- A King County Superior Court judge has ordered Whole Foods to reopen the 365 store it closed back in October in Bellevue Square mall, according to the Seattle Post-Intelligencer. Whole Foods must reopen the store within two weeks, the ruling states.
- Judge Mary E. Roberts issued a preliminary injunction after ruling that Whole Foods had violated the terms of its lease agreement, which stipulated the 365 store must stay open for at least 10 years out of the 20-year lease agreement. The store had been open for a little more than a year by the time it closed on October 14.
- Judge Roberts found that the closure and violation of the lease agreement resulted in “actual and substantial injury” for Bellevue Square. Court documents show Whole Foods notified mall officials just two days before it closed the store.
The Bellevue Square 365 store was Whole Foods’ third location under the value-priced brand, and the only one sited inside a mall. The space was formerly occupied by J.C. Penney, which in hindsight wasn’t a good sign for the grocer.
Indeed, shuttering the store after just one year indicates the location was a misfire. Now, Whole Foods must carry on with the underperforming location, pending future legal action from the retailer.
At the time of the store’s closing, Whole Foods issued a statement saying company officials made the decision to close the store before Amazon assumed ownership, citing “careful evaluation of both store performance and the site challenges that exist for successfully operating a grocery store.” Whole Foods, according to the spokeswoman, remains committed to the 365 format.
The store’s woes underscore the pitfalls of operating a grocery store in a mall. Mall owners are keen on attracting supermarkets, since they draw regular visits that can bleed over into other retail spots. Wegmans recently signed on to build an anchor location at Boston’s Natick Mall, while Kroger is building a $10.5 million store in a former Macy’s in Upper Arlington, Ohio. But with traffic declining at locations across the country, malls can be a risky bet for supermarkets.
The future of Whole Foods’ 365 format, meanwhile, remains uncertain after Amazon’s $13.7 billion acquisition in June. Whole Foods has put some store openings on hold, including a mall location in Bloomington, Indiana. However, the grocer has recently opened locations in San Francisco and in Concord, California, and next month it will open in Brooklyn’s Fort Greene neighborhood.
365 stores are more efficient, feature lower prices than traditional Whole Foods locations and appeal to a younger demographic — all of which falls in line with Amazon’s operating model. But numerous sources, including Credit Suisse analysts, have noted that 365 stores are located too close to regular Whole Foods stores, and may be cannibalizing sales.