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Chapter 4, Reality Check It's Just Groceries

Development of ideas:

How might its emphasis on middle management and the freedom and flexibility it gives its employees support loyalty?

Consider which of its core values might be compromised by its business model centered around the secrets of the Trader Joe's brand.

What are the key facts relevant to your response?

What is the ethical issue involved?

Who are the stakeholders?

What alternatives would you suggest?

How do the alternatives compare; how do the alternatives affect the stakeholders?

Reality Check It's Just Groceries Trader Joe's operates a chain of grocery stores throughout the United States and had 474 stores as of 2018 . While a normal grocery store carries somewhere around 50,000 items, Trader Joe's chooses to carry about one-tenth that amount, has a smaller footprint, does not carry options made in China, and has discontinued most unsustainable fish. Its stores are, on average, a third of the size of an the average supermarket in the United States, and the stores do not offer nearly everything that a customer can find in a regular grocery store. A 2018 study by Market Force found that Trader Joe's did not even make the top seventeen in convenient location or good sales High customer satisfaction may be correlated with high employee satisfaction. Trader Joe's employees receive extensive training about the company's culture surrounding customer service. They are also taught the company's core values and expectations. One former employee describes how she felt a part of a "family" while working at Trader Joe's. The hierarchy of each store-with its "captain," eight to twelve "mates" (middle managers), and the crew-allows for a more equal distribution of the work. The large number of mates allows oversight of opening and closing shifts to be distributed evenly and tasks to be rotated throughout the week. This ensures that no single person is stuck overseeing the 4 A.M. food truck delivery every day. Even for the crew, work schedules are flexible and the pay and benefits are good. Employees are not given a script and are encouraged to be friendly and engage with customers, even on often-forbidden topics in retail such as politics, religion, philosophy, and movies. Even as it remains one of America's best-loved grocery chains, it does not take itself too seriously. On a stressful day, you might hear a captain or mate remind its crew, "it's just groceries." This may be why Trader Joe's remains ranked one of the best places to work in the United States. Trader Joe's is privately held corporation. To keep prices low, 80 to 90% of the products sold in Trader Joe's are store-brand, bought from manufacturers or growers, rather than from distributors or middlemen, making it unique in this high proportion. It also contracts with existing brands, such as Stacy's Pita Chips, which packages its product under Trader Joe's private label. Trader Joe's gets the product at a reduced price, and the contractor is able to sell more product without losing brand loyalty by letting loyal customers know that they could get the product cheaper elsewhere. These contracts are guarded with the utmost secrecy. This lack of transparency poses a few concerns, however. Customers are unable to know where their food comes from, whether it was ethically sourced, or if the supplier is a brand the customer wants to support. Review Trader Joe's 7 Core Values below, and reflect on which might have contributed to the high levels of customer and employee satisfaction. How might its emphasis on middle management and the freedom and flexibility it gives its employees support loyalty? Consider which of its core values might be compromised by its business model centered around the secrets of the Trader Joe's brand. TRADER JOE'S 7 CORE VALUES 1. Integrity. In the way we operate stores and the way we deal with people. Act as if the customer was looking over your shoulder all the time. 2. Product-driven. Our strategy emphasizes price, product, access, service, and experience. We want to excel at one, be very good at another, and meet customer expectations on the others. 3. Produce customer wow experiences. We celebrate the special way we treat and relate to our customers. We think retailing is all about customer experience, and that is what really differentiates us. 4. We hate bureaucracy. We give everyone a license to kill bureaucracy. All officers are in cubicles. The CEO is in a conference room. We have very few layers-a very simple organization. 5. Kaizen. Each one of us every day is trying to do a little better. This is infused into our training programs. We really stress teamwork and working together, while we do not do elaborate budgeting at the store level. 6. Treat the store as the brand. Individual products are not the brand. The store is. Brand is really the covenant between the company and the customer, and the real key is day-to-day consistency in meeting and satisfying needs. 7. We are a "nationaleighborhood" company. Our customers benefit from our national buying ability, but we want each store to be close to the customer and really a part of their neighborhood.. "Market Force Information, "New Market Force Information Study: Online Delivery and Clickto-Collect Use Is Up, Although Printed Circulars Maintain Strong Foliowing" (June 26, 2018). ww. marketforce.com/industry/grocery-drug (acosssed February 26, 2019). "H. Benham-Archdeacon-Lattice, "What Trader Joe's Figured Out about Wook Culture That My Other Past Employers Havea't," Fart Compary (September 18, 2017). www.fastcomparyyoom/40468445/what-traderjoes-flgured-out-about-wodkculture-that-my-other-past-employers-havent (accessed February 26, 2019); A. Cain, "Irader Joe's Is Ons of the Best Places to Work in the US-Employees Share the 7 Best Parts of the Job," Buainssa Inaidar (July 11, 2018), wwwbbusinessinsidencom,traderjoesjobs-best-parts-2018-7 (accessed February 26, 2019). "Bloomberg, "Company Overview of Trader Joe's Company," wwwbioomberg.com/research/stocts/ private/ snapshotasp?privcapid=4204435 (accessed Fabruary 26,2019 ) Dan Myers, "10 Things You Didn't Know about Trader Joe's Products," Inaidor (May 10, 2017), www.thisisinsider.com/10-things-5ou-didnt-knom-about-trader-joes-products-2017-5 (accessed February 26, 2019). Source: A. Molaro, "The Trader Joe's Way for Libraries," Ths Information Aotiviat Libvarian (Norember 27,2013 ), hattpe://informationactivistoom/2013/11/27/thetraderjoesmay-for-1braries-amanifestopart-iii/ (accessed February 26, 2019)