How the Health-Conscious Grocery Store is Thriving
There’s a lot of competition in the grocery industry, but for more than 50 years one retailer has stood out from the crowd.
Trader Joe’s (owned by Aldi) is constantly lauded for its successful business and customer experience. It has more than 450 stores across North America with only about 10,000 square feet of selling space per store. In 2013, it averaged weekly sales of US$460,000. Its sales per square foot average of about $38 a week is more than triple that of the U.S. industry as a whole ($12), and even health-food competitor Whole Foods ($21).
Trader Joe’s has yet to come to Canada (and recently shut down a copycat store, Pirate Joe’s) so there is room in the market for this type of retailer. Today, we’re looking at what they’re doing right.
- Time On Their Side
Like Saje Natural Wellness, Trader Joe’s success didn’t happen overnight. The company was founded in 1967 as an alternative to the convenience store. It offered specialty food products and wines for the California crowd.
From 1967 to 1990, Trader Joe’s expanded to 36 stores. Between 2005 and 2011, it took off. It opened more than 110 stores and sales per store increased by 50% despite the recession.
They are now up to more than 400 stores, and it could probably be more, but they have purposely kept growth steady to avoid burnout.
- Knowing Its Brand
Unique, “ethical,” exotic, gourmet, healthy, natural, organic — all of these buzzwords have been part of Trader Joe’s messaging since the start.
Private-label products represent about 85% of Trader Joe’s stock. Since 2007, their products have been free from trans fats, artificial colouring and flavouring, preservatives, and GMOs.
- Cost-Saving Measures
Despite the exclusivity factor, prices have stayed low through cost-saving measures. These include:
- Buying directly from suppliers.
- Not soliciting slotting fees.
- Fewer SKUs (only about 4,000).
- Re-using real estate rather than ground-up development.
- Staff Retention
The majority of Trader Joe’s employees work 30 to 35 hours per week and are well-paid for the industry. Anyone working more than 20 hours per week has health-care insurance and a pension, along with 10% off store purchases.
- Rigorous Product Testing
Each Trader Joe’s branded product is taste tested by a crew member. There is also a staff member who travels to taste foods from around the world and brings product ideas back to the store.
- Unique In-Store Experience
A “Tasting Point” and daily wine tastings are just two experiences Trader Joe’s bring to the table. They also have staff wear Hawaiian shirts for a nautical theme, and instead of using a P.A. system, they use bells.
- Unconventional Leadership
Throughout its more than 50 years of business, Trader Joe’s has only had three CEOs. And customer data? They don’t collect it. The CEO has worked in the store as a bagger to get customer input.
So, how does Trader Joe’s stand out from the competition? By avoiding the competition. Instead, they have created their own products, their own brand, and their own positioning in the market.
What do you think has contributed to Trader Joe’s success? Are there any tips you could apply to your own brand management? Let us know on social media. Storesupport Canada is on Facebook, Twitter, and LinkedIn.
We can help you create your own retail success story. Contact us today. Call 1 877 421 5081 or visit www.storesupport.ca.