Case: The first of the “365” 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. Silver Lake, 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, the area may well be brimming with 365’s target customers. 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. In Bellevue, Washington, where one of the other new 365 stores will be opening, the median household income is $90,333, and 62.1% of people over age 25 have a bachelor’s degree. It is home to many employees in Seattle’s tech scene, including Microsoft. A store will also open in Portland, Ore which has a demographic profile similar to Bellevue’s. A 365 location in the Whole Foods headquarters city, Austin — the reigning city for hipsters in Texas - is currently planned but has not yet been announced. Each of the new 365 stores is opening in an existing market for the company. 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 There are currently five Whole Foods Market stores in the Seattle area, and four stores in Portland, where two stores stand within 1.5 miles of each other. Whole Foods management has stated “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, 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.”
Question 1. In several markets, the proposed 365 store location is a mile or two from a traditional Whole Foods store so, in the role of VP of Marketing, explain in some detail what strategy and actions you would recommend, with supporting rationale, to eliminate or minimize the probability of the 365 operation taking sales from the traditional Whole Foods store. Pick any one of the locations profiled above and make use of the demographic information supplied (and available online) in answering the question.
2. Explain the impact those marketing recommendations would or could have on the management, financing and operations of the stores
3. From class discussions about positioning, develop 2 positioning statements, one statement for the 365 line and one for traditional Whole Foods stores.