Trader Joe's Business Analysis

Bimbo Bakeries USA, headquartered in Horsham, Pennsylvania is the United States affiliate of Grupo Industrial Bimbo, founded in Mexico City, Mexico. Though Grupo Bimbo is now a multinational corporation, it began as a single family-owned bakery in Mexico City called “El Molino”. Lorenzo Servitje Sendra worked with his father in the family bakery throughout his childhood, but when his father died in 1936 he had to take over. Lorenzo was educated and ambitious, and together with three of his family members devised a plan to increase the scope of their business. They bought five delivery vans to deliver their breads, wrapped in plastic to preserve freshness, to various small stores daily. Customers loved their product and within a few years they had increased production and were expanding outside of Mexico City.

The company keeps real estate costs low by staying away from desirable locations to accommodate its average smalls stores. Trader Joe’s takes prides in the way they cut costs and maintain its economical ways to benefit everyone. One of their slogans is “Every penny we save is a penny you save and our CEO doesn’t even have a secretary.” (Organizational Behavior 2014, p.499) There are many ways in which they fight to maintain keeping costs low. The company searches out delicious unusual foods from around the world and then directly deals with the manufacturers to make a contract. The company puts their own label and then makes it a house brand. Then they make each product a tester and if people like the product, it gets to stay on the shelf. This low overhead approach is what keeps the company going. What the company does not do is sacrifice quality, there house brands have been a success due to them taking risks. There are about fifteen new products put out on the shelves every week, but they make sure when one product goes out on the shelf, another product goes off the shelf. Therefore, the products that do not sell get taken off. They will even bring back discontinued products if customers request

In the United States, the food retail industry is absolutely massive. According to Statista, this industry brings in nearly 5.27 trillion dollars annually and 594.4 billion of that is from grocery store sales. In this market, the 20-ton gorilla in the room is Walmart, racking in nearly 20% of the entire market at around 118 billion dollars in 2013 according to the Harvard Business School case study. Following Walmart, Kroger and Costco own the biggest next largest slices bringing in 76 billion and 71 billion respectively. In this highly competitive market that has some of the smallest margins of any industry it can be tough to get ahead and even tougher to grow. However, Trader Joe’s has managed to pierce what was once a very small world

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.

They only stock about 4,000 SKUs in their small locations; this is a business strategy resulting in the retailer selling an estimated $1,750 in merchandise per square foot, more than double Whole Foods’ (Kowitt). Additionally, produce is priced per unit at Trader Joe’s, while Whole Foods sells by the pound. Both Whole Foods and Trader Joe’s “organic” options generally run about $1-2 more expensive than their “regular,” non-organic products. Whole Foods also offers more national brands, which are pricier than private label brands.

Chick-fil-a first opened its doors in 1946 in the state of Georgia. Founded by the owner Pruett Cathy, he later, in the early 1960s, incorporated Chick-fil-a. Since then, chick-fil-a has grown massively all over the United States making them the largest quick-service chicken restaurant in the United States. Chick-fil-A began as a restaurant named the Dwarf House but has grown to over 1,700 locations.

Trader Joe’s in not a super mega store or chain. Each of its location have an average of about 10,000 S.F. This limits the variety of product that they carry but does not limit their variety. This means that they don’t carry your staple products from Kellogg’s, Kroger, General Mills, etc. like Walmart or Safeway but allows them to carry their own versions of such foods and hard to find products that their competitors don’t carry. Most grocery chains carry around 50,000 sku’s in each of their stores, Trader Joe’s carry only around 4,000 sku’s, 80% of which carry its own private label (Kowitt, 2010). Fortune magazine also estimated sales to be $1,750 in merchandise per square foot. This more than doubles sales of its nearest competitor, Whole Foods. If a product doesn’t carry its own weight, it is gone to make room for

Cracker Barrel Restaurant is a country-based food chain. The restaurant offers a variety of food. Their mainly dishes are home-style breakfast, lunch, dinner as well as desserts. For forty-eight years, Cracker Barrel has been contributing people who drive on the freeways in the United States a quick breakfast stop. With that being said most of the Cracker Barrel Restaurants are located along the highways, attracting travelers and tourist (CrackerBarrel.com). Therefore, not only does the restaurant serve food but it also, brings a vintage gift shops to people dinning.

Trader Joe’s occupies a niche position in the grocery market by providing natural, organic and eclectic selection of wines, frozen food, prepared food and groceries at everyday low prices. They have a small area format with limited products which has put them in the top rank for sales per square feet.

THE ORGANIZATIONAL BEHAVIOR OF FOOD RETAILER TRADER JOE’S IS UNIQUE IN MANY WAYS. FROM OWNER, JOE COULOMBE, TO A STORE CLERK, THEY ALL HAVE THE SAME VISION IN MIND- TO SET THEMSELVES APART FROM THE REST. NOT FALLING INTO STEREOTYPICAL FOOD CHAINS, TRADER JOE’S DOES BUSINESS THEIR WAY. THIS MAKES THEM PERFECT AT BEING THEM. FROM INTERVIEW QUESTIONS TO JOB DESIGN, THEY ARE NOT YOUR STANDARD FOOD MARKET. THE SOCIAL CAPITAL IN WHICH MANAGEMENT IS CHOSEN, TO THE STORE’S ATMOSPHERE AND POSITIVE REINFORCEMENT FOR ALL EMPLOYEES ARE HAVE A PROVEN TRACK RECORD OF SUCCESS. ADDED WITH IMPECCABLE CUSTOMER SERVICE, THE ORGANIZATIONAL BEHAVIOR OF

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

availability of substitutes 1, and the threat of retaliation from incumbents (by lowering price, for

Analysts who study specialty grocer TRADER JOE'S attribute the company's financial success to the canny use of private labels, direct deals with producers and very compact stores (Speizer, 2004). Trader Joe’s is known for their critical standards of hiring their employees. Trader Joe’s customer service holds some superiority over other small grocery stores as they focus on that one important standard of their

The strategic process for any organization begins with the mission of the organization and the business model that management will utilize to achieve the desired goals. For Papa John’s, the business model has included franchise ownership and simplistic, yet effective items that keep the consumer engaged with the organization, lending to customer loyalty. Papa John’s prides itself on the usage of top quality ingredients and utilizing the specific item menu so that the consumer can begin to develop an affinity for these products and not to overload the consumer with choices that lose its individualized characteristics. The franchise model has been an up and down endeavor for the organization. There are around 4000 franchises today (Bandler

Firstly, it is important to remember the current situation of Trader Joe’s in USA, the company has over 400 stores in 30 states and is the leader in customer service in USA. However, the company is not on the top ten supermarkets in sales category. Additionally, Trader Joe’s just operates in USA and does not have experience in other international markets. (Peterson, 2013)