Amazon’s Whole Foods Market grocery chain is employing a new strategy to seek out a different kind of shopper, reports the Wall Street Journal. The tech giant has opened four locations in New York City called “Daily Shops” that are only about a quarter of the size of their typical stores, while offering similar items and prices, which they believe will be a more practical option for consumers in dense urban areas. The Daily Shop the Journal reported on is around 9,100 square feet.
The consumer habit they are hoping to cater to with this strategy is known as “fill-in” shopping, which is defined by consumers going out for just a few items more frequently than typical grocery runs. Nicole Davia, a Whole Foods senior vice president, says that they are “serving a previously unmet need in the neighborhood.” There is data to back up the soundness of the plan, according to Placer.ai, a data analytics firm that tracks people’s movements in public spaces. They claim that consumers made 11% more visits to the grocery store in the past year than in 2019, while spending less time shopping per visit. This makes intuitive sense in the densest parts of New York City, where consumers generally travel on foot or use public transport to buy groceries, rather than driving their own vehicle that they can load up with a larger haul. The Journal also highlights the economic advantages of opening a smaller store, as they could be “cheaper and quicker to open, allowing grocers to expand in urban areas where real estate or construction costs are high.”
However, the model does present its own set of challenges despite the promising data and seemingly lower upfront costs for opening a new location. Bill Simon, former chief executive of Walmart, says that the small-format Daily Shops will still need a higher-than-usual inventory turnover (i.e. goods will have to be sold at a quicker rate), even if the upfront costs of opening a shop might be lower, telling the Journal that “the degree of difficulty is as high as you’ll see in retail.”
Ventures similar to Whole Foods’ Daily Shops from its competitors have had mixed results. Target, Publix, and Ahold Delhaize (a Dutch-Belgian retail multinational), and even the deep-pocketed Walmart have not been able to make the concept work for them and have backed off it. On the other hand, Sprouts Farmers Market has seen visits to their smaller-footprint stores grow at a faster rate than grocery stores nationwide, including their own, according to Placer.ai’s data.
Consumers interviewed by the Journal who used the Daily Shop on the Upper East Side gave mixed reviews. One claimed that he was not always able to find all the items he needed, including basic staples like potatoes and onions, leaving him to rethink what he intended to cook for himself. Another appreciated having a shop “down the block” where he could pick up a few things at a moment’s notice.
The Journal says Whole Foods plans to open another location in Washington D.C. in mid-2025.
