AUSTIN, Texas -- Whole Foods Market here plans to launch a low-cost private-label line in an effort to compete against stores like Trader Joe's and conventional supermarkets.
"It's natural products at lower prices," Peter Roy, president of Whole Foods, told SN.
The new line, slated to hit the shelves in about a month, is called "365," denoting value every day of the year.
The retailer plans to expand the line quickly, possibly introducing 100 stockkeeping units by the end of the year, said Roy. Eventually, it could grow to 700 grocery SKUs, he added.
The line will differ from the company's existing private-label line, marketed under the Whole Foods label, in several ways. First, unlike the Whole Foods brand, 365 will not feature organic products. Also, it will be priced about 20% lower than the Whole Foods line.
The new brand will include many of the products found in the Whole Foods line, including juices, salad dressings, cereals, vitamins, condiments, jams, nut butters, olive oil and pasta sauces.
Analysts believe this is a shrewd move for Whole Foods, which currently does not have a low-priced line.
"This allows them to effectively compete on price without cheapening their house brand," said Kim Gale, vice president of equity research for Adams Harkness & Hill, a Boston investment bank that tracks the natural products industry.
Gale noted that the company's existing private-label program has done very well.
The line may help Whole Foods expand its customer base, said Howard Solganik, president of Solganik & Associates, a Dayton, Ohio-based retail food-service consulting company.
"No matter how much money someone has, consumers appreciate a good value," Solganik said. "If they're growing their business with bigger stores, they need to attract a larger audience. They can't focus on pricier, organic products. It's probably a good move."
Introduced in January 1990, the Whole Foods label has grown to 22 categories with 500 SKUs.
The program has enabled the company to get good margins, while enhancing brand loyalty in the increasingly competitive market.
Last year, the retailer introduced several new product lines for the program, including salsa, sodas, sauces and organic tofu.
Whole Foods recently reported record sales and earnings during the first quarter of fiscal 1997. The 70-store company earned $4.7 million on sales of $297.6 million -- on track to break the billion-dollar mark. Sales were up 21.5% compared with the first quarter of 1996.
The company's 1996 results were recalculated to reflect the merger with Fresh Fields in August 1996.