First Look: Whole Foods Debuts Small Format Concept in NY

Whole Foods opened the doors of its highly anticipated, small format Daily Shop concept in the Upper East Side of New York last week. Located at 1175 Third Avenue, the 9,100 square foot store offers grocery essentials to the Lenox Hill neighborhood, focusing on private label items, grab-and-go options, and self-checkout to deliver value and convenience for on-the-go urban customers. 

The Austin-based supermarket chain has experienced starts and stops experimenting with new brick-and-mortar formats in the past, as discussed in our previous coverage of Whole Foods. We explore the distinct features of the new Daily Shop concept in this deep dive and our Instagram Reel video.

Photo Credit: McMillanDoolittle

Products and Service: Streamlined Assortments and Emphasis on Self-Service

Entering the Daily Shop store feels quite similar to walking into a full-scale Whole Foods store. The natural light, high ceilings, and use of clear or white shelving create an illusion of space despite an overall smaller store footprint. A key distinction is the absence of service counters across several fresh departments, including meat, seafood, deli, and bakery. The Lenox Hill store also features only one food vendor, the company’s Juice & Java café concept, which is the first of several to debut in Manhattan. Store staff, many of whom were flexed over from nearby locations to support the store opening, were able to focus on keeping shelves stocked and helping customers. 

Essential grocery categories are represented with curated, scaled-back product assortments. There is a strong representation of 365 by Whole Foods private label throughout the store to emphasize value as the company seeks to shed historic “whole paycheck” perceptions of high prices amid ongoing economic pressures on consumer spending.

The prepared foods area has a variety of ready-to-eat and ready-to-heat options, minus the hot and cold bar. A new sous vide prepared foods product line, featuring items like Peppery Grilled Tri-Tip Steak, debuts at this location under the Whole Foods Kitchen label. Unlike a typical Whole Foods, grab-and-go and bakery items are prepared offsite in a micro-kitchen rather than in-house. 

Also unlike a typical Whole Foods is the emphasis on using self-checkout. The first Daily Shop has 10 self-checkout counters and a customer service counter offering traditional checkout. The push to use self-checkout, lack of service food counters, and smaller store footprint should reduce labor needs and boost profitability.

Photo Credit: McMillanDoolittle

Branding and Store Design: Building in Flexibility to Evolve the Concept

Despite early announcements branding the concept as the Whole Food Market Daily Shop, we were surprised to find that the “Daily Shop” nomenclature was barely used at the store. The exterior sign simply reads as “Whole Foods Market”, the same as any other Whole Foods in their fleet of over 500 stores, and within the space, the term “Daily Shop” was used sparingly on store window decals and occasional interior signage. The average shopper would most likely think of the location as a smaller Whole Foods rather than a separate store concept. 

We view this as a strategic choice to simplify the branding, reduce consumer confusion, and maximize flexibility to evolve the format. A similar example of this and a lesson learned was Target’s decision to move away from the “CityTarget” and “TargetExpress” branding for its smaller scale and urban locations. In the eyes of consumers, it was unclear what differentiated a CityTarget from a TargetExpress, so the stores rebranded under the singular “Target” name to present a unified brand experience and create flexibility to open stores of varying sizes without bucketing them into specific format types.

Photo Credit: McMillanDoolittle

This focus on flexibility is visible throughout the Daily Shop, featuring adjustable displays that can be moved throughout the store and a mobile checkout kiosk that can be deployed during peak traffic hours. The cafe concept itself lacks permanent signage and the “Juice & Java” branding is only displayed on the digital menu boards, offering the option to experiment with and flex the foodservice space in the future to, say, a cocktail bar or food-forward concept if desired. The lack of permanent café branding is likely an intentional and conservative choice influenced by the underwhelming performance of the company’s Allegro Coffee branded in-store cafes, which felt undifferentiated and failed to ever gain traction among consumers. 

In terms of store size, Whole Foods previously announced that Daily Shop locations would range from 7,000 to 14,000 square feet, or about a quarter to one-half the size of the average 40,000 square foot Whole Foods. With a store footprint more comparable to that of a typical Walgreens or CVS, the store does not offer seating, opting instead for standing-room areas to maximize space.

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Technology (or Lack Thereof): A Back-to-Basics Approach In-Stores

Although Amazon has pioneered advancements with Just Walk Out and Dash Cart technologies, neither was integrated into the Daily Shop experience. Company leadership previously stated that Daily Shops would not implement Just Walk Out, consistent with plans to phase out the technology from its full-size supermarkets. The scale of traditional grocery stores, along with the complexities of variable weight items like produce, customized items from service counters, and age-restricted items like alcohol likely made Just Walk Out technology challenging and costly to implement. However, McMillanDoolittle’s coverage of Aldi’s first checkout-free store—an 18,000-square-foot location, notably larger than the 9,100-square-foot Daily Shop—highlights that competing retailers are actively testing similar technologies. This creates pressure on Amazon to continue refining its solution, which remains in use in smaller Amazon Go stores and is licensed to retailers in airports, stadiums, schools, and convenience stores globally.

Surprisingly, in a retail era where omnichannel options are table stakes, there was no dedicated space or online option for order pickup, even though the Daily Shop concept emphasizes convenience, and order pickup is arguably the fastest in-and-out shopping experience you can offer customers. In our view, some of the standing room (where only employees and no customers seemed to be standing during our visit) could have been allocated to house coolers for order pickup.

All this aside, the self-checkout line moved along efficiently, and future iterations of the concept could (and should) test out different configurations of in-store technologies to address multiple shopping journeys.

Photo Credit: McMillanDoolittle

Continued Expansion: Whole Foods Sets its Eyes on the Big Apple

The company plans to open four additional Daily Shop locations in New York, strategically clustering the quick-shop stores near full-size Whole Foods locations to address both full-cart and fill-in shopping trip needs. The Lenox Hill location, for example, is nestled in between the existing, full-size Upper East Side and Midtown East stores. The debut of the Daily Shop concept reflects Whole Foods’ growth strategy centered on gaining share of wallet by targeting convenient, fill-in shopping trips and expanding its brick-and-mortar footprint by opening smaller sites in markets that cannot necessarily support additional full-size stores. The next locations are scheduled to open in the East Village’s StuyTown development and in Hell’s Kitchen.

Ready to future-proof your brand and adapt your store formats to evolving consumer shopping habits? Contact us today to explore how flexible store formats can position your brand for long-term growth.