Trader Joe's Internalization

Topics: Trader Joe's, Aldi, Grocery store Pages: 21 (7066 words) Published: December 10, 2012
Trader Joe’s

I] About Trader Joe’s
A] Trader Joe’s history
Trader Joe’s is a chain of grocery stores first opened in 1967 in California, United States. Trader Joe's was founded by a man named Joe Coulombe and has been owned since 1979 by the Albrecht family, a German family who also owns the ALDI discounts food stores. Trader Joe’s has currently 367 stores within the United States with locations in over 20 states. Trader Joe's stores offer a wide, diverse and ever-changing range of organic products, 98% of them being food but also wine and exotic products. Some of their range of products includes essential groceries (bread, dairy and cereal), pastas, seafood and meatless foods, baked items, frozen meals, chips and other snacks, coffee and tea, nuts, cheeses, vitamins, candies, pet food, wine and beer, and fresh produce. Trader Joe's is named after its founder, Joe Coulombe and began in 1958 in the Los Angeles area as "Pronto Market" convenience stores. The original Pronto Markets were very similar to 7-Eleven stores, with a raging competition between the two stores going on. The first store named "Trader Joe's" opened its doors in 1967 in Pasadena, California. In response to the competition from 7-Eleven, the chain differentiated its stores' offerings and doubled the floor space the same year. With the appointment of the new CEO, John Shields, in the late 80’s the company started to expand to Arizona and the Pacific Northwest before opening its first stores on the East Coast in 1996. By multiplying its stores number at the end of the 90’s, Trader Joe’s has increased its profits by ten times. For 2009, its total sales for 2009 were estimated to be around $8 billion. The company also almost doubled its surface from 8,000 to 12,000 square feet, which was about more than double the size of some of the original Trader Joe's stores. . Despite the relative small size of its stores (compared to other giant US supermarkets), Trader Joe's president declared that the company had "the highest sales per square foot of any grocery chain in America" : $1,750 in merchandise per square foot, more than double than Whole Foods Market, its main competitor as of today. Trader Joe’s is also looking to cultivate a unique and friendly environment, with an exceptional customer service. Since their employees are well-trained, they have been able to implement a very effective communication system in their stores. When a customer needs assistance, a bell is rung; the number of rings lets employees know what kind of assistance is needed, (cleanup, restock, information on products etc.). The effectiveness of this system could be a plus to earn customers’ trust in France. As a matter of fact, the French culture, and more broadly the European way of life puts forward the importance of having expressive thoughts and feelings. By adapting itself to the communication culture in France, Trader Joe’s could spread the word about the added value their brand can bring to the consumer.

B] Trader Joe’s current situation
1) Position of the Product in relation to competitors
a) Differentiation
In 1958, the channel of stores is called “Pronto Market” but it was very similar to “7-Eleven” so Joe Coulombe wants to be evolving his concept on the theme of South Seas. In 1960, he realizes that Americans traveled more and more and want more wines on different countries and food too. In 1967, “Trader Joe’s” was born. To be different about 7-Eleven, Joe increased his stores by two. Meat provided local butchers. Then the new director Theo Albrecht paid his employees more than the minimum syndical (40 000$ TO 60 000$ per year). Trader Joe’s main competitors are: The Kroger Co. , Whole Foods Market, Inc. and Safeway, Inc. to be successful over the long term such a strategy has to be defensible. The firm identifies four requirements for defensibility: Value (in the eyes of the customer), rareness,...
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