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Assignment was given to utilize the skills learned in class and apply it to the reading....

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Running head: TRADER JOE’S: A QUIRKY AND SUCCESSFUL GROCERY RETAILER 1

Case Study: Trader Joe’s: A Remarkably QuirkyAnd Successful! - Grocery Retailer

Central Michigan University – MSA 603 – Dr. Harvey

TRADER JOE’S: A QUIRKY AND SUCCESSFUL GROCERY RETAILER

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Abstract

Trader Joe’s began in 1967 by a man named Joe Coulombe. Joe was inspired to offer diverse products to people who have traveled to other parts of the world and enjoyed the foods in other countries and wanted to enjoy those foods when they returned home. The Trader Joe’s stores were decorated with a South Seas theme with cedar planks and fishing nets on the walls and the employees wearing Hawaiian shirts. The store’s environment is warm, welcoming, engaging and fun. Trader Joes’ strategy is to offer hard-to-find foods that are priced at great values. A few of Trader Joes’ competitors are Whole Foods, Sprouts Farmers Market, Wal-Mart and Kroger. Trader Joe’s does not share its profits earned so competitors will not have an advantage over them. Today, Trader Joe’s continues to be privately held. Franchising or going on the stock market is not on the radar for Trader Joe’s.

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Case Study: Trader Joe’s: A Remarkably QuirkyAnd Successful! - Grocery Retailer

Joe Coulombe (Joe) owned a chain of “Pronto Market” convenience stores in the greater Los Angeles area in the mid-1960s. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C70) The Pronto Market convenience stores had 7-11 stores as its main competition. Joe thought of having a new type of store that offered more diversity in its products that spanned across the world. After going on vacation in the Caribbean, he came back home with an inspiration to open the first Trader Joe’s in 1967. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-70) Trader Joe’s offers hard-to find foods at great value prices along with a large variety of California wines. The stores are adorned with fishing nets and wooden planks with employees wearing Hawaiian shirts. By the late 1970s, there were 20 Trader Joe’s in southern California which attracted the attention of the German Albrecht family who owns a chain of discount supermarkets called Aldi Nord (Aldi). (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C70) In 1979, Aldi purchased Trader Joe’s but kept Joe onto run the business until 1987 when Joe retired. By May 2014, there were 418 Trader Joe’s in nearly 40 states with more than 10,000 employees and an estimated $12 billion in annual sales. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-70) SWOT Analysis From a retail branding perspective a few strengths, weaknesses, opportunities and threats for Trader Joe’s. Some of the strengths Trader Joe’s has are the corporate culture, new products on the shelves and location of the stores. The corporate culture is perpetuated by the hand off of the company to Joe’s friends when each retired. The friendly, welcoming, fun environment

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continued throughout the years. Also by continuing to hire people who are friendly, who likes to interact with customers while offering superior customer service. The employees wear Hawaiian shirts as part of the warm, welcoming environment that Trader Joe’s is known for. Another strength is that Trader Joe’s doesn’t charge for product placement on its shelves but instead the supplier has to compete to show they can sell in high enough volumes and at low enough prices to keep their shelf space. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-71) Customers tend to like the narrow options better when making their purchasing decisions. The store locations play a major part in Trader Joe’s success because they are in the neighborhoods of people who are more likely to be educated, adventurous and well-traveled who could appreciate the diversity of products being offered in the stores. Trader Joe’s targeted college towns and other educated communities. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-71) Weaknesses One weakness for Trader Joe’s is logistics. Trader Joe’s does not purchase from national or regional distributors but rather directly from the manufacturer who ships the product to the Trader Joe’s distribution centers. Doing so limits where and how quickly Trader Joe’s receives its purchases if they are to expand across the country (i.e. Texas and Florida) because they not easily accessible through its distribution centers. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-71) Another weakness is the limited number of products carried. While having limited diverse products is Trader Joes’ niche, it also presents a weakness. A typical grocery store may carry 50,000 different items whereas Trader Joe’s carries closer to 4,000. (Hill, C. W., Schilling, M. A., & Jones, G. R., 2017, pg. C-71) This makes Trader Joe’s easily susceptible to competition with stores like Kroger, Sprouts Farmers Market, and Whole Foods. Today’s society is social media driven. Trader Joe’s does not use any type of social media to advertise or market

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its brand. Instead, it uses a newsletter called the “Fearless Flyer”, radio advertising and word of mouth. Not using social media to help advertise and market the Trader Joe’s brand may be hindering the growth of sales by not reaching more people than they currently are. Opportunities. An opportunity for Trader Joe’s is advertising and marketing using an online and social media presence. If more people learned about Trader Joe’s and what products are offered and the locations, they may just travel longer distances to shop there rather than at one of the larger retail markets. Another opportunity is to begin purchasing from national and regional distributors in locations where purchasing directly from the manufacturer takes longer to receive in the distribution centers in an effort to reduce the wait time of product order to delivery. Threats. In comparing the types of products being sold at Trader Joe’s, the store closest to Trader Joe’s brand is Whole Foods. Both Trader Joe’s and Whole Foods sells products that are healthy, organic and valuably priced. Another threat for Trader Joe’s is not having an online presence. Many stores like Whole Foods, Meijer and Kroger (Trader Joe’s competition) offer online ordering which can either be picked up at the store or delivered to the customer’s home. Trader Joe’s would increase sales by offering online ordering with either pick-up or delivery options. While Trader Joe’s has a distinctive product strategy of offering hard-to-find, healthy, organic, humane products at a great value, they have some weaknesses that that may be hindering their growth in sales. Traer Joe’s has some opportunity for growth in sales by eliminating one of their treats which is going online and offering online ordering while still maintaining the fun, friendly in-store interaction with their employees when customers are not able to or prefer to shop in the store.

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References Hill, C. W., Schilling, M. A., & Jones, G. R. (2017). Strategic management: An integrated approach theory & cases. Boston, MA: Cengage Learning....