Whole Foods says its first smaller-scale Daily Shop in Manhattan, N.Y., has exceeded sales projections. - Yuki Iwamura/Bloomberg News
Arthur Glauberman shops for groceries on Manhattan’s Upper East Side almost daily.
Whole Foods Market wasn’t among his stops until September, when the natural-foods retailer opened a minimarket less than a block away from his apartment. On a recent fall day, the 72-year-old residential salesperson was doing laundry in the basement of his building when he realized he needed some things from the grocery store.
With a few pairs of pressed pants tucked under his arm, he walked out the back door to the Daily Shop. “The idea of having a store down the block where you could go and get produce,” Glauberman said, “I was thrilled that they opened.”
Whole Foods is crafting a growth strategy around shoppers like Glauberman, planning to open more smaller-scale, Daily Shop stores in dense urban neighborhoods and win over consumers who don’t regularly visit one of the Amazon.com-owned chain’s traditional stores.
The 9,100 square-foot Daily Shop location is about a quarter the size of a regular Whole Foods, and sells items at comparable prices. “We’re serving a previously unmet need in the neighborhood,” said Nicole Davia, a Whole Foods senior vice president.
Whole Foods’ Daily Shops are the latest effort by grocery sellers including Walmart, Sprouts Farmers Market, Publix and others to squeeze supermarket operations into smaller spaces that cater to “fill-in” shoppers. Some supermarket chains have struggled to operate smaller locations as a result of slim profit margins and the smaller operations’ sometimes-challenging logistics.
Fill-in shopping, where consumers make frequent trips but buy only a few items, is on the rise, according to Placer.ai, a data firm that tracks store visits. Consumers made 11% more trips to grocery stores in the 12 months ended in October compared with 2019, the firm said, while spending less time during a visit.
Promotions and discounts targeting increasingly price-conscious consumers have made shoppers more inclined to bargain-hunt, said R.J. Hottovy, Placer.ai’s head of analytical research.
The small-format stores can save operators money by focusing on core products, experts said. They can also be cheaper and quicker to open, allowing grocers to expand in urban areas where real estate or construction costs are high.
To make up for construction, setup, labor and operating costs, small-format stores need high inventory turnover—the speed at which goods are stocked and sold, said Bill Simon, the former chief executive of Walmart.
Whole Foods has more than 500 locations in the U.S. - Yuki Iwamura/Bloomberg News
“If they’re going to operate a bunch of small-fresh stores, the degree of difficulty is as high as you’ll see in retail,” Simon said of Whole Foods’ endeavor.
Whole Foods said its first Daily Shop in Manhattan has exceeded sales projections every week since opening. The grocer, which operates more than 500 locations nationwide, has four more Daily Shop stores in New York City and will bring the format to Washington, D.C., in mid-2025, a spokesperson said.
The company said in October that its sales had increased by more than 40% since its acquisition by Amazon in 2017, when Whole Foods reported fiscal year sales of about $16 billion. This year, Whole Foods said, it doubled the number of promotions and lowered prices on 25% of items, helping lift its sales.
At Sprouts Farmers Market, the natural-foods retailer’s visits to smaller-format stores significantly outpaced its own normal-size stores, as well as grocery stores nationwide, between January 2022 and early 2024, according to Placer.ai. Sprouts declined to comment.
Other grocers, including Publix’s GreenWise Markets, Ahold Delhaize’s Bfresh concept, and Target, have backed away from their efforts to develop small-format stores in recent years, citing operational challenges.
Walmart struggled to make its small-format stores as profitable as supercenters, partially because smaller stores couldn’t carry as many high-margin items. Simon, who was part of the retailer’s push for Walmart Express, said one supercenter generated the same amount in sales as about a dozen Walmart Express stores. The concept also conflicted with its Neighborhood Markets brand, a chain of slightly larger-format stores that Walmart continues to operate.
Whole Foods has tried a smaller-store format before. Beginning in 2016, the grocer opened a sister chain of lower-priced grocery stores called “365 By Whole Foods Market,” aimed at attracting younger shoppers. But after Whole Foods began lowering prices at its traditional stores, the company said the price distinction between the two brands became less relevant. It said in 2019 it was ending the project.
Whole Foods said that it learned from the 365 effort, and that the Daily Shop concept is unique. The 365 stores were about 25,000 square feet, compared with 7,000 to 14,000 square feet for the Daily Shop. The 365 stores also focused primarily on value and private-label goods, while the Daily Shop’s selection and pricing mimic that of a normal-size Whole Foods.
Hadrien Bessou said he has been to Whole Foods’ Manhattan Daily Shop about five times on his way back from work. The self-checkout line, he said, winds through the store’s narrow aisles, particularly frustrating because he expected a quick, in-and-out experience.
Bessou said he has often been unable to find basics such as potatoes and onions. “You’re kind of, like, going in with a list of 10 things, and you walk out and you only have five,” he said. “All of a sudden, your recipe is starting to fall apart.” Bessou said he won’t be using the Daily Shop for quick grocery runs anymore.
Glauberman, who made three separate trips to the Daily Shop on a recent Saturday, said that timing matters. “If you go early, you can get your broccoli,” he said.
