retail news in context, analysis with attitude

As Phil Collins might have put, it, there appears to be "something in the air tonight..."

Fortune reports that Whole Foods, responding to a quarterly report which suggested that growth at the company was slowing, has decided to launch a new chain of lower-priced stores that will be more accessible to consumer and could eventually be as large as the mother ship.

According to the story, the chain is "for people who can’t otherwise afford to buy its premium and organic food and will "offer a curated selection and have a simpler design to cater to people who want Whole Foods quality without paying Whole Food prices, particularly customers in their 20s and 30s."

"It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great price,” co-CEO Walter Robb said in a statement. “We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand.”

The first of these new, as yet unnamed stores are slated to open next year, with a fast rollout planned once the concept has been tested and proved.

• The Washington Post reports that "Macy’s is launching a new fleet of discount stores that it hopes will help it better compete for bargain shoppers.

Four pilot stores, called Macy's Backstage, will open in New York next year, the company said, and the Post writes that they "will be similar to Nordstrom Rack or TJMaxx, offering a mix of clothing and home goods at 20 to 80 percent off their original prices."

"We believe we can deliver a whole new level of value to customers who appreciate fashion and love to hunt for a bargain," said Peter Sachse, Macy’s chief innovation and business development officer.

The Post goes on to write that "the launch of Macy’s Backstage is just one of several major strategic moves the department store chain has made so far this year.  It scooped up beauty retailer Bluemercury for $210 million, its first acquisition in more than a decade. It also restructured its merchandising and marketing functions to better suit what’s known as omnichannel retailing, in which shoppers move seamlessly between  in-store and online shopping."
KC's View:
Less so than Macy's, (which is following a path already walked by Nordstrom Rack), I think this is something about which Whole Foods needs to be very careful.

Will these new, lower-priced stores be in the same markets as Whole Foods stores? Different markets? How much overlap will there be in terms of products? When they carry identical SKUs, how will they justify higher prices in one store than in the other ... or will they have to lower the prices at Whole Foods, in which case, why create a whole new chain?

I understand the compulsion here, but it seems to me that this announcement must be making the folks at companies like Sprouts very happy, since it seems to concede that Whole Foods' efforts to lower its prices have not been successful, and signal that it will be getting into a side of the business at which it is not yet proven.

There's another line in "Something In The Air Tonight" that goes, "Well, if you told me you were drowning, I would not lend a hand." Which probably is how Sprouts is feeling.