Whole Foods' new stores are unrecognizable

Whole Foods Opening New Less Expensive Line of Stores Targeting Millennials

Whole Foods is launching a new chain of stores that will be unlike the grocery-store chain's existing locations.

The first of the new stores, called 365 by Whole Foods Market, will open next month in Los Angeles. The second store is slated to open in Lake Oswego, Oregon, in July.

Whole Foods gave Business Insider a sneak peek of what's to come. Here's what customers can expect:

1. 365 by Whole Foods' prices will be much lower than those at Whole Foods' existing stores.

365 by Whole Foods will be competing directly on price with Trader Joe's, Kroger, Sprouts, and other similar stores, said Jeff Turnas, president of the new chain.

To offer the lower prices, Whole Foods has cut back on the building, design, and furnishing costs for its 365 stores.

See Whole Foods locations around America:

Whole Foods around the country
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Whole Foods' new stores are unrecognizable

2. The stores will have a no-frills design and digital price tags.

"We scaled down the look and feel of the store," Turnas said. There will be no printed signs in the new stores, and all the price tags will be digital, enabling the company to make price changes quickly and more efficiently.

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While the design will be scaled down, Turnas stressed that 365 would not be a "bare-bones" experience similar to what shoppers might find at some discount grocers.

"We're still very customer-centric," he said.

3. The stores will be smaller than regular Whole Foods stores, with a different layout.

When customers walk inside a 365 store, they should be able to see the entire store from where they stand. That's because Whole Foods has lowered the height of all fixtures and shelving in the 365 stores to make it easy for customers to find what they need.

"We don't want people to be overwhelmed," Turnas said. "We want them to immediately get the layout and not feel intimidated."

365 Whole FoodsWhole FoodsThe prepared food bars, which are typically located on the perimeter of regular Whole Foods stores, will instead be located in the center of 365 stores. A "pantry" section offering beer, wine, and other packaged goods will be located on the perimeter.

4. The stores will carry about a third of the products that regular Whole Foods stores carry.

365 stores will offer about 7,000 items. There will be a mix of products by Whole Foods' private label (which is called 365 Everyday Value) as well as by a variety of national brands — some of which aren't currently carried by Whole Foods.

5. 365 will offer express checkouts to make the stores more convenient for people who want to make a quick trip for prepared foods or a couple of grocery items.

365 Whole FoodsWhole Foods

The express checkout lanes will be located in the middle of the store near the prepared-food departments. To speed things up, customers will be able to use only Apple Pay and credit cards at the express checkouts.

6. The stores will offer a rewards program that gives customers free stuff based on past buying behavior.

"You'll get instant savings every time you shop" through the rewards program, Turnas said. For example, if you tend to buy bagged lettuce, you might get a reward of a free bag of lettuce for every 10 bags you buy.

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When customers sign up for the rewards program, they will be asked about their dietary preferences and other lifestyle questions, such as whether they have kids, to better tailor the rewards program to meet their needs.

7. Customer service will be more efficient.

365 is training its employees to be able to work across all departments — including checkouts — so no department is left understaffed, depending on a store's needs on any given day.

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The company is also using new inventory-management software that will automatically reorder items that need restocking, so employees don't have to manually manage inventory orders.

8. 365 will offer customers a place to hang out, whether in the dining areas or at the craft beer, coffee, or juice bars.

Each store will have its own kitchen, and customers will be able to order food from the kitchen using an iPad then take it to go or eat it in the store dining area.

There will also be in-store restaurants.

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The Los Angeles location, for example, has a 1,235-square-foot vegan fast-casual restaurant called By Chloe, in addition to a craft-brew bar operated by Allegro Coffee Company.

Turnas says the "hangout" factor is what will set 365 apart from its competitors.

"Nobody hangs out at Trader Joe's or Kroger," Turnas said.

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