Trader Joe’s Secret to Success
Trader Joe's is a different kind of grocery store.
With all the Whole Foods, Wal-Marts and specialty retailers struggling through this economy, it seems like there’s a silent killer among them: Trader Joe’s.
The privately held company’s sales last year were roughly $8 billion, the same size as Whole Foods’ and bigger than those of Bed Bath & Beyond, No. 314 on the Fortune 500 list. Unlike those massive shopping emporiums, Trader Joe’s has a deliberately scaled-down strategy: it is opening just five more locations this year.
The company selects relatively small stores with a carefully curated selection of items. Typical grocery stores can carry 50,000 stock-keeping units, or SKUs; Trader Joe’s sells about 4,000 SKUs, and about 80% of the stock bears the Trader Joe’s brand.) The result: Its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods’. Even better: the company has no debt and funds all growth from its own coffers.
The rise of Trader Joe’s reflects Americans’ changing attitudes about food. While Trader Joe’s is not a health food chain, it stocks a dizzying array of organics. It sells billions of dollars in food and beverages that years ago would have been considered gourmet but are now mainstays of the U.S. diet, such as craft beers and white-cheese popcorn. The genius of Trader Joe’s is staying a step ahead of Americans’ increasingly adventurous palates with interesting new items that shoppers will collectively buy in big volumes.
It’s a different take on the concept of a grocery store…Trader Joe’s isn’t a health food grocery chain, it’s not a dirt-cheap grocery store like Fresh and Easy…it combines lots of types of retailers into one…and it works.
Business Coaching | Stephanie Sims | August 30, 2010
Business Coaching, grocery, market demand, small business owners, successful small business, trader joe's
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