Preview

Trader Joe’s vs. Whole Foods Market

Good Essays
Open Document
Open Document
5247 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Trader Joe’s vs. Whole Foods Market
MIT Students

Trader Joe’s vs. Whole Foods Market: A Comparison of Operational Management

15.768 Management of Services: Concepts, Design, and Delivery

1

Grocery shopping is more diversified and evolved than ever before. Individuals across the nation have access to everything from exotic products to unique delivery services. Often, specialty stores have limited locations whereas specialty services have a limited reach. However, two retailers have expanded to hundreds of locations while adhering to unexpected market positioning for previously untargeted market segments. Whole Foods Market and Trader Joe’s have become household names while also innovating beyond regional and national traditional chains. Despite comparable size in terms of locations, each store’s growth has operated using a very different model. This document will address the various facets for both Whole Foods Market and Trader Joe’s in order to understand how each business model has won a piece of the market pie and share of wallet. Whole Foods Market Background and History In 1978, John Mackey had a vision to build a store that would meet his desire for whole, natural foods as part of the movement away from artificial, processed foods. Mackey was a college dropout, but against all odds he was able to borrow $45,000 in capital financing and open his first store for what would become Whole Foods in Austin, Texas.1 By all accounts it has been an incredible success and the most recent annual report (2009) reveals that there are 284 stores across most of the United States with a handful in Canada and Great Britain.2

2009 Sales (000s)
1 2

2008

2007

2006

$8,031,620 $7,953,912 $6,591,773 $5,607,376

http://www.wholefoodsmarket.com/company/history.php Whole Foods Market Annual Report (2009), pg. 3

2

# of Stores Store Size (sq.ft.)

284 37,000

275 36,000 $570,000

276 34,000 $617,000

186 34,000 $593,000

Weekly Sales (/store) $549,000

To best understand

You May Also Find These Documents Helpful

  • Good Essays

    Traditional grocery stores have fallen by the wayside as supercenters and specialty food stores grow. They are increasingly looking for ways to differentiate themselves from the rest of the competition. Oftentimes, the supercenters are able to offer lower prices on food while offering a sizeable selection of other goods that food-only grocery stores find it hard to compete with. Some of these changes have come by mergers and the ability to purchase more for less and changing their appeal in the market. These stores have implemented new technologies such as self-checkouts and biometric technology that allows people to pay at the checkout with a scan of their finger to sway the consumer with convenience. Grocery stores are also differentiating themselves by touting their store brands, as premium goods as opposed to the well know value brands. They are changing their layouts and up scaling their stores to meet customers demands for a reason to enter their retail dwellings. Some groceries are offering even more convenience with the addition of specialty offerings such as Starbucks and fast food restaurants.…

    • 559 Words
    • 3 Pages
    Good Essays
  • Good Essays

    The lessons that the Trader Joe’s story offers to aspiring entrepreneurs who want to get off to a good start in any industry is to understand the advantages and disadvantages of any industry. If an entrepreneur wants to start with Trader Joe’s, he/she would learn to think in smaller retail markets so they can improve food access and quality in neighborhoods with few or no large grocery stores. While the economic advantages of large grocery stores are disadvantages to the smaller markets, small grocers do have distinct advantages. They can offer more personalized service and a greater sense of community. Their smaller pool of employees and customers allow for the development of personal relationships. Corporate grocery store chains recognize the small retail market niche and some are now repackaging their offerings into smaller retail settings. Trader Joe’s is designing new, smaller stores that may offer a more social shopping experience. Through the Trader Joe’s story, entrepreneurs need to explore many facets of their industry they want to dive into.…

    • 494 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Competition among the North American wholesale club industry is pretty high. Everyone tries to achieve lower prices by reducing the cost in displayed items on pallets or inexpensive shelving. They also have very low costs for store décor and fixtures and comparatively low labor cost because they use fewer personnel to operate their facilities.…

    • 470 Words
    • 2 Pages
    Good Essays
  • Good Essays

    John Mackey, founder and CEO of Whole Foods Market, is one of the largest natural and organic food retailer worldwide. Throughout the article Mackey has made numerous accomplishment on many occasions with his business. In the article Mackey talks about his competitors, and how his company is different from other food retailers. Mackey talks about his management styles and what he believes to be, the best way to run his business. Throughout the Whole Foods article Mackey speaks of Organizational structure and how and why he uses centralization and decentralization throughout his company.…

    • 552 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Capstone Project

    • 552 Words
    • 3 Pages

    This paper will describe my plan to expand Publix grocery store into a one stop shop, will continuing with the mission and vision the company already has in place. It will also describe the context and organization, as well as articulate the vision and mission as well as the strategy of the organization. This paper will also describe the source of competitive advantages and the nature of the business opportunities.…

    • 552 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Whole Foods market generated $8.0 billion in sales in fiscal 2009, an increase of 1.0% over the previous years. Yet in fiscal 2009 same-store sales were down 4.3% over the previous years. Operating income for Whole Foods was $284.3 million in fiscal 2009, up to 20.4% over the previous year. This improvement was largely due to stringent cost-containment measures that Whole Foods put into place in the face of the recession economy.…

    • 1195 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Food Desert - Analysis

    • 323 Words
    • 2 Pages

    The implementation of this strategy, specifically by pioneering small formats in the "food desert" neighborhoods of Chicago, shows the increased sales opportunities for this market. Walmart's market segmentation studies have shown the potential strength of this type of strategy. The announcement of these stores, and a similar recent announcement in Dallas, demonstrate the importance of these markets in Walmart's plans to gain increased market share of the grocery business.…

    • 323 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Whole Foods Swot Analysis

