Whole Foods aims its 365 store at mil­len­ni­als, who want an “ex­pe­ri­ence,” not just gro­ceries

Whole Foods courts mil­len­nial shop­pers with 365

Bloomberg Businessweek (Asia) - - CONTENTS - By Joel Stein

When the first 365 by Whole Foods Mar­ket opened near me in Los An­ge­les, I went im­me­di­ately, cu­ri­ous to see how mil­len­ni­als shop for food. Do they just take pho­tos of it? Do they look for items with their own names on them? Do they even buy gro­ceries? Don’t they just smash but­tons on their iPhones un­til a cooked meal ap­pears at their door? Mar­ket re­searcher Min­tel re­ported last year that 40 per­cent of them don’t even eat ce­real be­cause it re­quires clean­ing up af­ter­ward.

The 365 con­cept is Whole Foods’ re­sponse to three quar­ters of sales de­clines at stores open at least a year. The par­ent store’s fo­cus on or­ganic and lo­cal has been copied else­where, cheaper. It’s get­ting killed by Trader Joe’s and Aldi, be­cause they of­fer lower prices; smaller, easy-to-nav­i­gate stores; and an ever-ro­tat­ing se­lec­tion of in­ven­tive items cov­ered in choco­late or Sriracha. Whole Foods is a vic­tim of its own suc­cess: It got shop­pers to buy fresh gro­ceries in­stead of stuff­ing their freez­ers. But that meant they were go­ing to the store more of­ten, so they wanted to get out faster, with­out hav­ing to choose among 100 olive oils. And if you’re go­ing to get them to drive some­where, the des­ti­na­tion has to feel like an “ex­pe­ri­ence” they can’t get on­line. In­stacart and Ama­zonFresh have the com­pet­i­tive ad­van­tage among folks who want to stay on the couch, snack­ing on some­thing other than ce­real.

Whole Foods has signed 19 leases for 365 stores across the coun­try. It planted the first in the hip­ster-est sec­tion of L.A., Sil­ver Lake, known for hav­ing a cof­fee shop/ dog adop­tion agency and a stop sign on which some­one’s added “Ham­mer Time” in graf­fiti. To get the per­spec­tive of some­one in 365’s tar­get au­di­ence, I brought along my 27-year-old friend Igor Hiller; his mil­len­nial bona fides in­clude do­ing im­prov at Up­right Cit­i­zens Brigade and hav­ing car in­sur­ance paid by his mother.

We were greeted out­side with a sign that said, “Free Air Gui­tars.” Walk­ing in, we found a clean, well-lit, and col­or­ful store, with ex­posed beams and ducts. There were no em­ploy­ees in sight, as if to say, “Shop, don’t shop, to­tally up to you, dude.” (What they’re ac­tu­ally say­ing is: fewer em­ploy­ees, less over­head, smaller costs to pass on.) Igor liked it im­me­di­ately. He liked that it was a third smaller than the Whole Foods he spent hours roam­ing as a screen­writer’s as­sis­tant; that items were cheaper, closer to what he paid at Trader Joe’s; that there were only a few choices per prod­uct; and that the salad bar was priced by the con­tainer, not the pound, mak­ing him re­con­sider his en­tire be­lief sys­tem about avoid­ing items with a lot of wa­ter weight. He got way too ex­cited that prices were listed on dig­i­tal tablets in­stead of on chalk­boards with pho­tos of farm­ers— he gets it, farm­ers grow food, what­ever. He didn’t mind the ab­sence of a butcher or a cheese­mon­ger, or that the wine ex­pert was re­placed by a screen where he could search re­views of pinot noirs.

We stopped at the TeaBot, where we chose per­son­al­ized blends, caf­feine lev­els, and tem­per­a­tures. Mine was based on a mix­ture called Chai Th­ese Nuts. Then we went over to a mu­ral that said, “Sil­ver Kale.” Igor made me pose with him in front of it while an­other shop­per took our photo. “It’s very In­sta­grammable,” Igor said. “That’s why they put that in.” He didn’t like the ana­gram, though. (Get it? Sil­ver Lake, Sil­ver Kale?) “I hate any ad­ver­tise­ment that pre­tends to know me. You’re not my friend. You’re a com­pany. Don’t try to have an in­side joke with me.”

There seemed to be fewer shop­pers at 365 who were Igor’s age than there were fortysome­things like me. Five min­utes after we got there, we ran into my Gen­er­a­tion X friend Bruce Gilbert, a music su­per­vi­sor for shows such as Trans­par­ent and Orange Is the New Black, wear­ing a Joy Divi­sion T-shirt with lead singer Ian Cur­tis re­placed by Joey Trib­biani from Friends. Sip­ping a cor­tado from the Al­le­gro cafe—it also serves beer and wine—he told us he’d been there four times in the pre­vi­ous three days, partly to check out the sin­gles scene. “I was here at 10 o’clock last night,” he said, which was ap­par­ently peak time. He hadn’t shopped for gro­ceries yet.

That’s cool with 365’s pres­i­dent, the


very chill Gen Xer Jeff Tur­nas, who’s been with Whole Foods for 21 years. “We didn’t set out to say we just want mil­len­ni­als in our store,” he says. “We set out to cre­ate a fun, new, fresh way to shop with amaz­ing prices.” Tur­nas spent the past few years in Europe and, with 365, is try­ing to copy the vibe that makes su­per­mar­kets there more ex­pe­ri­en­tial. He ob­sessed about the store’s music; the playlist, which you can sub­scribe to on Spo­tify (cur­rent fol­low­ers: 50), in­cludes such songs as Odessa by Cari­bou and How Did I Get Here by Odesza. (The web­site 365 team mem­bers use for job in­for­ma­tion is called Back­stage Pass; a “You Rocked It” pro­gram lets them award points to co-work­ers that can be re­deemed for gift cards.) And Igor was right: Tur­nas added the mu­ral after the stylish com­pany that pro­vides 365’s em­ployee uni­forms told him the store needed an In­sta­gram at­trac­tion. “I liked ‘Sil­ver Save’ more than ‘Sil­ver Kale,’ ” he says, pre­fer­ring a mes­sage that riffed on prices. “But we let the artist do his thing.”

