Trader Joe's Analysis
Trader Joe’s
Trader Joe’s: A Quiet, Private, and Savvy Retailer
Thomas Pinnola
Strategic Management Professor Backhaus March 17th 2013
Thomas Pinnola
Professor Backhaus
Writing Assignment 2
March 17th 2013
Trader Joe’s: A Quiet, Private, and Savvy Retailer
Joe Coulombe started Trader Joe’s in 1967. Traded Joe’s can be characterized as a low cost, high quality grocery store. Eighty percent private label product mix, expanding its target markets, keeping costs down, and extremely effective marketing powers Trader Joe’s increase popularity. Since 2002, the market value of private food label has risen twelve percent (Datamonitor, 2008). This essay will discuss and analyze Trader Joe’s strategic group and their closest competitors as well as offering an opinion on the macroenvrionment factors that affect Trader Joe’s future growth. This analysis of the external environment will be done with the use of Porter’s Five Forces. These five forces include the threat of new entrants, the threat of rivalry, the bargaining power of buyers, the bargaining power of sellers, and the threat of product substitutes (textbook source). First I will discuss the first of Porters Five Forces, threat of new entrants. The threat of new entreats encompasses factors of absolute cost advantages, brand loyalty, and economies of scale. Trader Joe’s uses absolute cost advantages in many aspects of its business operations. An absolute cost advantage is characterized as having experience in the industry or anything else that gives a company an advantage For example Trader Joe’s uses smaller stores in not prime locations (Datamonitor, 2008). This allows Trader Joes to keep costs low because they are able to rent smaller spaces for their stores. However, these stores prove to be extremely efficient within their small space. Consider their sales per square foot statistic of $2,000, which is said to be
Trader Joe’s: A Quiet, Private, and Savvy Retailer
Thomas Pinnola
Strategic Management Professor Backhaus March 17th 2013
Thomas Pinnola
Professor Backhaus
Writing Assignment 2
March 17th 2013
Trader Joe’s: A Quiet, Private, and Savvy Retailer
Joe Coulombe started Trader Joe’s in 1967. Traded Joe’s can be characterized as a low cost, high quality grocery store. Eighty percent private label product mix, expanding its target markets, keeping costs down, and extremely effective marketing powers Trader Joe’s increase popularity. Since 2002, the market value of private food label has risen twelve percent (Datamonitor, 2008). This essay will discuss and analyze Trader Joe’s strategic group and their closest competitors as well as offering an opinion on the macroenvrionment factors that affect Trader Joe’s future growth. This analysis of the external environment will be done with the use of Porter’s Five Forces. These five forces include the threat of new entrants, the threat of rivalry, the bargaining power of buyers, the bargaining power of sellers, and the threat of product substitutes (textbook source). First I will discuss the first of Porters Five Forces, threat of new entrants. The threat of new entreats encompasses factors of absolute cost advantages, brand loyalty, and economies of scale. Trader Joe’s uses absolute cost advantages in many aspects of its business operations. An absolute cost advantage is characterized as having experience in the industry or anything else that gives a company an advantage For example Trader Joe’s uses smaller stores in not prime locations (Datamonitor, 2008). This allows Trader Joes to keep costs low because they are able to rent smaller spaces for their stores. However, these stores prove to be extremely efficient within their small space. Consider their sales per square foot statistic of $2,000, which is said to be
Cited: Datamonitor. (2008, October). Trader joe 's case study; retaining a niche position in low-cost, high quality food retail . Retrieved from https://blackboard.newpaltz.edu Gustafson, M. (2008, November). Trader joe 's a remarkable journey. Retailer Extra. Retrieved from https://blackboard.newpaltz.edu/@@/74A5C3E83773FE38DF7DD21BD85122B7/courses/1/spring13_BUS450_01/content/_1290008_1/traderjoes.pdf Kowitt, B. (2010, August 23). Inside the secret world of trader joe 's - full version. CNN Money. Retrieved from http://money.cnn.com/2010/08/20/news/companies Llopis, G. (2011, September 05). Why trader joe 's stands out from all the rest in the grocery business. Forbes. Retrieved from http://www.forbes.com/sites/glennllopis/2011/09/05/why-trader-joes-stands-out-from-all-the-rest-in-the-grocery-business/ Unknown. (2011, April 26). How does trader joe’s keep prices so low?. the pricing journal. Retrieved from http://thepricingjournal.com/2011/04/26/how-does-trader-joe’s-keep-prices-so-low/