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What to expect from Whole Foods’ new, low-price grocery chain

Whole Foods is hoping millennials can revive the company’s lagging sales by opening a new store, 365 by Whole Foods, which has lower prices and robots. (Video: Jayne Orenstein, Dani Johnson/The Washington Post)

We’re inching closer to the launch of 365 by Whole Foods Market, a new, lower-priced grocery store that the organics giant is betting will help pull it out of a rough patch. Whole Foods has been under siege lately as supermarkets and big-box stores are dedicating more shelf space to organic food, and often doing it at lower prices. With 365, they hope to fight back and broaden that kind of customer they cater to.

The first 365 store is slated to open May 25 in the Silver Lake neighborhood of Los Angeles. And the company has offered fresh details on what the new store will look like and how executives will set out to lower prices.

Jeff Turnas, president of new store concept 365 by Whole Foods Market, talks about the feel of the stores which are slated to open in 2016. (Video: Whole Foods Market)

Jeff Turnas, president of 365 by Whole Foods Markets, said in an interview that he and his team have “looked and turned over every stone to find efficiencies.” That includes, for example, trying to lay out stores in a way that reduces the time it takes for a worker to get from the stockroom to the shelves. It means thinking carefully about how to create attractive merchandising and displays on the cheap, and creating a uniform store design prototype that can be used across many locations.

We’re not putting as much capital into these stores as we would a traditional Whole Foods,” Turnas said.

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Even the product assortment in these smaller-format outposts is designed in part with an eye toward greater efficiency. Bottled water, for example, is a category in which 365 won’t have a particularly deep selection, because it takes a lot of effort to stock and because 365 executives don’t believe their customer demands it.

And with a center-aisle grocery item like olive oil, Turnas said, they tried to narrow the offerings.

“Rather than 50 or 60 olive oils, we’re going to have 10,” Turnas said. “But they’re going to be well-represented from around the world and [different] price points.”

It’s not surprising that Whole Foods would need to more tightly curate its selection in a 365 store: After all, these small-format locations are expected to be about 30,000 square feet, compared with the 40,000 to 50,000 square feet that co-chief executive John Mackey has called the “sweet spot” for a typical Whole Foods. But these examples suggest that 365 won’t simply be a lineup of the cheapest organic goods. It will be an experiment in whether a more ruthless efficiency in curation and stocking can help bring down prices across the store.

The new 365 stores hope to have much in common with their sister operation, including high-quality meat and seafood and a sprawling produce department.

There are key differences, though, including an emphasis on prepared food bars that Turnas said will be “a little more get-it-yourself, self-serve” than those in a traditional Whole Foods. 365 is also building its stores around a program called Friends of 365, in which it will turn over a small section of its square footage to like-minded retailers to make shopping more of an experience.

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The Silver Lake store will include a 1,245-square-foot vegan fast-casual restaurant called By Chloe and a 396-square-foot Allegro Coffee Company bar that will serve craft coffee and beer. There will also be a kiosk called TeaBot built by a company of the same name that allows shoppers to create customized tea blends that are served up hot to the user in less than 30 seconds.

Speculation has been running wild about what kinds of retailers might be included in Friends of 365, after several news stories touted that executives were considering tattoo parlors. (The website for the Friends program includes a blurb that calls for applications from food, fashion and personal care brands, but also says “Record shop? Tattoo parlor? Maybe!”)

Turnas said they don’t currently have any plans for tattoo parlors at upcoming stores, but the example was simply meant to show how wide a net they want to cast with the Friends program.

It seems applicants have gotten the message — Turnas said they’ve received video pitches or other inquiries from at least one tattoo parlor, more than one marijuana dispensary, and a pet grooming business.

The thought process for choosing the Friends will vary from location to location. While they liked New York-based By Chloe for the Silver Lake store, Turnas said they’d be looking differently at partners for an upcoming store in Portland, Ore.

“They’re very territorial, so it didn’t seem right to bring people from outside” the Portland area, Turnas said.