trader joe's
CASE: HR-28B
DATE: 05/05/06
Trader Joe’s--2006
“This is like a designer Costco”
-Trader Joe’s customer
“We like to think of Trader Joe’s as an economic food democracy.”
-VP Andrew Dumper
“Many successful grocers are delighted to have sales per person hour at $50 to $60. Ours is $212 and increasing.
-CEO Dan Bane
By 2006, Trader Joe’s expansion into the East Coast market had been an unqualified success, with more that 60 stores in ten Eastern states and more than $1 billion in revenue. These new customers, an assortment of foodies, college students, sugar fiends, and health nuts, expressed the same enthusiasm for the stores as those in the
West. At the recent opening of their first New York City store, one customer proclaimed, “It’s my favorite store in
1
the world. I used to take a train and a bus for two and a half hours to the Trader Joe’s in Hartsdale.” Said one
Cambridge shopper, “It’s much more personal. They recommend stuff. Like: ‘Oh, did you try this. If you haven’t tried it, go get it. Try it. You’ll love it.’” She estimated that she’ll spend $80 on food that would cost $100
2
elsewhere.
But Trader Joe’s success was hardly limited to the East Coast. In 1996, they had 77 stores and $728 million in revenues. A decade later, they had 253 stores and almost $5 billion in sales—more than tripling the number of stores and quintupling their revenues. And they did this in an industry renowned for low margins and slow growth.
Since 1996, they had also centralized their purchasing (formerly both East and West Coast operations had run separate purchasing operations), further leveraging their operational efficiency.
Dan Bane, who became CEO in 2001, explained how Trader Joe’s differentiated itself along five highly related dimensions: (1) selective products, (2) private-labeled unique products, (3) small, intimate feel of each store,
(4) fanatical attention to customers, and (5) extraordinary value. In his view, “There is nothing slick
DATE: 05/05/06
Trader Joe’s--2006
“This is like a designer Costco”
-Trader Joe’s customer
“We like to think of Trader Joe’s as an economic food democracy.”
-VP Andrew Dumper
“Many successful grocers are delighted to have sales per person hour at $50 to $60. Ours is $212 and increasing.
-CEO Dan Bane
By 2006, Trader Joe’s expansion into the East Coast market had been an unqualified success, with more that 60 stores in ten Eastern states and more than $1 billion in revenue. These new customers, an assortment of foodies, college students, sugar fiends, and health nuts, expressed the same enthusiasm for the stores as those in the
West. At the recent opening of their first New York City store, one customer proclaimed, “It’s my favorite store in
1
the world. I used to take a train and a bus for two and a half hours to the Trader Joe’s in Hartsdale.” Said one
Cambridge shopper, “It’s much more personal. They recommend stuff. Like: ‘Oh, did you try this. If you haven’t tried it, go get it. Try it. You’ll love it.’” She estimated that she’ll spend $80 on food that would cost $100
2
elsewhere.
But Trader Joe’s success was hardly limited to the East Coast. In 1996, they had 77 stores and $728 million in revenues. A decade later, they had 253 stores and almost $5 billion in sales—more than tripling the number of stores and quintupling their revenues. And they did this in an industry renowned for low margins and slow growth.
Since 1996, they had also centralized their purchasing (formerly both East and West Coast operations had run separate purchasing operations), further leveraging their operational efficiency.
Dan Bane, who became CEO in 2001, explained how Trader Joe’s differentiated itself along five highly related dimensions: (1) selective products, (2) private-labeled unique products, (3) small, intimate feel of each store,
(4) fanatical attention to customers, and (5) extraordinary value. In his view, “There is nothing slick