Trader Joe's Case Analysis
Brian Leon – STRT 4501
Trader Joe’s Case Analysis
Problem
Trader Joe’s has enjoyed a loyal, receptive customer base and a strong brand image over its 48-year history. But as competition increases from both high- and low-end competitors, Trader Joe’s is failing to leverage its customer loyalty and supply chain resources to maximize profit potential, increase its reach and product portfolio, and become a one-stop shop for groceries.
Analysis
Trader Joe’s has acquired and developed a valuable collection of resources and capabilities in the supermarket industry. They have built a brand image that is much stronger than any of its competitors, emphasizing fun, trustworthiness, and product exclusivity and value. Because of this, Trader Joe’s enjoys a “cult-like” customer base that is excited about new products and trusts the company to provide high-quality, low-cost specialty foods. Additionally, high salaries and benefits keep employees happy and enthusiastic about working for the company, which in turn improves the customer’s in-store experience. Trader Joe’s also takes advantage of a unique relationship with their suppliers, protecting unique company products and “cutting out the middle man,” allowing customers to enjoy lower prices free of markups. A frequently overhauled product portfolio that explores new tastes encourages buyers to try items they may not be familiar with and buy in bulk. Finally, Trader Joe’s small stores and low stock-keeping units (SKUs) gives them the highest revenue per square foot of selling space in the industry of $2,054.05, almost twice that of Whole Foods (see Exhibit 1).
These resources and capabilities combine to form a set of unique core competencies: a loyal, enthusiastic customer base that trusts in the company’s products and practices; a powerful brand image as the fun, friendly, and wholesome grocer; a unique relationship with suppliers to remove merchandisers from the equation; and extremely high employee loyalty and job
Trader Joe’s Case Analysis
Problem
Trader Joe’s has enjoyed a loyal, receptive customer base and a strong brand image over its 48-year history. But as competition increases from both high- and low-end competitors, Trader Joe’s is failing to leverage its customer loyalty and supply chain resources to maximize profit potential, increase its reach and product portfolio, and become a one-stop shop for groceries.
Analysis
Trader Joe’s has acquired and developed a valuable collection of resources and capabilities in the supermarket industry. They have built a brand image that is much stronger than any of its competitors, emphasizing fun, trustworthiness, and product exclusivity and value. Because of this, Trader Joe’s enjoys a “cult-like” customer base that is excited about new products and trusts the company to provide high-quality, low-cost specialty foods. Additionally, high salaries and benefits keep employees happy and enthusiastic about working for the company, which in turn improves the customer’s in-store experience. Trader Joe’s also takes advantage of a unique relationship with their suppliers, protecting unique company products and “cutting out the middle man,” allowing customers to enjoy lower prices free of markups. A frequently overhauled product portfolio that explores new tastes encourages buyers to try items they may not be familiar with and buy in bulk. Finally, Trader Joe’s small stores and low stock-keeping units (SKUs) gives them the highest revenue per square foot of selling space in the industry of $2,054.05, almost twice that of Whole Foods (see Exhibit 1).
These resources and capabilities combine to form a set of unique core competencies: a loyal, enthusiastic customer base that trusts in the company’s products and practices; a powerful brand image as the fun, friendly, and wholesome grocer; a unique relationship with suppliers to remove merchandisers from the equation; and extremely high employee loyalty and job