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Whole Foods abandons plan to expand small-format stores

Whole Foods Market Inc. will no longer pursue its plan to open more stores under its 365 banner, which uses a smaller format than the retailer's traditional stores, Yahoo Finance reported Jan. 12, citing an internal email from Whole Foods CEO John Mackey.

In the email, Mackey reportedly said the company will no longer open new Whole Foods 365 stores, citing the chain's prices as the main factor behind the decision. He said the price distinction between regular Whole Foods stores and the smaller store format "has become less relevant" as the company focuses on cutting prices over time, the report said.

According to the report, the Amazon.com Inc.-owned grocer will concentrate on growing the core Whole Foods Market brand. The existing 12 Whole Foods 365 stores will reportedly remain in operations, but associates who have been working at the stores will be integrated into the core brand's other regions, the news outlet said.

Whole Foods launched the 365 store format in 2016 to attract budget-conscious customers, as the stores carry lower-priced items.

Amazon and Whole Foods did not immediately respond to requests for comment from S&P Global Market Intelligence.

Whole Foods in May 2017 unveiled plans of opening 22 stores under the 365 format. When Amazon acquired the company about a month later, analysts said the e-commerce giant would likely grow the 365 brand to better compete with traditional supermarket chains on price.

Shortly after the deal, Whole Foods, which already had four of the small-format stores before Amazon bought it, announced three more branches of the 365 brand in the U.S.

More recently, Amazon was reported to have plans in place to expand the core Whole Foods brand as it tries to extend its two-hour delivery service to more customers in the country.