Trader Joe s Case Analysis
PART 1: Situation Analysis
The success of Trader Joe’s is the result of a business model that pairs unique products offerings with low prices. By making luxury affordable, many well-educated, budget conscious, consumers are drawn to Trader Joe’s on a regular basis. As of 2012, the company ranked 12th in overall grocery sales (7.6 billion), however 1st in grocery sales per square foot ($2,054/ft.)1. As a basis for comparison, Whole Foods ranks second at $1,257.14/ft. To date, the company’s growth strategy has involved offering a differentiated shopping experience to markets with high concentrations of college educated consumers who value a “good deal”. It is estimated that 80% of Trader Joe’s customers attended college. The company’s unique and limited product lines, low-cost merchandising capabilities, unparalleled commitment to customer service, and focus on employees has allowed Trader Joe’s to carve out a position in the market is rare, inimitable, non-substitutable, and most importantly, provides value to customers.
Trader Joe’s is a national chain of neighborhood grocery stores and this works for them for many reasons. The company prides itself on creating a customer experience unmatched by others in the industry – similar to what you may receive at your local village market.2 This is a major source of their competitive advantage, however, this is not the only reason why the company has experienced so much success. The company is also deeply committed to its employees – paying them well-above industry norms. Where labor costs can be prohibitive for many companies, Trader Joe’s uses high salaries and strong benefit packages to attract and retain employees who embody the core values of the company. They are viewed as assets to the company, they are empowered to make decisions that best serve customer’s needs, and they are expected to engage with customers. All of this relates directly back to providing a truly unique customer experience. Many Trader Joe’s
The success of Trader Joe’s is the result of a business model that pairs unique products offerings with low prices. By making luxury affordable, many well-educated, budget conscious, consumers are drawn to Trader Joe’s on a regular basis. As of 2012, the company ranked 12th in overall grocery sales (7.6 billion), however 1st in grocery sales per square foot ($2,054/ft.)1. As a basis for comparison, Whole Foods ranks second at $1,257.14/ft. To date, the company’s growth strategy has involved offering a differentiated shopping experience to markets with high concentrations of college educated consumers who value a “good deal”. It is estimated that 80% of Trader Joe’s customers attended college. The company’s unique and limited product lines, low-cost merchandising capabilities, unparalleled commitment to customer service, and focus on employees has allowed Trader Joe’s to carve out a position in the market is rare, inimitable, non-substitutable, and most importantly, provides value to customers.
Trader Joe’s is a national chain of neighborhood grocery stores and this works for them for many reasons. The company prides itself on creating a customer experience unmatched by others in the industry – similar to what you may receive at your local village market.2 This is a major source of their competitive advantage, however, this is not the only reason why the company has experienced so much success. The company is also deeply committed to its employees – paying them well-above industry norms. Where labor costs can be prohibitive for many companies, Trader Joe’s uses high salaries and strong benefit packages to attract and retain employees who embody the core values of the company. They are viewed as assets to the company, they are empowered to make decisions that best serve customer’s needs, and they are expected to engage with customers. All of this relates directly back to providing a truly unique customer experience. Many Trader Joe’s