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    Why Amazon Is Betting on Whole Foods’ Daily Shop Small Concept Store

    Press RoomBy No Comments8 Mins Read

    Small grocery stores are gaining popularity, including with Whole Foods.

    The Amazon-owned chain has been opening locations using a new format, Whole Foods Market Daily Shop, for about a year. Last week, Whole Foods opened its latest Daily Shop store near its HQ2 in Arlington, Virginia — right across the Potomac River from Washington, DC.

    Amazon CEO Andy Jassy described the new store format as a smaller version of Whole Foods designed for urban markets. The company’s first three locations are “off to very good starts,” he said on its earnings call Thursday.

    “I’m also very excited about this new concept,” Jassy said. “Expect to see more.”

    The store’s goal isn’t to offer you everything you need on a weekly grocery run. Instead, at about 10,000 square feet, or about a quarter the size of a normal Whole Foods store, the latest Daily Shop store is designed for that quick fill-in trip for milk or a heat-and-eat meal on a busy weeknight.

    “If you want a quick lunch, need some ingredients on your way home from work, or you’re stopping in for a meal to go ahead of a flight, we’re ready to serve you,” store team leader Jose Gomez said in a statement about last week’s opening.

    A Whole Foods spokesperson said that Daily Shop offers a similar product selection to regular Whole Foods stores, “but you won’t see things like a hot bar or full-service meat and seafood cases that you’d see in our traditional, larger store formats.”

    “Each category will have a smaller selection, but every category is still represented with various options and price points for the customer,” the spokesperson said.

    The Daily Shop format is designed for dense urban areas, Amazon said when it introduced the concept last year. Other smaller-format supermarkets, such as Aldi and Grocery Outlet, have been expanding rapidly in the US.

    I headed to the latest Daily Shop location on opening day to see what shopping there is like. Here’s what I found.

    This Whole Foods Daily Shop store is located in the Crystal City neighborhood of Arlington, Virginia.


    The sign outside of a Whole Foods Market Daily Shop store

    The outside of the Whole Foods Market Daily Shop featured large windows.

    Alex Bitter/BI

    This space housed an Amazon Fresh location before it closed last year. The area around it includes several apartment and condominium complexes, a Metro stop, one of DC’s airports, and one of the major freeways leading into and out of Washington, DC.

    Amazon has a big presence in Arlington.


    An AWS Skills Center location in Arlington, Virginia's Crystal City neighborhood.

    This AWS Skills Center is located just down the block from the Daily Shop location.

    Alex Bitter/BI

    Amazon selected this part of Arlington as the location for its HQ2 in 2018. Since then, the company has opened offices and other facilities in the area, such as this AWS Skills Center.

    Daily Shop isn’t Whole Foods’ first attempt at a smaller store.


    People line up outside of a Whole Foods 365 store

    Whole Foods previously ran some Whole Foods 365 stores.

    Epics/Getty Images

    Whole Foods used to operate small stores under the name Whole Foods 365. This chain focused on the company’s store-brand products and prepared foods. The stores were aimed at younger, price-focused consumers.

    The company shuttered the format in 2019.

    Daily Shop seems to avoid the mistakes that 365 made.


    A sign above the produce section at a Whole Foods Daily Shop store reads: "Eat Colorfully Every Day."

    The produce section of the Whole Foods Daily Shop store

    Alex Bitter/BI

    While it’s also a small-format grocery store, Daily Shop avoids some of the mistakes that Whole Foods made with its 365 locations, said Phil Lempert, a food industry analyst and editor of the website Supermarket Guru.

    The 365 stores carried mainly store-brand products to compete with other grocery chains on prices, Lempert said. “365 was just searching for a way to get the Kroger shopper to come to the store,” he said.

    Lempert, who has visited other Daily Shop stores, said that the new stores carry items at multiple price points and are more focused on convenience than price. On my visit, for example, I spotted store-brand items as well as fancy French cheeses.

    It helps that Amazon has cut prices on many items at all Whole Foods stores since it acquired the chain in 2017, he said.

    “I think the Daily Shop store is back to food and really understanding the consumer,” he said.

    A Whole Foods spokesperson said the format is meant to be quick and convenient, bringing stores closer to some customers and extending the company’s reach into surrounding neighborhoods.

    “This format is designed to provide customers a quick, convenient shopping experience with easier access to the fresh, high-quality offerings they expect from Whole Foods Market,” the Whole Foods spokesperson said. “These stores bring Whole Foods Market closer to existing customers, while extending the company’s reach to others in surrounding neighborhoods.”

    Whole Foods’ focus on ingredients and food quality could be seen around the store.


