Will '365 by Whole Foods' spell trouble for Trader Joe's?

By George Anderson

JUNE 16, 2015

Trader Joe's is going to have to up its fresh foods game or the grocery could be in serious trouble with the launch of Whole Foods' new "365" concept. That's one of the first thoughts that popped into my brain last week when Whole Foods released more details on its new small store concept, currently in development.

If 365 — which takes its name from the natural grocer's "365 Everyday Value" store brand — simply matches Trader Joe's approach (quality, selection and price) with its own private label in refrigerated, frozen and shelf stable categories while living up to Whole Foods' standard of quality in fresh, it will have an immediate head-to-head advantage. I'm typically among the first to decry mirroring competitors, but a me-too plus strategy might work in this case.

Here's my thinking: The one clear Achilles heel of Trader Joe's is its fresh business, particularly produce. Consumers commonly say they shop at Whole Foods for produce because of better selection and quality. The same shoppers will say they buy packaged organic and gourmet items at Trader Joe's because it is comparatively cheaper and the quality is there.

Of course, there isn't any indication Whole Foods is planning to take my advice.

"These stores are going to be cool. They are going to look great. They'll be fresh. They'll be bright. They'll be the right amount of technology to make it so it's utilitarian and useful and not technology for technology's sake," said Jeff Turnas, president of 365 by Whole Foods, on a company video to announce the concept.

"We are not looking at a discount model. We are not looking at a dumbed-down version of Whole Foods because we are never going to sacrifice our quality standards," he added.