Dive Brief:
- An overcharging scandal in New York reported last month hurt the retail chain's sales in the last weeks of the quarter.
- Whole Foods Market reported its lowest sales growth since the 2009 economic downturn for last quarter due in part to increased competition from other retailers, such as Target and Wal-Mart, selling local and organic foods.
- While Whole Foods' CEOs made a video apology to consumers following the initial report, co-CEO John Mackey also called Whole Foods the "victims" of the incident as the company's sales and reputation have been harmed by a charge that is not specific to Whole Foods.
Dive Insight:
Even before the pricing scandal, Whole Foods has been on the move to improve store sales and compete with similar smaller retailers like Trader Joe's by opening its own smaller format store, 365 by Whole Foods Market. The retailer has already announced a few different locations, including its first in the Silver Lake neighborhood of Los Angeles plus other locations in Bellevue, WA; Houston; Portland, OR; and Santa Monica, CA, all of which could open in the second half of 2016, according to a press release.
"The growth rate has slowed massively," Edward Jones analyst Brian Yarbrough told The Wall Street Journal, "yet they are still opening more stores." These new store openings include the 365 by Whole Foods Market stores but also its traditional format stores, which the retailer continues to increase in number, having set a goal of opening between 38 and 42 stores this year.