Five Forces Analysis For Trader Joe's

Abraham’s (2002) research shows, Trader Joe 's was acquired in 1979 by the Albrecht family of Germany which owns and operates a discount food chain of 4,500 Aldi stores in Europe and parts of the central US. Abilities, competences, and methods that an organization uses to improve its effectiveness and efficiency and create and sustain competitive advantage are called resources (Williams, 2015, p. 109).

One of Trader Joe’s biggest advantages is in their target market. They have found the niche that appreciates higher quality foods but is on a tight budget and Trader Joe’s has managed to provide high quality food that is at a great price. So you end up with the individuals who are health conscious and in college or recently graduated who value a great deal. Trader Joe’s has realized that and has capitalized on this fact by opening in locations that are easily accessible to both students

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.

Thirdly, Trader Joe’s stores are small and located in non-prime locations, which holds fixed operating costs at bay. Furthermore, the company is able to generate the industry’s highest sales per square feet in its small sized stores. In an effort to diversify from its competitors, Trader Joe’s also relies on a non-traditional marketing strategy. Completely neglecting conventional marketing techniques like commercials or promotional offers, the company focuses on unique and store specific in-store marketing with its newsletter and the occasional radio ad being its major means of communication with its customers. The Trader Joe’s brand with its vast fan base is naturally another part of the company’s competitive advantage.

Grocery shopping is more diversified and evolved than ever before. Individuals across the nation have access to everything from exotic products to unique delivery services. Often, specialty stores have limited locations whereas specialty services have a limited reach. However, two retailers have expanded to hundreds of locations while adhering to unexpected market positioning for previously untargeted market segments. Whole Foods Market and Trader Joe’s have become household names while also innovating beyond regional and national traditional chains. Despite comparable size in

Whole Foods Market is a leader in the quality and differentiation food business, they offer natural and organic products. Whole food market was opened in 1980 by John Mackey, Renee Lawson Hardy, Craig Weller and Mark Skiles. It was founded in Austin, Texas. In 1984, they start to expand their business out of Austin such as Houston, Dallas and later to others states within the US. In 2002, they entered the Canadian market in Toronto and they entered the United Kingdom in 2004 by acquiring seven Fresh & Wild stores (Whole Foods Market History, n.d). Whole Foods Market is ranked as the nation’s leading retailer of natural and organic

Trader Joe’s is known for their unique grocery shopping experience. From their friendly employees donning Hawaiian shirts to their selection of great tasting, well priced foods, Trader Joe’s is the place to be, either as an employee or customer. As an employee for Trader Joe’s, one earns more money than employees at other major grocery stores, and one receives benefits such as vision, medical, and dental insurance, paid vacations, company paid retirement, and an employee discount of 10%. As a customer, one is greeted by friendly faces, is able to try new things, and has a unique shopping experience at a low cost. However, not everything can always be perfect. Trader Joe’s was nicknamed “Traitor Joe’s” when they were ranked the worst on

Market Force has ranked Trader Joe’s as #3 for America’s favorite grocery stores (Vasel, 2016). Trader Joe’s is all about customer service, happy employees and offering high quality products at low prices. Their strategy is to compete differently than their rivals, and by offering products that the others can’t. This is reflected in their mission statement below:

Based on my shopping experience I completely agree with Marion Nestle and the facts he presents us with in “The Supermarket: Prime Real Estate”. Walking through the aisles I noticed what he mentioned about the way supermarkets arrange their items so that they can increase their sales. I went to Publix to carry my out my research. For me, it felt like Deja Vu. Just to the right of the entrance was the store’s bakery, and I have to say It smelled delicious (I almost went and bought myself a dessert). I continued browsing through the aisles and I noticed that the best-selling/most popular brands were at eye level, and right next to it (at the right) were the store brands. Something else that caught my attention was that the entrance to the

Trader Joes has positioned themselves well for the success in the 21st century. They were customer focused before it was necessary to be. They have built a loyal following based on trust, friendliness, and quality products at reasonable prices.

According to the textbook, Trader Joe is not a gourmet food store or a discount food store. Trader Joe actually specializes in selling gourmet food at a discounted price. This store is also a cultural experience. Trader Joe sells luxury things such as Organic Creamy Valencia peanut butter, cage free eggs, and more. All of these gourmet food that is generally sold for high prices are generally given away almost little to nothing. In order to sustain itself in the market, Trader Joe puts its own special twist on the food price value. Their price value slogan is “cheap gourmet”. Also, Joe’s price incentive attracts devoted customers who love what they purchase from the prices they pay. So what concept does Trader Joe utilize?

Trader Joe’s doesn’t have some big store that you can notice from down the road, they do not locate their buildings in an area that you can see from the highway, instead a typically Trader Joe location is in a low-rent, out-of-the-way area. Unlike other food stores, Trader Joe’s does not have on-site bakeries, delis, seafood sections, butchers, and large produce sections. The case author mentions Trader Joe’s buys directly from suppliers and negotiates hard on price. They also have no form of advertising, their biggest type of promotion is word-of-mouth. You would think that a company whose biggest promotion is word-of-mouth would not be as successful, but somehow it works for Trader Joe’s.

Specialty grocery stores have grown in attractiveness to customers, but the main issue is that often specialty stores have restricted locations which in turn limits their reach to customers. Whole Food’s Market and Trader Joe’s are two specialty grocery stores who have increased locations to the hundreds while adhering to an unforeseen market standing for formerly untargeted market segment.

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.

In the industry, competition is high in most areas of the United States. There are usually two to three Supermarkets in a given location depending on the population. Whole Foods has an advantage with the organic and natural food buying trends, but many other businesses in the industry such as Kroger, Costco, etc. have taken notice to the trend.