First 365 by Whole Foods opens in Silver Lake. See how the prices compare

Yet another challenger has stepped into the fray that is the Southern California grocery store market.

Whole Foods Market Inc.'s first smaller format store — 365 by Whole Foods Market — opened Wednesday morning in Silver Lake. The upscale grocery chain plans to open 12 more of these smaller concept stores over the next two years across the nation.

By 8:45 a.m., the parking lot at the new 365 store was packed. At least a dozen cars, including a taxi, circled the lot. A deejay played music at the entrance while customers streamed in.

Besides lower prices, the 365 store is also tech-friendly. 

Wednesday morning, produce lined a display in the center of the store. Scattered around the fruits and vegetables were electronic readers slightly larger than iPads with attached scales where shoppers could weigh their produce, see the price and print labels with all the necessary information for checkout.

365 has an impressive selection of organic wines and craft beer

Katherine Wellington, 48, took her Pink Lady apples to the scale and found out they were 70 cents each. She entered in the code for the fruit, and a small label printed out below the scale.

"I think they're trying to make checkout quicker, which is great," Wellington said. "It's really a fun, exciting vibe, and the prices seem great."

Wellington, who is in Los Angeles for work, said there was a Whole Foods near her home in Boston. But she noticed the prices at 365 were lower.

The design of the new 365 store is a departure from the traditional look of most Whole Foods stores. The numbers "365" appear in a large, colorful font on the front of the building, with the words "by whole foods market" in much smaller lettering off to the side. Underneath the name are large windows checkered with alternating blocks of colorful squares in primary colors. 

The salad bar and hot food options take up the center of the store, while the meat department has colorful signs reading "Meat: no antibiotics ever" and "Seafood: responsibly farmed."

Echo Park resident Jackelyn Valladares, 26, said she was pleasantly surprised by the variety in the 365 store. The high school teacher said she welcomed another local grocer that had "Trader Joe's prices" but "better quality."

"It's cheaper," said Valladares, toting two bags of chicken and produce. "As a millennial who grew up in this neighborhood, things were getting so pricey."

The 365 supermarkets are intended to appeal to younger shoppers like Valladares, who value quality foods but often have less disposable income.

Shoppers said they noticed the design of the store highlighted its focus on lower prices. Large, exposed air conditioning ducts are visible on the ceiling, which also has exposed wooden beams in a design more like that of a warehouse. 

Jamie Hamilton and Hilary Hattenbach, neighbors who live in Silver Lake, said they liked the competitive prices at 365.

"It's definitely more stripped down than I would have expected from a Whole Foods, but I can see that price point is important here," said Hattenbach, a writer.

Both women said they would have liked to have a deli counter. In order to save on labor costs, 365 does not have a deli counter or butchers.

Here's how 365 differs from your typical Whole Foods.

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Lower prices

The biggest selling point at 365 is lower prices, which company executives hope will attract people who wouldn't normally shop at the more expensive Whole Foods.

Expect a greater amount of non-organic produce and meat sold in smaller packages. Shelves will feature less variety than a typical Whole Foods, and there won't be any butchers slicing cuts of meat to order.

More tech

To attract younger shoppers and keep prices down, the 365 stores will have more technology in place to help shoppers find what they want.

That includes in-store iPads, which customers can use to order food to-go, or to scan wine labels for reviews in place of a traditional wine guide.

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Less overhead

The new concept stores will be much smaller than the typical Whole Foods store. On average, a 365 store will be about 30,000 square feet compared with 45,000 square feet for Whole Foods stores.

Whole Foods said this design decision cuts down on architect costs and increases efficiency.

There also will be fewer employees — 365 stores will have about 100 workers compared with the 250 to 500 at Whole Foods stores. 

Analysts say 365 is the Austin, Texas-based company's response to growing competition in the grocery business. Organic and artisan foods, once seen as Whole Foods' forte, are now sold at chains such as Ralphs and Safeway. Big-box retailers like Target and Wal-Mart also have expanded their food offerings.

In its second quarter ended April 10, Whole Foods reported flat sales compared with a year earlier, and the chain has posted three straight quarters of sales declines at stores open at least a year.

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UPDATES:

12:25 p.m.: This post was updated with additional details from the store opening.

10:51 a.m.: This article was updated with information from shoppers at the new store.

This article was originally published at 8:15 a.m.