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New Whole Foods 365 Market to Open on May 25th

Whole Foods Market, Inc. WFM announced that its first new “uniquely branded store concept” – "365 by Whole Foods Market" – synonymous with its “365 Everyday Value” brand, is slated to open doors on May 25 in the Silver Lake neighborhood of Los Angeles. The company also informed that two more “365 by Whole Foods Market” locations will open in 2016 – in Bellevue, WA, and Portland, OR. Additionally, it plans to open 10 more outlets in 2017.

The new chain will store compelling products at value prices, boast innovative technology and adorn a more modern look to target millennials. Moreover, the company will offer online ordering and delivery services via Instacart for the convenience of shoppers.

Market experts are viewing this as an endeavor by the company to shed its reputation of “Whole Paycheck” and to stave off competition. However, they warned that such low-cost chains may hurt margins.

For quite some time now, this Zacks Rank #3 (Hold) company has been revamping its pricing strategy and concentrating on value offerings in view of heightened competition. This is because more companies are entering into and expanding their presence in the Organic & Natural food business due to customers’ inclination toward fresh and organic products.

The mainstream supermarket chains such as The Kroger Co. KR, Target Corporation TGT and Wal-Mart Stores Inc. WMT are offering customers natural and organic foods at a much competitive price, thus taking a pie from Whole Foods’ share. However, with the launch of the “365” smaller format sister chain, Whole Foods intends to turn things around in its favor.

Definitely, Whole Foods’ decision to launch a low-cost chain is a strategy to counter the aggressive pricing technique adopted by its competitors. However, analysts are now apprehensive about whether the new store model will prove to be a game changer and help Whole Foods retain market share amid stiff competition without cannibalizing its own business.

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