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The Austin Business Journal reports that Amazon-owned Whole Foods still seems enthusiastic about its 365 by Whole Foods concept, which fist was launched by the company two and half years ago as a way of addressing concerns that the grocer’s “whole paycheck” image was distancing it from younger consumers. The 365 format, the company hoped, would have greater appeal by being less expensive, with more technology, and a hipper vibe.

Two new 365 stores are scheduled to open this week in the Atlanta market - one in Buckhead and the other in Decatur. “Soon the grocer will have 12 of its ‘365’ locations open,” the story says, with another one planned “near downtown Austin where Whole Foods is based. Another was expected in San Francisco soon, but that city's planning commission seems to be putting the brakes on the project due to concerns of a housing shortage and the impact on mom-and-pop businesses.”

The story also suggests that the 365 format could be ripe for testing of the Amazon Go checkout-free technology in a larger format store; currently, there are just seven Amazon Go convenience-sized stores, with an eighth begging built.

Here’s how the Business Journal frames the speculation:

“Each (365) store employs about 100 people, but the headcount at 365 stores and even traditional Whole Foods Markets could be curtailed as its parent company, Inc., investigates ways to streamline brick-and-mortar retail. Much of it has to do with ‘checkout-free’ technology — something Amazon is keeping at arm's length from Whole Foods.

“Amazon has insisted it has no plans to integrate checkout-free technology at Whole Foods since acquiring the high-end grocer for $13.7 billion last year. That may be because the technology isn't there yet. High ceilings and plentiful products are troublesome for scanners.

“So for now, Amazon is simply conditioning Whole Foods customers to shop with their smartphones — which is the basis of app-based Amazon Go technology — by offering discounts to Prime members who scan their phones at checkout.”

Indeed, there have been reports that Amazon is testing the use of checkout-free technology in a larger and different formats.
KC's View:
For the record, I’ve been predicting almost from the time that the the first Amazon Go store opened to the public that outfitting the 365 stores with the checkout-free technology seemed like a natural extension. The 365 stores are pretty much all self-service, and so would be a lot more friendly to the technology than traditional Whole Foods stores.

I’ve never been a big fan of the 365 format. They may have been designed to be less expensive, with more technology, and a hipper vibe, I’ve always though they failed on all three counts - they don’t effectively communicate a value proposition, and use of technology strikes me as cursory, and “hip” would be the last word I’d use to describe them. But … the 365 format actually predates the sale of Whole Foods to Amazon, and I’ve also argued that adapting checkout-free technology to the format would instantly make the stores cool.

If expansion of the 365 format has been slower than expected, that may be because new ownership/leadership made it desirable to consider new and greater options. I suspect that Amazon could just be warming up.

I also think we’ll see the checkout-free technology used in c-stores that are built inside or adjacent to traditional Whole Foods stores. They have all these locations, and it makes sense to utilize some of them to push the envelope on what’s possible.

Besides, that’s what Amazon does. They push the envelope. On pretty much everything. And they don’t fear making mistakes.