Trader Joe's Case Analysis
CASE ANALYSIS OF TRADER JOE’S
Keshav Bhattarai
INTRODUCTION
Trader Joe’s is a well-established privately held chain of neighborhood grocery stores based in Monrovia, California. The store was founded in 1967 by Joe Coulombe. The company described its target market as intelligent, educated, inquisitive individuals. It focused on people who were health conscious, enjoyed travel, and liked trying new things. By 2013, Trader Joe’s had expanded to approximately 400 locations across 37 states and the District of Columbia.
In 2013, Trader Joe ranked as one of the most successful groceries in the United States. The company generated an outstanding amount of sales volume per square foot to compare with its rivals. The company had a large number of satisfied …show more content…
THREAT OF NEW ENTRANTS: Because of Trader Joe’s accomplishment in 2013, many retailers such as Wal-Mart, Tesco, Target, and Publix started launching small-format stores all over the United States with a similar atmosphere as Trader Joe’s approach. According to Porter, new entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. However, Trader Joe’s does not have a high degree of threats from the new entries because the company has economies of scale and loyal and satisfied customers and on the other hand, it would always be difficult to find good suppliers and loyal customers for the new …show more content…
However, Trader Joe’s maintain very good relationship with the supplier, the company does not charge suppliers for shelf fees unlike the many rivals and the company pays its supplier promptly. In addition to that, Trader Joe’s required its vendors to maintain complete secrecy about their relationship with the retailer. The company did not want rivals or customers to know how and where it sourced its private label goods. Suppliers often wanted complete secrecy as well, because they were providing Trader Joe’s a much lower-cost version of their branded product, which might be selling at higher prices at Whole Foods or other retailers.
POWER OF BUYER: Bargaining power of Trader Joe’s customers is high because customers are able to purchase large quantities of each store keeping unit (SKU) at low prices. The company carried about only 4,000 SKUs per location to compare with as many as 50,000 units for its competitors. Additionally, there are a large number of grocery stores in the industry. Moreover, customers can influence which products are removed from the shelves to accommodate new products introduced every week. Trader Joes introduced 10 to 15 new products every
Keshav Bhattarai
INTRODUCTION
Trader Joe’s is a well-established privately held chain of neighborhood grocery stores based in Monrovia, California. The store was founded in 1967 by Joe Coulombe. The company described its target market as intelligent, educated, inquisitive individuals. It focused on people who were health conscious, enjoyed travel, and liked trying new things. By 2013, Trader Joe’s had expanded to approximately 400 locations across 37 states and the District of Columbia.
In 2013, Trader Joe ranked as one of the most successful groceries in the United States. The company generated an outstanding amount of sales volume per square foot to compare with its rivals. The company had a large number of satisfied …show more content…
THREAT OF NEW ENTRANTS: Because of Trader Joe’s accomplishment in 2013, many retailers such as Wal-Mart, Tesco, Target, and Publix started launching small-format stores all over the United States with a similar atmosphere as Trader Joe’s approach. According to Porter, new entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. However, Trader Joe’s does not have a high degree of threats from the new entries because the company has economies of scale and loyal and satisfied customers and on the other hand, it would always be difficult to find good suppliers and loyal customers for the new …show more content…
However, Trader Joe’s maintain very good relationship with the supplier, the company does not charge suppliers for shelf fees unlike the many rivals and the company pays its supplier promptly. In addition to that, Trader Joe’s required its vendors to maintain complete secrecy about their relationship with the retailer. The company did not want rivals or customers to know how and where it sourced its private label goods. Suppliers often wanted complete secrecy as well, because they were providing Trader Joe’s a much lower-cost version of their branded product, which might be selling at higher prices at Whole Foods or other retailers.
POWER OF BUYER: Bargaining power of Trader Joe’s customers is high because customers are able to purchase large quantities of each store keeping unit (SKU) at low prices. The company carried about only 4,000 SKUs per location to compare with as many as 50,000 units for its competitors. Additionally, there are a large number of grocery stores in the industry. Moreover, customers can influence which products are removed from the shelves to accommodate new products introduced every week. Trader Joes introduced 10 to 15 new products every