Trader Joe’s Case Analysis
Group 6, The Real Deal
Group 6 Case Assignment 2
Originally a regional chain in Southern California; Trader Joe’s has expanded to 37 states, coast-to-coast, and ranks 12th in revenue nationwide among supermarkets. Imitation remains the sincerest form of flattery and copy-cat stores are cropping up as the New
Urbanism movement continues to gain traction and once abandoned downtown areas are gentrified. Trader Joe’s growth has undoubtedly been fueled by their unique selling position as the supermarket attractive to young urban professionals by featuring products not available elsewhere in a fun, friendly environment.
Differentiators such as store-specific signage, above-average customer service, and exclusive products create loyalty among Trader Joes’ customers. Going against the grain and favoring new experiences while maintaining a discontinuity policy that often leaves even popular products in short supply has been successful. Presently, the average family would not find all the goods they desire at Trader Joe’s – reinforcing the targeted niche market is not a typical suburbanite.
Uniqueness has served Trader Joe’s well; however, ignoring the social media arena creates an opportunity to reach a larger audience and customer base. Trader Joe’s is most popular with particular demographics (single, educated, urban dwellers) – the same groups that are more likely to be engaged with Facebook, Twitter, tumblr, and a myriad of other social media outlets. So far, Trader Joe’s devotees have taken it upon themselves to create
“fan” sites with considerable numbers of followers and increased brand awareness at no cost to the company. The glaring trade-off is the loss of control Trader Joe’s assumes from the lack of brand management. As Trader Joe’s continues to expand into different markets, embracing social media becomes an even more appropriate and necessary course of action.
Supermarkets own just 51% of current retail grocery sales, the remainder lies with large discount and pharmacy chains along with wholesale clubs, compounding the threat to
Trader Joe’s market share. Trader Joe’s can continue to grow by capturing different demographics and appealing to a wider array of consumers. The challenge lies in not forgetting the type of customers that made each store special (See exhibit 1 regarding differentiation). In 2011, Trader Joe’s was the 11th most innovative firm in the United States according to Fast Company. Even more innovation is required to keep current customers while taking market share away from the competition. Making the grocery shopping experience a treasure hunt works well with for singles or recent college graduates with no children, but busy parents-on-the-go or career-focused couples may prefer more continuity, creating another trade-off. That’s not to say maintaining the current 4:1 ratio of private labels to major brands (most supermarkets are 1:4) should be abandoned, but rather introduce continuity in product location while keeping the unique floor plans to which
Trader Joe’s customers are accustomed.
We believe that the clear opportunity is for Trader Joe’s to increase market share by 25% by utilizing social media and other strategic brand management initiatives, to attract different demographics of customers, while retaining its loyal customer base, and to make slight adjustments to its product mix and/or product placement. It’s clear that what Trader
Group 6 Case Assignment 3
Joe’s is doing works, but with Wal-Mart and others diversifying their models, Trader Joe’s needs to stay ahead of the competition.
Founded in 1967 by Joe Coulombe as a shift in strategy from a previous convenience store business, Trader Joe’s has evolved into an iconic chain of supermarkets. With a focus on the “Intelligent, Educated, Inquisitive Individual” the