Why a pared-down lower-priced Whole Foods Market spin-off is a branding win

This week Whole Foods Market made a huge announcement: during its Q2 sales report, Whole Foods co-CEO Walter Robb stated that the chain is launching an all-new store concept with a simpler design and lower prices in an effort to target younger and lower-income shoppers.

“Offering our industry leading standards at value prices, this new format will feature a modern, streamlined design, innovative technology and a curated selection,” said Robb in a statement to the press. “It will deliver a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high-quality fresh food at great prices.”

Is it counterintuitive to expand in a way that lowers prices? Not quite—in fact, it appears to be a smart move that could end up being a win for the Whole Foods brand overall. The new spin-off has strong potential to draw in a whole new demographic of shoppers—those who are fans of Whole Foods products but could not previously afford the price. To that end, a successful launch of this offshoot could at least partially help Whole Foods shake off its “Whole Paycheck” reputation. Yet by maintaining two separate models, Whole Foods won’t risk losing any of its established shoppers by making any changes to its flagship Whole Foods Market locations.

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What’s more, Whole Foods Market is doing exceedingly well—the chain reported 10 percent total sales increase in Q2, reaching a record $3.6 billion. It’s true that one could say, if Whole Foods is doing this well, there should be no need to take risks on offshoots like this. But on the other hand—if there’s ever a time to expand and experiment, a time of surplus is the best time possible.

At the moment, Whole Foods Market has not yet announced a name, but is in the process of building a team with hopes of opening stores on a rapid basis starting next year. “We believe the growth potential for this new and complementary brand to be as great as it is for our highly successful Whole Foods Market brand,” Robb in the statement. “We look forward to sharing more details about this exciting new venture sometime before Labor Day.”