Whole Foods Market, looking to expand into more urban areas, is joining the flock of retailers opening small-format stores across the country.
The Austin, Texas-based grocery chain, owned by online retailing giant Amazon, said on Monday it will launch its first "quick-shop" location on the Upper East Side of Manhattan, at 1175 Third Ave., later this year with additional stores in the new format, called Whole Foods Market Daily Shop, to follow in New York City. The chain also said it plans to bring the small-store format to other cities across the country.
For several years now several major U.S. retailers have been growing their brick-and-mortar footprints by rolling out small-format stores. The strategy allows chains to gain a bigger presence in markets, particularly dense cities, where retail space is scarce and rents are at a premium. Department-store operators Macy's and Bloomingdale's, discounter Target, furnishings giant Ikea, apparel seller Burlington Stores and cosmetics chain Ulta Beauty are among those who have debuted downsized locations. Last week Macy's announced it will accelerate the openings of its small-format stores.
Whole Foods said its quick-shop locations will range in size between 7,000 to 14,000 square feet, or less than a quarter to half the footprint of one of its average 40,000-square-foot stores. These pint-sized stores will be "paving the way for expansion in dense, metropolitan areas," according to Whole Foods, aiming to offer shoppers convenience and easy access to high-quality groceries.
"In bustling hubs like Manhattan where proximity matters, these stores will bring Whole Foods Market closer to existing customers, while extending the company’s reach to others in surrounding neighborhoods," the company said in its statement.
Neil Saunders, managing director of GlobalData, in an email to CoStar News, expressed some reservations about the new initiative and the chain's priorities in the grocery sector.
"There’s nothing wrong with smaller-format stores in cities, especially if they are designed for the quick pick-up of essentials and grab-and-go items," Saunders said. "However, this does seem like yet another experiment from Amazon as it tries to find a grocery format that works. In my view, Amazon would be better spending its time optimizing its mainstream Whole Foods stores, which still leave a lot to be desired in terms of the proposition and quality of the experience, or developing a really compelling Amazon Fresh format."
About a year ago, Amazon announced it was shutting some of its Amazon Fresh supermarkets and halting the startup grocery chain's rollout.
Whole Foods declined to comment specifically on Saunders' remarks.
The new quick-shop markets will offer grab-and-go meals and snacks, weekly grocery essentials and last-minute ingredients to complete a meal, according to Whole Foods. Though smaller, the stores will still offer a wide selection of seasonal produce, meat and seafood, prepared foods like sandwiches and pre-packed meals, breads, alcohol, and supplements, as well as local specialties and the chain's private 365 brand, according to Whole Foods.
In addition, the location slated to open this year will be the first Whole Foods store in Manhattan to offer Juice & Java, a venue that offers coffee, tea, fresh-pressed juices, smoothies, sandwiches, soups and desserts.
“At our new store formats, we’re tailoring every square foot to the unique, fast-paced needs of urban lifestyles," Christina Minardi, executive vice president of growth & development for Whole Foods and Amazon, said in a statement. “Expanding our footprint with Whole Foods Market Daily Shop is key to our growth."
Last year Whole Foods opened its 17th store in New York City at One Wall Street, part of the company's commitment to expand its urban real estate footprint. The chain has more than 530 stores in the United States, Canada and the United Kingdom, with more than 75 stores in the pipeline.
Whole Foods stressed that its new-format stores won't replace its larger traditional store format.