Cheaper Whole Foods ‘365’ stores will be in hipster havens

Whole Foods Market WFM, +0.89%   announced plans to open five new, lower-cost versions of its grocery stores called 365 by Whole Foods Market in the second half of 2016.

The new chain will feature, along with lower prices, an environment that is “hip, cool and tech-oriented,” John Mackey, a co-founder and co-chief executive of Whole Foods, said in May, when the new store concept was first mentioned publicly.

The first five 365 by Whole Foods Market stores are to open in areas of the country ranging from the Pacific Northwest to Southern California to southeast Texas in metropolitan locales with varying college-education and median-income levels. What they do have in common: hipster populations.

That Whole Foods appeals to so-called hipsters is nothing new.

But with its 365 stores Whole Foods appears to be specifically targeting some of the most hipster-intensive of hipster areas.

The first of the new chain of stores is set to open in 2016 in the Silver Lake neighborhood of Los Angeles, named America’s No. 1 hippest hipster neighborhood by Forbes. The area is known for its large arts community, having risen to fame as the location of Walt Disney’s first large studio in the 1930s. (That studio’s site is now home to Gelson’s Market, a swanky, high-end grocery store.) Silver Lake, a center of the indie rock scene, is sometimes referred to as “the Los Angeles counterpart to Brooklyn’s Williamsburg.”

Silver Lake is an ethnically diverse neighborhood with a high percentage of never-married men (52.6%) and women (38.6%) — often an indication of a high hipster factor. The median annual income is $54,339, according to U.S. Census Bureau data, which isn’t too far off the national median household income of $53,046. In other words, it may well be brimming with younger consumers who want high-quality, organic foods but can’t necessarily afford Whole Foods Market prices.

The other announced locations have similar profiles. The Houston 365 store will open near the Houston Heights neighborhood, which has been compared to Silver Lake in terms of its hipster quotient. The cost of a two-bedroom rental there averages $2,000, and the median household income is $63,500. (A 365 location in the Whole Foods headquarters city, Austin — the reigning top city for hipsters in Texas — has not been announced.)

Each of the new 365 stores is opening in an existing market for the company. There are currently five Whole Foods Market stores in the Seattle area, and four stores in Portland. Ore. In Portland, two stores stand within 1.5 miles of each other.

“To best leverage our existing team member base and infrastructure, we expect most of our first 365 by Whole Foods Market stores will be in existing markets,” said Whole Foods representative Robin Rehfield Kelly in an email. “Complementing our Whole Foods Market stores, the streamlined store concept and efficient shopping experience will allow us to grow in both urban and suburban markets.”

Whole Foods typically has a set of guidelines when opening new locations, such as 200,000 people or more within a 20-minute drive and a large number of college-educated residents.

In Bellevue, Wash., where one of the new 365 stores is opening, the median household income is $90,333, and 62.1% of people over age 25 have a bachelor’s degree. It’s home to many employees in Seattle’s tech scene, including Microsoft MSFT, -0.38%  CEO Satya Nadella and Wikipedia co-founder Larry Sanger.

Still unanswered is the question of whether 365 stores will appeal to a broader market of cost-conscious consumers.

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