Why Are Millennials Flocking To Aldi Over Whole Foods?

Despite opening a new, hipper version of its typical stores, Whole Foods doesn’t appear to be making much headway in turning around its slumping sales. In fact, customers are actually heading to discount retailer Aldi. But why?

Bloomberg reports that stores like Aldi and Trader Joe’s (who are strange corporate cousins through their Germany-based parent companies) are capitalizing on Whole Foods’ weaknesses — namely their expensive price points — and offering similar, more affordable products that garner the attention of shoppers, including the always coveted millennial demographic.

Aldi, for its part, takes an approach to shopping that is essentially a 180 from Whole Foods’ — and its new 365 store’s — approach: focusing on speed and price, not ambience and what’s hip.

The stores are also different from traditional groceries: shoppers rent a cart and receive their quarter back upon its return, and bags are a strict BYOB policy.

Aldi is also pushing back against the trend of offering customers every possible item and brand they could want. The majority of products it sells are from house brands, and you won’t get lost in endless aisles because there are significantly fewer of them.

“The customer doesn’t have to walk in the store and have so many options and take time to decide. We’ve done that work for them,” Liz Ruggles, Aldi’s marketing director, tells Bloomberg.

The retailer’s no-frills approach to shopping is a striking contrast to Whole Foods’ answer: 365, a new store that is intended to be a place where people want to hang out, not just shop.

But so far, it doesn’t appear the store in Silver Lake, CA, has recaptured the grocery sales of customers leaving traditional Whole Foods.

In fact, one shopper tells Bloomberg that he went to the new 365 store recently for breakfast and iced coffee. While he got the goods, he also “drank beers” and “treated it like a bar and pregamed before a Memorial Day party.” He has yet to actually buy groceries from the store.

The lack of grocery sales isn’t exactly worrisome for Jeff Turnas, president of 365.

“I’m not sure it’s a negative,” he says. “We didn’t set out to say we just want millennials in our store,” he says. “We set out to create a fun, new, fresh way to shop with amazing prices.”

Whole Foods Is Getting Killed by Aldi. Is a Millennial Grocery Chain the Fix? [Bloomberg]