    A sign above the deli section of Whole Foods Daily Shop reads: "Pioneering Food Standards Since 1980."

    Whole Foods doesn’t allow products with certain ingredients to be sold in its stores.

    Alex Bitter/BI

    This sign, a reference to Whole Foods’ quality standards, appeared above the prepared food department.

    I found multiple ready-to-eat products, from these tequila lime tortilla chips…


    Transparent plastic bags of Tequila Lime Tortilla Chips sit on a shelf at Whole Foods Daily Shop.

    Bags of these tortilla chips were $4.99 each.

    Alex Bitter/BI

    I picked up a bag of these tortilla chips. The tequila lime flavoring was tasty, though they needed more of it.

    …to fresh pizza.


    Slices of pizza sit on a warming counter at Whole Foods Daily Shop

    Shoppers could buy a slice or a whole pie.

    Alex Bitter/BI

    I’ve enjoyed Whole Foods’ pizza bar at other locations, so I was happy to see it at Daily Shop.

    Daily Shop also has specials to draw in Prime members.


    A yellow shelf tag at Whole Foods Daily Shop shows a discounted price of $10 on Fridays for a family pack of Tiramisu or Tres Leches cake.

    Big packs of tiramisu or tres leches cake are $10 on Fridays.

    Alex Bitter/BI

    This Friday-only discount on tiramisu and tres leches cake was for members of Amazon Prime.

    The store had a decent selection of store- and name-brand products.


    Tubes of toothpaste for kids made under Whole Foods' 365 store brand sit on a shelf next to similar products from Tom's of Maine at a Whole Foods Daily Shop store.

    Two types of kids’ toothpaste at Whole Foods Daily Shop.

    Alex Bitter/BI

    While 365 products were throughout the store, I usually saw at least one name-brand equivalent, whether I was looking at breakfast cereal or toothpaste. That supports Lempert’s point that Daily Shop isn’t as focused on cheap groceries as its small-format predecessor was.

    Despite the stores’ small size, there was also a decent selection of fresh food.


    Bananas sit in a display at a Whole Foods Daily Shop store

    Organic bananas sat inside the entrance to this Daily Shop store.

    Alex Bitter/BI

    Bananas are a staple at virtually every grocery store, though if you wanted one or two, you might be better off getting them for free down the street at one of Amazon’s community banana stands.

    There was also this return point for Amazon purchases.


    A "Pickup and Return" kiosk at a Whole Foods Daily Shop store.

    An Amazon returns kiosk was at the back of this Daily Shop store.

    Alex Bitter/BI

    Many Whole Foods and Amazon Fresh locations let Amazon customers make returns at their stores, and this Whole Foods Daily Shop location was no exception.

    With a few items in my hands, I headed toward the checkouts.


    The checkout section at a Whole Foods Daily Shop store.

    There were several self-checkouts at this Daily Shop location.

    Alex Bitter/BI

    I headed for one of the open self-checkouts, though there was at least one regular checkout staffed by a person if I had wanted that.

    The store wasn’t as busy as I worried it might be on opening day, so I didn’t have to wait in line to pay.

    Checking out was easy, especially with just a few items.


    A self-checkout kiosk at Whole Foods Daily Shop

    The self-checkout looked like any other Whole Foods store.

    Alex Bitter/BI

    The checkout area was small, likely a reflection of this format’s focus on quick trips.

    My shopping bag reminded me again of Whole Foods’ quality standards.


    A paper bag from Whole Foods Daily Shop reads "It's What's Not In The Bag" and contains a list of ingredients that Whole Foods doesn't allow in products sold at its stores as an underprint.

    My paper shopping bag listed many of the ingredients that Whole Foods doesn’t allow in its products.

    Alex Bitter/BI

    Whole Foods has a list of about 300 ingredients that it doesn’t allow in any of the food it sells, from foie gras to some food colorings. The shopping bag I got at checkout had dozens of them printed right on it.

    Overall, it was a good shopping experience.


    The author outside of a Whole Foods Market Daily Shop in Arlington, Virginia.

    The author is standing outside the Whole Foods Daily Shop store.

    Alex Bitter/BI

    Daily Shop seems to live up to Whole Foods’ promises. It’s not meant to replace a larger grocery store, but it’s a reasonable option if you need a few ingredients for a recipe or want something easy to heat up for dinner on the way home from work.

    This Daily Shop store has competition on both fronts, though, with several restaurants on the block, and a Costco and a full-size Whole Foods about a 10-minute walk away.

    That will be part of the challenge for these urban stores: Cities usually have lots of easy, quick food options, and Daily Shop will need to stand out in a crowd.

    Do you have a story idea to share about Whole Foods? Contact this reporter at abitter@businessinsider.com.

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