Analyzing Trader Joe's Strategy

Trader Joe’s is an organic grocery food store that is one of the best known organic food chains. By listening to the consumer and adjusting to the changing consumer market, Trader Joe’s had built a brand equity that is continuously growing. Trader Joe’s faces stiff competition from other large organic food chains therefore must stand out and adapt to the consumers’ needs. Marketing strategies are important to communicate to the consumer more effectively and help target the consumer to their product. Trader Joe’s segments its products by psychographic, behavioral and demographic characteristics

In the St. Louis metropolitan region there is a wide variety of grocery retailers, from which consumers purchase their groceries. With many grocery stores spread throughout the regional area offering good merchandise and competitive prices there are two chains that are frequented, Aldi’s and Trader Joe’s. Both of these companies share the same parent company, Albrecht Brothers, and have stores nationwide. Both Aldi and Trader Joe’s are owned by one company; however, they share commonalities and differences.

Trader Joe’s chief executives have been careful in their expanding of the brand to more geographic locations, and they must continue to seek out their target market of “intelligent, educated, inquisitive individuals” and settle around them.

One of Trader Joe’s competitive assets is their business model. They open small stores that give their customers a neighborhood feel. Analysts have found that the chain sells almost twice as much per square foot as its main competitor, Whole Foods (INVESTPOEDIA, 2016). This unique strategy allows consumers to view and choose more products in a given area, therefore making them more likely to find what they are searching for. This strategy is sustainable if Trader Joe’s continues to operate in this manner.

Trader Joe’s was founded by a guy named Joe Coulombe in 1967 under the idea of being a store that offered products aimed at sophisticated costumers interested in finding good bargains and products that are natural and organic, and not typically found in general supermarkets. Although, there are many changes that happened with the company and the industry since 1967, Trader Joe’s is still going strong with the way they do things whether it be on the customers’ aspect or the employees’ aspect. However, as Trader Joe’s tries to implement new processes and procedures, things start to shake the very foundation of the company itself like growing bureaucracy that the company never has, or the increased competition between employees who try to advance

It has been said that U.S. food spending is increasing, but unfortunately, supermarkets are not making what they should be. Between the alternative grocery methods, and other such societal shifts, this has caused some supermarket chains to have to focus on their more profitable stores, and exit from the less profitable areas. Even though such value-oriented grocers as Walmart are making it very difficult for conventional supermarkets to compete based on price, Publix continues to lead in the supermarket industry where they made $548 per square foot annually. In addition, Publix’s net earnings in the beginning of 2010 were up to $996 million, compared to $877.3 million in the previous year (Mujtaba & Johnson).

After examining Trader Joe’s, and comparing it to Michael Porter’s generic strategies it was not very clear which method it was attempting to follow. It possesses qualities of both differentiation as well as price leadership. We believe that it is following focused differentiation but with a side of price leadership. This is demonstrated through the way that the company runs its stores, the products placed inside them, as well as its low price points.

Trader Joe 's is a privately owned grocery store that sells a variety of natural and healthy food and beverage options. Their headquarters is located in Monrovia, California and they have about 350 stores in roughly 25 states. It was started by Joe Coulombe as a Los Angeles convenience store chain in 1958, and then the company was bought in 1979 by German billionaires Karl and Theo Albrecht, who founded the ALDI food chain. Trader Joe’s competes within their niche market of organic and health food grocery stores with stores like Wild Oats and Whole Foods, as well as big grocery stores such as Hannaford, Roche Bros, and Market Basket. To keep costs down, its stores have no service departments and average about 10,000-15,000 sq. ft.

Loblaw Companies is one of the largest food retailers in Canada, owning well maintained brands such as NoFrills, Real Canadian Superstore, and Shoppers Drug Mart. With its focus of fresh produce, real Canadian pork, and low prices on other instore food products, Loblaw’s had created well-established branding for themselves in the local communities. However, in the past few years, Loblaw’s Companies have faced an ever-growing competitive market, with other retail competitors such as Walmart, Costco, and Drugstores expanding in the food retail industry. It is sourced

The second force that I will use to analyze the Trader Joe’s company is the “the rivalry among established competitors”. Factors to consider when looking at the rivalries in the industry are industry demand, cost conditions, and exit barriers. Trader Joe’s competitors include The Kroger Co., Whole Foods Market, and Safewat Inc., and all super markets in general (Llopis, 2011). With that said, there seems to be a high demand for what Trader Joe’s offers, private labels. This means that the intensity in the industry is less compared to an industry with a flat demand. Trader Joe’s does not have to fight hard to sell their products because of the service they have created. Trader Joe’s brand can be considered “diversity on steroids” which has somewhat of a cult following among consumers (Llopis, 2011). Consumers that want unique experiences with their food are able to do exactly that at

Competitors Intersections: Trader Joe’s is the most appropriate rival to analyze for this section of the report dealing with how rivals are coping with the marketplace and how their actions are impacting Whole Foods. Year ending 2009, Whole Foods had $12 Billion in sales, while Trader Joe’s was $8.0 Billion. They are the next closest rival to Whole Foods. Trader Joe’s offered no discount specials or coupons like Whole Foods did when the recession hit hard in 2008. This may be a major factor in why Whole Foods is doing so much better than them currently. Marketing impact of Whole Foods can be seen by a direct increase in sales since the recession hit. Trader Joe’s does incorporate a low cost strategy in the marketplace. They utilize a wide selection of house labeled items that are a significant value compared to the name brands. These house labeled items are still

Trader Joe’s founder had a perception for his stores after vacationing in the Caribbean. He perceived that the customers would try new things while on vacationing. Also realized that less is better. Many time customers buy more when there is less to choose from in that store. Their attention is only selective when there is not a big variety of supplies.

Trader Joe’s has an amazing business model that makes them a $9 billion dollar 365 store organization, which can make larger stores very envious. First of all they use smaller real estate the average store is about 25% of a full size grocery store, they pretty much carry specialty products that are exclusive to Trader Joe’s, they may appear under their house brands of Trade Giatto, Trader Jose´, Trader Ming & Trader Darwin that cannot be found in any other stores.

Trade Joe’s is known as “the place to go” if you are looking for unique products you won’t find at other grocery stores, don’t mind Hawaiian-shirt-clad employees, and are lucky enough to have one near you! In 2012 Trader Joe’s ranked as the 2nd best supermarket in US according to Consumer Reports, and in 2013 Market Force Information, named Trader Joe’s as the #1 consumer’s favorite grocery store. These achievements are no doubt due to the company’s strategy and competitive advantage. Their strengths and weaknesses are also a critical component to understand when analyzing Trader Joe’s success, as well as its potential going forward. While Trader Joe faces some problems, these obstacles are by no means insurmountable.

From a modern marketing point of view, grocery business and its stores are in “maturity and saturated stage” of the market-product life cycle. The aging of the baby boomer generation and the rising trend of healthy organic foods made way for Trader Joe’s, a less traditional grocery store with many more “hip” brands and innovations. Trader Joe’s is a fascinating company. It is privately owned and a sassy young company. It started off modestly with few small convenience stores in Pasadena, California. Trader Joe’s were differentiated from the local grocery stores with its tropical theme and its “exclusive” business style (naming the store