Whole Foods Market is supplying Amazon’s latest grocery move with the announcement earlier this week the specialty chain plans to open the first of its new small-format locations in New York City later this year.
Small-format stores have been a hit-or-miss for grocers in recent years with numerous companies abandoning the concept altogether. In 2023, Publix ended its GreenWise Market banner to transition the eight stores over to its traditional supermarket brand, and even Whole Foods operated a small-format grocery banner that it ultimately shuttered in 2019.
But Whole Foods Executive Vice President of Growth and Development Christina Minardi noted in an interview that the upcoming small format, called Whole Foods Market Daily Shop, is not a repeat of the 365 concept. While those locations spanned 25,000 to 30,000 square feet and centered on value, the Whole Foods Market Daily Shop locations will span 7,000 to 14,000 square feet and will focus on convenience.
While significantly smaller in size compared to traditional Whole Foods stores, which average 40,000 square feet, these news markets will still allow shoppers to complete their full, weekly shopping trips, Minardi said, noting that the concept will simply feel more intimate.
“This store will have prepared foods, but it’ll be packaged prepared foods,” she said. “So we won’t have that cold and hot bar, we won’t have the chef case, but we offer all the same offerings [as the traditional store formats], just in a grab-and-go environment.”
Industry experts see growth potential in the grocer’s new convenience-focused concept for both Whole Foods and Amazon as both companies forge ahead with their expansion plans.
“It actually feels like a good direction for Amazon and Whole Foods,” Anne Mezzenga, co-CEO of retail blog Omni Talk and a former Target executive, said in an interview. “I think all the places where Amazon feels like it’s weakest, Whole Foods kind of supplements that and kind of gives them the street cred.”
Currently, the companies have one Daily Shop slated for later this year on the Upper East Side of Manhattan and aims to open a second location in the city before the end of the year, Minardi said. Two more Daily Shops are scheduled to open in 2025, and the fifth will debut in 2026 — all in New York City. Minardi did not specify where in the city these stores aim to open.
After setting up shop in New York City, Minardi said her team will look to expand in similar urban markets, including Boston, Chicago and Washington, D.C.
Whole Foods has already started testing smaller, convenience zones in its traditional stores, Stewart Samuel, IGD’s director of retail futures, wrote in an email. For instance, the first level of the grocer’s more than 60,000-square-foot location along New York City’s High Line in Manhattan is a convenience market offering prepared foods, a full-service coffee bar and more quick-grab items for customers who don’t have time to venture to the location’s second story.
“The move to testing a standalone [small-store] concept suggests that those stores [with convenience zones] have signaled an opportunity to explore,” Samuel said.
The integration of Amazon One in the new Daily Shops adds to the speed and convenience of the store model, Neil Saunders, managing director of retail for GlobalData, said in an emailed statement, but noted that features like that are just “icing on the cake.”
“They are not major reasons as to why people select a grocery store to shop in,” he said.
Minardi said the Daily Shops will limit the technology to Amazon One and self-checkout stations for the time being, but she didn’t write off incorporating Just Walk Out in the future.
“Just Walk Out is great because it does have a great convenience factor, but it does limit you a little bit in building big displays or off-shelf displays,” Minardi said. “When we did Daily Shop, we were really focused on making sure that we were merchandising and designing a store that everywhere you turn, you were going to look at food. And we really wanted to maximize that.”
The U.S. has a gap in its market for these smaller, convenience-focused grocery formats, according to Samuel, and while retailers like Choice Market and Foxtrot Market have found success with them, larger companies like Kroger and Walmart have not been so lucky.
Despite the promising outlook for the new format, it won’t solve Amazon’s grocery woes, industry experts said.
“Amazon cannot win grocery from a smaller store format,” Saunders said. “It needs to play strongly in both [the small format space and] the larger store arena – where the bulk of spending is made.”
