ROBERT SIEGEL, HOST:
Whole Foods is a company that blends high-minded ideas about food with high prices. The formula has enabled the company to grow rapidly in recent years. But as competition increases, Whole Foods is having to change its strategy. Yesterday the company announced it's opening a sister chain with a cheaper prices. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Whole Foods isn't providing many details about its new idea and analysts so far are reserving judgment. Based on what the company has said, the new chain will be a kind of junior Whole Foods, just as intensely serious about food but aimed at millennial shoppers. CEO John Mackey spoke to investors yesterday.
(SOUNDBITE OF ARCHIVED RECORDING)
JOHN MACKEY: We do think this is a very unique concept. We're going to come up with a complementary brand and strategy that fits well alongside the Whole Foods Market brand.
ZARROLI: The move comes at a time when Whole Foods is facing a much more competitive landscape. People eat out in restaurants more and a wave of new companies is using technology to bring food to people's tables. Justin Massa is president of the research firm Food Genius.
JUSTIN MASSA: You've also got Google Shopping Express and AmazonFresh. I mean, there's a lot of folks going after higher-end convenience and health-oriented food consumers.
ZARROLI: Whole Foods is still growing, but the company acknowledged yesterday that the growth hasn't been as intense as Wall Street was expecting recently. So it's looking for ways to appeal to younger shoppers, those who like Whole Foods standards but not its prices. There are people such as Ana Aguilar (ph), a college student in Manhattan.
ANA AGUILAR: It's a healthy option, you know? It's really close, its fast, it's convenient. They have a hot food bar. So all of those things make it seem worthwhile, but every time I leave the checkout, it hurts a little bit.
ZARROLI: These younger consumers are a lot like everyone else, only more so, says Justin Massa. They increasingly go for packaged foods and they don't plan their meals very far in advance.
MASSA: Being able to offer that kind of consumer a convenience, a kind of healthful product, that is on their way home is probably the best way to capture them.
ZARROLI: But profit margins in the food business are already painfully thin. The question is whether Whole Foods' new chain can find a way to lure younger shoppers and also keep prices low enough for them to continue going there. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.
