CEO John Mackey told employees that the company has opted to not open any additional Whole Foods 365 stores, according to an internal email obtained by Yahoo Finance. The existing 12 stores, which boast smaller formats and cheaper prices, will remain in business.
“As we have been consistently lowering prices in our core Whole Foods Market stores over the past year, the price distinction between the two brands has become less relevant,” Mackey wrote. “As the company continues to focus on lowering prices over time, we believe that the price gap will further diminish.”
Launched in 2016, 365 stores carried Whole Foods private-label items, including 365 Everyday Value products. However, since Amazon acquired Whole Foods in 2017, the brand has become more of a staple in regular Whole Foods stores, on the Amazon website and in Amazon Go stores.
“Learnings and innovations from 365 have been incorporated into Whole Foods Market, and the company will continue to innovate and experiment,” according to a Whole Foods spokesperson, who added that 365 employees will be integrated into other Whole Foods’ regions.
Over the past year, Amazon has expanded its smaller-format, cashierless store Amazon Go. So far, the store has opened two locations in Seattle, as well as New York and Chicago, with plans to open as many as 3,000 locations by 2021. However, a company spokesperson said the 365 decision is “unrelated to Amazon Go.”
Brittain Ladd, CEO of Six-Page Consulting, isn’t convinced. “Why do you need both Whole Foods 365 and Amazon Go, when Amazon Go carries the almost-same number of [stock-keeping units (SKUs)]? It was too confusing to the customers,” he said. “Amazon keeps a strategy where they have larger Whole Foods stores that provide a significant immersion experience of grocery shopping, [with] Amazon Go [as the quick] convenience shop.”