grocery store, referring to the withdrawal of its 365 stores.

According to Mr. Ladd, this decision is part of Amazon's overall grocery strategy. "Why do you need Whole Foods 365 and Amazon Go, while Amazon Go offers the same number of stock units (SKUs)? It was too confusing for the customers, "he said. "Amazon retains a strategy of having larger Whole Foods stores offering a significant immersion experience in the grocery store, and Amazon Go to be the fast and convenient store."

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