    • 454 Words
    • 2 Pages

    Our group researched and conducted a SWOT analysis on Whole Foods Market. The strength is being one of the top grocers in the U.S. by providing healthy and organic food. The option to purchase high quality natural food is available for consumers who are health conscious. The weakness for Whole Foods is viewed as a luxury shopping destination. Lower and middle class people with limited finances cannot afford to shop there on a regular basis. The opportunity is available to expand within international markets. Whole Foods can explore nonexistent markets internationally with the potential for growth. The threat is competitors will have an interest to gain consumers for their business. Competitors can utilize many avenues such as advertising and commercials to attract customers.…

    • 454 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Prior to the recession of 2008, Whole Foods’ strategy focused on Growth, Store Location, Product Line, and Pricing. After going public in 1991, Whole Foods implemented a Growth strategy that included opening new stores and acquiring smaller chains in attractive markets. Store Location strategy involved finding locations in affluent, urban areas. High traffic shopping destinations and prime real estate spots were part of this Location strategy. The strongest strategic element Whole Foods adopted was its Product Line. Whole Foods specialized in a huge selection of organic and natural foods not found in traditional grocers. Pricing strategy for Whole Foods aimed to be competitive. A majority of its private label foods…

    • 824 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    The US retail grocery industry includes about 65,000 supermarkets and other grocery stores with combined annual revenue of about $550 billion. Key growth drivers are consumer spending habits and food trends (Blank, 2014). Over the past twenty years, the traditional supermarket has been shaped and reshaped to try and meet consumer demands. Recently, generation Y has begun to push its impression on supermarkets looking for a fresh market and whole foods market approach that bring more natural, organic, and specialty foods to the forefront. Population growth and consumer tastes drive demand. Large corporations can offer a widespread selection of foods and have the edge in purchasing, large distribution channels, marketing dollars, and financial backing. Small companies must…

    • 1247 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Whole Foods Market corporate level strategy consists on selling the highest quality of organic and natural products at logical prices. Additionally, healthy eating habits and caring for the local and global environment contributes to the purpose of the company. On August 28, 2007 Whole Foods Market acquired one of its rivals Wild Oats Markets for $565 million. However, the Federal Trade Commission issued a complaint in order to block the merger. The FTC claimed that the merger was anticompetitive meaning that it eliminate substantial competition between the two stores. Consequently, the FTC believed that Whole Foods will eventually raise prices and reduce quality and services. Also, on 1997 Whole Foods acquire Allegro Coffee Company which allowed…

    • 217 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    Whole Foods

    • 1021 Words
    • 5 Pages

    * Whole Foods Market was founded in 1980 working with natural and healthy foods in Austin, Texas; it’s one of the world’s largest of natural and organic foods supermarkets. In 2009, the sales total $8 billion and had 289 stores in the U.S. The Whole Foods Market plans to come up with strategies to help improve the company but to do so understanding the core values plays a major role in the company’s planning. The strategies they want to improve the growth strategy, store location strategy, product line strategy, pricing, control expenses, and merchandising strategy. This company values keeping all its products natural meaning minimally processed, largely or completely free of artificial ingredients, preservatives, and other non-naturally occurring chemicals, and as near to their whole, natural state as possible.…

    • 1021 Words
    • 5 Pages
    Powerful Essays
  • Better Essays

    Whole Foods

    • 2291 Words
    • 10 Pages

    From the fairly humble beginning of being a one-store entrepreneur living on the third floor and taking baths in the dishwasher, John Mackey has seen his 1978 Safer Way grocery store grow into an $8 billion a year corporation. As of September 2008, Whole Foods had 264 stores in the United States, six in Canada, and five in the United Kingdom. Whole Food’s is now the leading chain of natural food supermarkets in the United States. The company 's stores average 28,500 square feet in size and feature foods that are free from artificial preservatives, colors, flavors, and sweeteners. They also offer many organically grown products. Many locations include in-store cafes and juice bars. Whole Foods has also developed a growing line of private label products such as organic pasta, freshly roasted nut butters, oak-aged wine vinegars, and aromatic teas. After the company was founded in 1980 with a single store, it grew dramatically into a chain of more than 130 stores in 25 states, the District of Columbia, and Canada. It is a Fortune 1000 company, ranked as the 41st largest U.S. supermarket and the 730th largest U.S. company overall. There are few companies that attract the kind of following Whole Foods and its CEO/founder has both among its customers and the national media. Their corporate website averages more than 50,000 visitors a day. Through a long series of acquisitions, John Mackey has created a niche retailer which enjoys lofty profits in a very price competitive industry that is typically characterized by accordingly low profit margins. Whole Foods had 275 stores, and 50,000 plus team members in 2008 with a goal of 1,000 stores open in the future (Whole Foods Market, 2008a).This ever-evolving, often controversial organic retailer is facing several major strategic issues in both its external and internal…

    • 2291 Words
    • 10 Pages
    Better Essays
  • Powerful Essays

    Save-a-Lot Case

    • 1126 Words
    • 5 Pages

    Save-A-Lot is operates in a foodservice industry that serves as retailers within a niche marketing segmentation. Save-A-Lot target market consists mainly of value seeking and convenience oriented psychographic segment. These consumers usually seek quality products at lower prices. They want valuable low prices like Costco but without the bulk, and a convenience of a mama and papa stores but much bigger, meaning that it is small enough and convenience enough that consumers don’t need to park and walk as far. For this mean, Save-A-Lot’s retailing concept meets the shoppers’ needs and expectation with smaller grocery stores. Within a year, through word-of-mouth advertising, Save-A-Lot spread to 29 locations.— (Save-A-Lot )…

    • 1126 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Loblaws Business Strategy

    • 550 Words
    • 3 Pages

    The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive pressures are increasing in the industry with the potential entry of Wal-Mart and new delivery methods such as the internet.…

    • 550 Words
    • 3 Pages
    Satisfactory Essays