Amazon Takes On Trader Joe’s With Small-Format Whole Foods Stores

Amazon is rolling out a new store format under the Whole Foods Market banner — a move that comes as the eCommerce giant looks to increase its share of grocery by growing its brick-and-mortar presence.

The specialty grocer recently announced its Whole Foods Market Daily Shop, a smaller store geared toward meeting the demands of shoppers in dense, urban areas.

The format aims to offer a more compact, efficient alternative tailored to the unique demands of urban areas. These “quick-shop” stores, which will be 7,000 to 14,000 square feet in size, are meant to make better use of real estate in cities. The first such location is expected to open later this year on Manhattan’s Upper East Side, with additional New York City stores to follow.

“At our new store formats, we’re tailoring every square foot to the unique, fast-paced needs of urban lifestyles,” Christina Minardi, executive vice president growth and development, Whole Foods Market & Amazon, said in a statement. “We’re excited to introduce a new way for our customers to quickly pick up their Whole Foods Market favorites – from grab-and-go meals to that last-minute dinner ingredient – making the early morning or after work grocery trips more efficient and enjoyable.”

The focus of these locations is on convenience, offering an array of grab-and-go meals and basic staples in addition to last-minute ingredients. Additionally, the Manhattan store will feature an in-store eatery, Juice & Java, selling a limited selection of beverages and foods in an effort to meet the heightened demand for on-the-go options in these areas.

The format seems to be designed to present a rival to cult-favorite grocer Trader Joe’s, known for its limited assortment. According to an archived 2019 report from Kiplinger, the retailer stocks under 4,000 items, while according to FMI, the average grocer carries nearly eight times that.

Streamlining the assortment could go a long way toward meeting shoppers’ need for speed, given that convenience is a top factor influencing choice of merchant for the vast majority of grocery customers. PYMNTS’ study last year “Consumer Inflation Sentiment Report: Higher Prices Fuel a Deal-Seeking Competition,” which drew from a survey of more than 2,100 U.S. consumers, found that 77% cited ease and convenience as key factors that influenced their decision of where to make their most recent grocery purchase.

Additionally, the announcement of Whole Foods’ small-format concept comes as part of Amazon’s broader push to grow its share of brick-and-mortar grocery.

“If you want to serve as many grocery needs as we do, you have to have a mass physical presence,” Amazon CEO Andy Jassy told analysts on the company’s earnings call last month.

Indeed, PYMNTS Intelligence’s study last year “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services, found that 7% of grocery transactions still occur in physical stores.

By focusing on convenience and streamlining assortments, these compact stores are poised to become formidable competitors in the grocery landscape, challenging established favorites like Trader Joe’s. With an emphasis on meeting the demands of on-the-go consumers, these locations aim to win the loyalty of urban consumers, meeting their need for quick, easy options.