Tur­nas is also cool with a fake In­sta­gram ac­count made for the store. Cre­ated by 27-year-old music video di­rec­tor Jack Wagner, it gained at­ten­tion for fab­ri­cat­ing a story that singer Kim Gor­don had been bit­ten by a coy­ote in the park­ing lot. It also posted a fake apol­ogy from a barista for in­sert­ing in­die rock cas­sette tapes into boxes of or­ganic ce­real. Wagner started the ac­count after walk­ing to 365 every morn­ing to get a break­fast bur­rito and iced cof­fee. He, too, hasn’t yet pur­chased any gro­ceries. “We drank beers,” Wagner says. “We treated it like a bar and pre-gamed there be­fore a Me­mo­rial Day party.” Tur­nas says Wagner’s ac­count might have both­ered the ex­ec­u­tives who run Whole Foods, but not the folks at 365. “I’m not sure it’s neg­a­tive,” Tur­nas says. He fig­ures it’s an honor that some­one cared enough to mock the place. Still, su­per­mar­ket an­a­lyst Phil Lem­pert, the food trends ed­i­tor for NBC’s To­day show, says 365 is “try­ing way too hard to be hip.”

It’s dif­fi­cult enough to suc­ceed even when you’re not. Tesco, the hugely suc­cess­ful Bri­tish gro­cer, started a U.S. chain called Fresh & Easy in 2007 and wound up lend­ing Ron Burkle $234 mil­lion in 2013 to as­sume its li­a­bil­i­ties; Burkle closed all 150 stores last Oc­to­ber. Fresh & Easy was in­ten­tion­ally un­hip. Veg­eta­bles and fruits were wrapped in cel­lo­phane—it was sup­posed to make them look con­ve­nient and safe, but they were seen in­stead as gross. The self-check­out lines were con­fus­ing. The lack of Sriracha-and-choco­late-in­flu­enced prod­ucts bored cus­tomers.

Aldi, how­ever, has had great suc­cess as a no-frills su­per­mar­ket. (In a not-very-mil­len­nial move, Aldi, a pri­vate com­pany, de­clined to share its fi­nan­cials.) It’s all about speed and price, not Spo­tify playlists. Aldi is as cheap as a gro­cery can be, and when I vis­ited one alone in Ar­ca­dia, about 20 min­utes out­side L.A., I could see why. You put a quar­ter in the shop­ping cart dis­penser to rent one, get­ting your money back when you re­turn it, so no worker has to play fetch. There are no paper or plas­tic bags—it’s BYOB—and no one to put what you buy into them. Items are dis­played Costco-style, in the cases they ar­rived in, and about 90 per­cent are house brands. In­stead of 30 aisles, there are only five, but there’s room for con­stantly chang­ing “Aldi Finds” such as choco­late-cov­ered pis­ta­chios and Sriracha ket­tle chips. “The cus­tomer doesn’t have to walk in the store and have so many op­tions and take time to de­cide. We’ve done that work for them,” says Liz Rug­gles, Aldi’s mar­ket­ing di­rec­tor. There are 1,500 Aldi stores in the U.S., and the com­pany says it plans to open 500 more by the end of 2017.

More com­pe­ti­tion is com­ing. Kroger, the largest su­per­mar­ket chain in the coun­try, is work­ing on its own cooler ver­sion of it­self: In Fe­bru­ary it opened a Main & Vine in Gig Har­bor, Wash., ex­actly the kind of city you want to au­di­tion in. Pro­duce, which makes up half the store’s in­ven­tory, is in the in­te­rior aisles, not on the perime­ter, an ac­knowl­edg­ment that peo­ple are putting fresh in­gre­di­ents cen­ter stage in their meal plan­ning. A chef cooks at a ta­ble in the front of the store, and you can buy the in­gre­di­ents to re-cre­ate his dishes, such as Mex­i­can-style corn; ba­con, Brie, and ap­ple baguette sand­wiches; and spiced cherry grilled chicken thighs. There are reg­u­lar wine, beer, and cheese tast­ings, as well as a bar and cafe. Mil­len­ni­als “want to hang out in a cool en­vi­ron­ment” and feel like food­ies, says Mike Don­nelly, Kroger’s ex­ec­u­tive vice pres­i­dent for mer­chan­dis­ing, who’s in charge of Main & Vine. Up to a point. They don’t want bento boxes, Don­nelly learned. Peo­ple thought they were too weird.

In its first week, at least, 365 had this cru­cial hang­out thing down. When we went, Igor sug­gested we go to a tablet and or­der bowls of quinoa, Brus­sels sprouts, and bar­ba­coa. After our names ap­peared on a gi­ant screen and we picked up our meals (no hu­man in­ter­ac­tion nec­es­sary), we ate at an in­door pic­nic ta­ble next to my cart, which was filled with two chimichurr­i-mar­i­nated chicken breasts ($5), two prepacked Dover sole filets ($5), Beast burg­ers ($4.39), and Justin’s honey peanut but­ter ($5). I’ll be back. The figs were really cheap. For the record, Igor didn’t buy any gro­ceries. <BW>

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