Whole Foods 365 and the Rise of the Millennial Focused Store

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Whole Foods 365 and the Rise of the Millennial Focused Store

By Barry Clogan - 07/29/2016

Recent news about Whole Foods Market’s 365 stores has created a stir in the grocery industry. Whole Foods 365 stores are lower-cost versions of the store that sell primarily products from the retailer’s private label called 365. The stores will emphasize natural and organic product offerings, and offer a trendy, tech-driven shopping experience. Whole Foods is establishing 365 as not just a store, but rather as a lifestyle brand designed to cater to the demands and expectations of a younger generation. 
 
Whole Foods’ 365 stores indicate a larger trend in grocery. In fact, according to recent MyWebGrocer data, millennial consumers (ages 18-34) represent nearly one third (30%) of all online grocery visits, and account for the highest proportion of new users in the past year. Millennials are one of the largest generations in history, and they’re moving into prime spending years. In response, more retailers should consider Whole Foods’ approach, and tailor shopping experiences that cater to this demographic.
 
Innovations in convenience and technology will be essential to winning shopper loyalty among this generation. With technology at their fingertips, millennials are used to shopping when, where and how they want. Without a digital presence, grocery retailers will become irrelevant to millennials. A website or a Facebook page that pushes traditional marketing content isn’t enough. Brands must engage with younger shoppers in two-way conversations across all devices by providing a more sophisticated digital experience that in turn establishes brand loyalty.
 
The millennial grocery shopping experience
Millennial expectations have been largely influenced by the growth of online pure play retailers like Amazon. Shoppers of this generation are comparison shoppers who prefer to begin their experience on mobile devices, even if they make the final transaction in-store. They often get inspired based on recipes and what they have an appetite for that day, so big weekly stock-up trips are not common. The ability to build grocery lists or shopping carts online, especially on mobile devices, is highly attractive to millennials. Younger shoppers expect the overall user experience to be seamless, from ordering to delivery. Retailers must place an emphasis on excellent service in order to provide consistency between the digital and brick-and-mortar experience.
 
This generation is also deeply in debt, resulting in many millennials postponing large purchases such as houses or cars. So when it comes to grocery shopping, they rely on public transportation or ride-sharing services, such as Uber or Zipcar. At the end of the day, ease of access is a high priority for this generation. They expect grocery pickup and delivery options that are simple and cost-effective.
 
However, millennials do have considerable buying power, given the size of the cohort, and once they become brand loyal they’re likely to stay with the retailer that offers them the solutions they’re looking for. For example, millennials who are already Amazon customers are likely to extend their purchases to grocery because they know it’s easy and seamless and it is a retailer and platform that they’re familiar with.
 
They want a grocery shopping experience that helps them execute their cooking ideas  and are inspired by online content across social media sites and blogs. Grocery retailers need to provide quality product content that includes up-to-date ingredients and nutritional information along with more in-depth content (like recipes and cooking guides) to serve as a trusted resource for this generation. Once shoppers of this generation are hooked, it’s likely that they’ll remain loyal shoppers long term.
 
Leverage technology to engage with this generation
While Whole Foods’ approach to meeting the needs of millennials focuses more on price and location of physical stores, grocers looking to reach this generation also need to consider a digital component. Given how digitally savvy these shoppers are along with their desire for convenience and a more holistic experience, offering sophisticated digital options could be the right solution for many grocery retailers.
 
Advanced e-commerce sites allow shoppers to make lists, save favorite items and easily search for specific ingredients for recipes. Millennials prefer to engage with brands and share information, so offering additional recipes and guides is another strategic way to build customer loyalty with this generation. What’s more, quick delivery within urban areas helps solve the “lack of transportation” issue facing many millennials today.
 
Without a cohesive digital presence, grocery retailers risk losing market share within this demographic. And once market share is lost, it’s difficult for a business to get it back. At the end of the day, a digital storefront is one of the best ways for grocery retailers to foster long-term loyalty among millennial shoppers.
 
Whole Foods occupies a unique space in the grocery industry, leading the way in organic and sustainably harvested offerings and a customer-as-guest service approach. They’ve been able to make a name for themselves among the millennial generation because of their health-conscious offerings and convenient new storefronts. But for grocery retailers who do not have this brand proposition, they can still win over millennials by developing a sophisticated digital presence to create long-term relationships with this generation and serve as a trusted grocery retailer who understands and caters to their needs. 

-Barry Clogan, SVP of Business Consulting Services at MyWebGrocer