Case Study 1 Trader Joe s Keeping a Cool Edge 1

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Case Study 1 Trader Joe’s Keeping a Cool Edge The average Trader Joe’s stocks only a small percentage of the products of local supermarkets in a space little larger than a corner store. How did this neighborhood market grow to earnings of $9 billion, garner superior ratings, and become a model of management? Take a walk down the aisles of Trader Joe’s and learn how sharp attention to the fundamentals of retail management made this chain more than the average Joe. From Corner Store to Foodie Mecca In more than 365 stores across the United States, hundreds of thousands of customers are treasure hunting.1 Driven by gourmet tastes but hungering for deals, they are led by cheerful guides in Hawaiian shirts who point them to culinary…show more content…
Recent annual sales are estimated at $9 billion, landing Trader Joe’s in the top third of Supermarket News’s Top 75 Retailers.12 Because it’s not easy competing with such giants as Whole Foods and Dean & DeLuca, the company applies its pursuit of value to every facet of management. By keeping stores comparatively small—they average about 10–15,000 square feet—and shying away from prime locations, Trader Joe’s keeps real estate costs down.13 The chain prides itself on its thriftiness and cost-saving measures, proclaiming, “Every penny we save is a penny you save” and “Our CEO doesn’t even have a secretary.”14,15 Trader Giotto, Trader José, Trader Ming, and Trader Darwin Trader Joe’s strongest weapon in the fight to keep costs low may also be its greatest appeal to customers: its stock. The company follows a deliciously simple approach to stocking stores: (1) search out tasty, unusual foods from all around the world; (2) contract directly with manufacturers; (3) label each product under one of several catchy house brands; and (4) maintain a small stock, making each product fight for its place on the shelf. This commonsense, low-overhead approach to retail serves Trader Joe’s well, embodying its commitment to aggressive cost-cutting. Most Trader Joe’s products are sold under a variant of their house brand—dried pasta under the “Trader Giotto’s” moniker, frozen enchiladas under the “Trader Jose’s” label, vitamins under “Trader Darwin’s,” and
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