What is Trader Joe’s strategy? Strategy development encompasses carrying highly selective products, offering private-label products, offering small, neighborhood stores that exude warmth, providing attentive employees and offering extraordinary value.
Trader Joe’s is committed to providing selective products that cannot be found in grocery stores. It does not carry commodities such as soft drinks. The company prides itself on the quality of its private label products, which account for 70 percent of the product offerings. Personnel at Trader Joe’s scour the world for products free of preservatives, artificial colors or flavors or genetically altered ingredients. They taste-test all foods considered for private labeling. If the taste testers are unanimous in their high recommendation of the product, Trader Joe’s buys it and relabels it. The result is assured quality that other groceries stores do not attempt.
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The value that Trader Joe’s offers to customers includes “taste, quality, private labeling and price” according to the CEO Don Bane, and the strategy is successful. Grocery stores measure profitability by sales-per-person hours. Whereas Whole Foods bragged about 52 sales-per-person hours as referenced in the article, Trader Joe’s averaged 212 during the same time frame. It is clear that the unique branding strategy of Trader Joe’s differentiates itself from all other grocery store chains, and that differentiation as a corporate strategy can produce dramatic results.
If you love TJs, tell us why! If you don’t, I’d like to hear that too!
TJ’s strategy is data-driven and has been successful in TJ’s adhering to it consistently in its history. Underlying all the creativity in its development of products is its Lean and low-cost method of operating processes and TJ’s access to capital through Aldi ownership. It is access to capital that enables a company to scale and it is brand awareness that attracts customers. Supposedly, by some sources, not measurable, proximity to a TJ’s increased the value of a house by $10,000. So why is Aldi not in the development of building residences? Trader Joe’s is an awesome grocery business but it is no Amazon. And it could have been. Amazon brings great products to consumers with a Lean and low-cost distribution strategy of simplifying customer access to high-quality products. As Trader Joe’s will need a more highly educated group of customers outside of uber higher-income locales, TJ’s will need to rethink its dependency on data of the past and move into the future without losing its focus on brand.