Case Brief Trader Joes
UNIVERSITY OF SOUTHERN CALIFORNIA
MARSHALL SCHOOL OF BUSINESS
IBEAR 37 – Fall 2014 TERM 1
Case Brief Assignment
GSBA 529 Strategic Formulation for Competitive Advantage. Section 15730
HBS Trader Joe’s (Rev: Dec. 9, 2013)
Hugo Lozano Martinez
Hugo.Lozano.2015@marshall.usc.edu
USC ID: 3746-8393-45
Trader Joe’s, originally a local Californian chain store that offers uncommon groceries at low prices and that focus on a niche market of cultured and urbane clientele had a cautious growth during its first years and after it was acquired by a family that owned one of Germany’s most successful grocery chains expanded to 414 locations nationwide by 2013. With all that success, some grocery business competitors arose trying to compete. Even though experts estimate that the company has a higher return of investment than other supermarkets, there is a question if the company will be able to sustain its expansion without losing its charm effect. After reading the article there are some key strategic issues that must be addressed to keep Trader Joe’s expansion and survival.
1. Since the company does not invest in technology and locate the stores in small shopping plazas, Trader Joe’s customers complain about crowded check-out lines and parking lots. One of the seven core values of the organization is to create a WOW experience in their customers. If the costumer end to end experience is not good at all, something bad they should be doing or can be improved. I will recommend updating to the industry standards, for example self check-out counters and invest in technologies to avoid making line at the store, as well as relocating as much as possible any stores with small parking lots. Looking at the Los Angeles blogger complain, I will suggest to first try to relocate the worst 5 Trader Joe’s stores.
2. Trader Joe’s sales rely on 80% of private label products that tend to be 20% of the sales of a typical supermarket. Also, when costumers search for first necessity
MARSHALL SCHOOL OF BUSINESS
IBEAR 37 – Fall 2014 TERM 1
Case Brief Assignment
GSBA 529 Strategic Formulation for Competitive Advantage. Section 15730
HBS Trader Joe’s (Rev: Dec. 9, 2013)
Hugo Lozano Martinez
Hugo.Lozano.2015@marshall.usc.edu
USC ID: 3746-8393-45
Trader Joe’s, originally a local Californian chain store that offers uncommon groceries at low prices and that focus on a niche market of cultured and urbane clientele had a cautious growth during its first years and after it was acquired by a family that owned one of Germany’s most successful grocery chains expanded to 414 locations nationwide by 2013. With all that success, some grocery business competitors arose trying to compete. Even though experts estimate that the company has a higher return of investment than other supermarkets, there is a question if the company will be able to sustain its expansion without losing its charm effect. After reading the article there are some key strategic issues that must be addressed to keep Trader Joe’s expansion and survival.
1. Since the company does not invest in technology and locate the stores in small shopping plazas, Trader Joe’s customers complain about crowded check-out lines and parking lots. One of the seven core values of the organization is to create a WOW experience in their customers. If the costumer end to end experience is not good at all, something bad they should be doing or can be improved. I will recommend updating to the industry standards, for example self check-out counters and invest in technologies to avoid making line at the store, as well as relocating as much as possible any stores with small parking lots. Looking at the Los Angeles blogger complain, I will suggest to first try to relocate the worst 5 Trader Joe’s stores.
2. Trader Joe’s sales rely on 80% of private label products that tend to be 20% of the sales of a typical supermarket. Also, when costumers search for first necessity