Do millennials need their own grocery store?
With the millennial generation now the biggest in America (sorry, Baby Boomers), it's getting special attention from marketers and retailers. That now will include its own grocery store chain.
Whole Foods (WFM) is working on a new type of grocery store aimed at millennials, or those people born between 1981 to 1997. Ranging from their early thirties to college students, the millennial generation consists of 75.3 million Americans, or more than the 74.9 million Baby Boomers, according to the Pew Research Center.
Whole Foods, like other marketers, is realizing that the millennials have issues unique to their generation. Many in the group have graduated from college with high levels of student debt, and have struggled to find good-paying jobs amid the Great Recession and anemic post-recession years. That may help explain why they're a more frugal group than their elders.
Even so, when it comes to grocery shopping, millennials think of the experience as a social activity, according to a survey from Barkley, Service Management Group and The Boston Consulting Group. They also like to save on budget items in order to spend more on some luxury food products, the survey found.
The new chain " will offer a convenient, transparent, and values-oriented experience geared toward millennial shoppers, while appealing to anyone looking for high quality, fresh food at great prices," said co-chief executive officer John Mackey on a Thursday conference call.
Whole Foods plans to start opening stores next year, and Mackey said it expects "a fairly rapid expansion from there." The company is also building a team to focus on developing the concept, he said. A Whole Foods representative said the company doesn't have any additional details to share aside from what was discussed during Mackey's call.
Whole Foods hasn't necessarily targeted the budget-conscious in its current lineup of 417 stores, helping it earn the nickname "Whole Paycheck." The chain reported earnings that disappointed some analysts on Thursday, as other grocery chains are edging in Whole Foods' niche in organic foods.
Asked on a conference call if the new millennial-focused chain will cannibalize its existing stores, Mackey said he didn't see that as a problem. While Whole Foods targets a wide range of customers, he said, and the millennials have their own values.
"They're idealistic, they're values oriented, they're mission driven," he said. "So we think a streamlined, hip, cool, technology-oriented store unlike any store anybody has ever seen before that has lower capital, lower cost, perhaps little labor cost and lower prices is going to be very, very attractive to that particular generation."