Trader Joe's Analysis

Topics: Trader Joe's, Private label, Grocery store Pages: 4 (1411 words) Published: April 10, 2013
Trader Joe’s

Trader Joe’s: A Quiet, Private, and Savvy Retailer

Thomas Pinnola

Strategic Management

Professor Backhaus

March 17th 2013

Thomas Pinnola
Professor Backhaus
Writing Assignment 2
March 17th 2013

Trader Joe’s: A Quiet, Private, and Savvy Retailer
Joe Coulombe started Trader Joe’s in 1967. Traded Joe’s can be characterized as a low cost, high quality grocery store. Eighty percent private label product mix, expanding its target markets, keeping costs down, and extremely effective marketing powers Trader Joe’s increase popularity. Since 2002, the market value of private food label has risen twelve percent (Datamonitor, 2008). This essay will discuss and analyze Trader Joe’s strategic group and their closest competitors as well as offering an opinion on the macroenvrionment factors that affect Trader Joe’s future growth. This analysis of the external environment will be done with the use of Porter’s Five Forces. These five forces include the threat of new entrants, the threat of rivalry, the bargaining power of buyers, the bargaining power of sellers, and the threat of product substitutes (textbook source).

First I will discuss the first of Porters Five Forces, threat of new entrants. The threat of new entreats encompasses factors of absolute cost advantages, brand loyalty, and economies of scale. Trader Joe’s uses absolute cost advantages in many aspects of its business operations. An absolute cost advantage is characterized as having experience in the industry or anything else that gives a company an advantage For example Trader Joe’s uses smaller stores in not prime locations (Datamonitor, 2008). This allows Trader Joes to keep costs low because they are able to rent smaller spaces for their stores. However, these stores prove to be extremely efficient within their small space. Consider their sales per square foot statistic of $2,000, which is said to be...
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