Whole Foods Market is a magnet for upscale consumers on the prowl for organic apples, gluten free bakery products, vegetarian meals, and everything in between.
The retailer knows well, however, that the right store box and marketing strategies are essential to this consumer attraction.
That’s why the company has been working diligently to fine-tune these factors, with the latest developments including these:
- Shifting to a focus on slightly larger stores of 35,000 to 45,000 square feet. That compares to a more recent concentration on boxes of 30,000 to 35,000 square feet, according to company comments during a recent analyst call.
- Possibly seeking to acquire additional smaller stores. Last year the retailer purchased a group of such stores in Boston and just reopened one at 16,000 square feet, the smallest Whole Foods in the U.S.
- Unveiling a program of online ordering with store pickup in the next year or two, a concept it’s dubbing “click and collect.”
If Whole Foods seems to be going in many directions on store size, then a reality check is in order. The company is recognizing that larger units perform well as they age, partly because these stores have greater efficiencies and more parking spaces. The chain has a penchant for bigger units, but that doesn’t indicate a major shift upwards in store size.
“They’re talking about a little bigger in store size,” explained Andrew Wolf, Managing Director, BB&T Capital Markets, who noted the company is getting a higher return on new store investments. “Their sweet spot is 35,000 to 40,000, and that’s where most of their stores will be. You may see some stores at 20,000 square feet, but it’s not their sweet spot. I don’t see them opening huge stores again of 50,000 or 60,000 square feet.”
Whole Foods’ format sizes are big news in local markets, as evidenced by this tweet from a media outlet in Pennsylvania:
Meanwhile, Wolf said the online ordering concept is on target because it avoids a home delivery strategy, which would be an expensive element.
“This could be a good thing for their customer,” he said. “The depot model makes a lot of sense, and their stores are depots.”
Whole Foods’ “Click and Collect” initiative won’t have a transforming impact on the retailer, according to one media source:
Observation: (re prev tweet) Since the store is the message/medium for @wholefoods, don't think 'Click & Collect' will be game changer @ WF.— NSFoodsMemo (@NSFoodsMemo) May 16, 2013
On balance, Whole Foods’ expansion strategies show healthy flexibility on factors such as store sizes and product pickup models.
The company, which operates more than 340 units, has a lofty goal: to eventually reach 1,000. That will be accomplished partly by having irresistible organic products, but also through a continued willingness to tweak the model.