Could Whole Foods Market’s new chain be heading this way?

Whole Foods Market’s plans to launch a new format in the U.S. brings up the question of whether Canada is also on its radar with a similar venture. With the first stores to open next year, ‘365 Everyday by Whole Foods Market’ has been billed as a unique format, offering a curated range of its products, incorporating a modern, streamlined design, and innovative technology.

Unique concept to capture shopper spend

We also know that it is going to be a smaller format store, operating with a lower cost structure and offering lower prices. The store branding also points towards a strong private label offer. It sounds like a great concept and Whole Foods is confident that the concept will not only broaden its appeal, but it will also gain a greater share of its existing shoppers’ spend as they shop across both of its formats.

Trader Joe’s in its sights

Whole Foods believes the format will help create a point of difference in a sector that is becoming increasingly crowded. As mainstream grocers broaden their organic and natural food ranges, specialist retailers are also expanding at pace. The vision which has been painted to date suggests that Whole Foods has its sights on Trader Joe’s, one of the most popular retailers in the U.S. and one that has executed flawlessly on the “value with values” model.

U.S. testing and roll-out will take priority

On the question of whether the new format will come to Canada, I believe the chances are relatively low over the next couple of years. It will take the retailer at least 12 to 18 months to refine the model before embarking on a large scale roll-out in the U.S.. It has suggested that it could have the same potential that it sees for its core, larger format stores in the U.S., namely a chain of 1,200 stores. That it will keep it busy for a while!

Opportunity to accelerate Canadian expansion

On the question of whether the model could work in Canada, there may well be a gap in the market to exploit. While Whole Foods continues to add to its Canadian network, progress is relatively slow, adding one to two stores at most each year.  Previously the company has indicated the scope for 35 to 40 stores in Canada. A smaller format store would provide the retailer with more flexibility over site selection, enabling it to potentially ramp up its development pipeline.

Concept hits many consumer trends

My regular visits to Whole Foods Market’s stores here suggest strong consumer demand, and the absence of a direct competitor such as Trader Joe’s or Sprouts Farmers Market suggests a captive audience.  Smaller store formats are also gaining traction globally and Canadian shoppers have limited options in this channel.  Developing a concept which hits all the major consumer trends, underpinned with a strong value proposition, looks like a winner.

If not ‘365 Everyday by Whole Foods Market’, then…

However, the key question is whether the gap in the Canadian market is large enough.  As ever, the issue of scale is an important one, particularly when you consider the scope of the retailer’s existing operations in the country.  What the success of the model in the US may do though is influence and inspire others to develop a similar proposition here. So watch this space!