One of Trader Joe’s Company, BB #:162286 Monrovia, CA, founder Joseph Coulombe’s most significant ideas was the creation and proliferation of Trader Joe’s own brand, began in 1972 with granola.
Today, private label products can be found throughout the stores and are favored by millions of loyal customers.
“Trader Joe’s has been successful because of private labels, exceptional frozen food, and items that are fun, very affordable, offer great quality, and are less expensive than national brands,” says Phil Lempert, retail consultant for Supermarketguru.com in Santa Monica, CA.
Indeed, Trader Joe’s private labels account for as much as 80 percent of the products lining shelves at any given time. They are creative and humorous, and customers love the funky names, illustrations, and package designs.
Size and selection
As far as selection, Trader Joe’s falls into the less-is-more camp with smaller stores and availability.
“Product assortment is much smaller than what would be found in a typical supermarket,” notes Bill Bishop, cofounder and retail consultant for Brick Meets Click in Barrington, IL, which he says is another advantage. “Given the smaller range of products, it’s actually easier to see and then buy the novel products, which are what attract many customers.”
Richard Ziff, commodity manager for Shapiro-Gilman-Shandler Company, BB #:113670 a distributor and importer in Los Angeles, CA, agrees.
“The stores are an easy size to shop with unique grocery items, and although there may be a limited range of products, there’s high volume.” Trader Joe’s, he says, does “as much business in a 12,000-square-foot store as chain stores do in 40,000.”
Further, the product lineup changes. Lempert says some branded items may be removed from shelves for months “to create a yearning to get those brands back.”
When customers ask about a favorite item, the manager will let them know it will return, but in the meantime suggests they try something else. “It’s a great way to get people to try other products,” he says.
Bishop also lauds the company’s measured growth. New stores, he explains, are only added when “it’s evident there’s enough customer demand to support the new store without cannibalizing the sales of existing stores in the area.
“The combination of cautious store development and limited items in the store,” he believes, “gives Trader Joe’s top honors for sales per square foot—one of the ultimate measures of retail profitability.”
This is a feature from the cover story of the March/April issue of Produce Blueprints Magazine. Click here to read the full issue.
