How would you modify Trader Joes strategy moving forward? Why?

As a result of these trends, many traditional supermarket chains found themselves shedding employees in order to become more cost competitive. Several experienced financial distress. The Great Atlantic and Pacific Tea Company (known as the A\&P brand) had filed for bankruptcy protection in December 2010. Supervalu, which operated chains such as Jewel and Albertson's, suspended its dividend in July 2012 and hired Goldman Sachs and Greenhill \& Co. to examine strategic options for the business. 30 In January 2013, Supervalu sold five of its grocery chains to private equity investors, cutting the size of the company roughly in half. Trader Joe's in 2013 By 2013, Trader Joe's had expanded to approximately 400 locations across 37 states and the District of Columbia. Of the 414 stores currently open or set to open in the coming year, 172 were located in California (see Exhibit 3 for a list of stores by state). Illinois ranked second, with 20 locations. The top five states accounted for 60% of the company's stores. 31 Experts estimated that Trader Joe's generated approximately $10 billion in annual revenue. 32 The company did not disclose financial results, but most analysts believed that it achieved higher returns on investment than most supermarkets in the nation. Experts noted that while Whole Foods Market had the highest sales per square foot of any publicly traded grocer in the country, Trader Joe's doubled the sales per square foot achieved by Whole Foods (see Exhibit 1 for data on the top chains in the country). 33 Store operations Many Trader Joe's stores could be found in old strip malls in suburban locations. The typical Trader Joe's store had less than 15,000 square feet of selling space. Many early locations maintained footprints of approximately 10,000 square feet. The typical supermarket ranged in size from 40,000 to 50,000 square feet. As a result, Trader Joe's did not have the wide aisles that existed in many supermarkets. Writer Dave Gardetta explained the logic of the quirky, cramped layout of the stores: This "chevron" pattern is used in all Trader Joe's stores, aisles canting left. . . The offbeat floor arrangement complements Trader Joe's unregimented persona: "Hey, we just threw up some shelves, and there they are." It's also a retail trick. Angled passageways reveal a store's contents in profile to arriving shoppers. Rows squared with the walls (see: any supermarket) inadvertently conceal their contents from customers peering into a corridor's mouth looking for the toothbrush display. 34 Checkout lines could be quite long at Trader Joe's during busy Saturday mornings, and parking lots tended to be quite crowded. One Los Angeles area blogger complained about it: I love Trader Joe's for their prices, for their Joe-Joe's, for their simmering sauces. But, all the mushy love I have for Trader Joe's is nearly outweighed by how much I hate it for having absolutely awful parking lots. If you don't live near one of their new and improved stores i.e., the ones at Hollywood and Vine or Olympic and Barrington-then you're stuck with an archaic lot that is a one-way traffic jam from hell. This is my list of the 5 Worst Trader Joe's Parking Lots in LA. 35 Trader Joe's did not invest a great deal in technology within the stores. The company did not offer self-checkout lanes, and it did not have flat-screen TVs at the checkout counter. CEO Dan Bane joked about those televisions at rival retailers, noting that Trader Joe's customers had the opportunity to actually talk to employees. 36 Merchandising Trader Joe's carried about 4,000 SKUs per location, as compared with as many as 50,000 units for most grocery stores. Eighty percent or more of the products in a Trader Joe's store consisted of private label items. (Typical supermarkets generated less than 20% of their sales through private label goods.) Because of this, customers could not find many of the major brands at Trader Joe's. If customers wanted Cheerios cereal or Coca-Cola beverages, they had to go elsewhere. Nor did Trader Joe's offer a wide selection of fresh meat or produce. Instead, it featured an extensive frozen food collection. It also tended to sell fruit by the piece rather than by the pound. Beth Kowitt of Fortune visited one of the company's Manhattan stores and commented, "Make no mistake: A typical family couldn't do all its shopping at the store. There's no baby food, toothpicks, or other necessities. But for this crowd of urbanites and college kids, Trader Joe's is nirvana." 7 Trader Joe's buyers scoured the globe for interesting new products and tried not to follow trends. Instead, they tried to identify new products that customers had not experienced previously. They also avoided trade shows, which featured products that every other retailer could see. Because the company stocked limited varieties of each product, its buyers purchased very large quantities of each SKU at low prices. This enabled them to purchase goods directly from manufacturers, rather than working through distributors or wholesalers. Trader Joe's did not charge suppliers to slot their products on the retailer's shelves, unlike many rivals. Moreover, the company paid its suppliers promptly, rather than trying to stretch out its accounts payable for as many days as possible, 38 Trader Joe's maintained a dynamic product mix that made shopping at the store feel like a treasure hunt. Merchants strove to introduce 10-15 new products per week. As a result, they had to eliminate 10-15 products each week. Some changes occurred because special seasonal items were introduced or discontinued. In other cases, the buyers ruthlessly cut products that did not meet sales goals. Employees became adept at consoling customers searching for discontinued products. 39 Coulombe explained how he pursued a scarcity strategy quite deliberately: I learned that lesson with vintage wines. There's only so much 1966 Lafite Rothschild. So we deliberately pursued a policy of discontinuity, as opposed to, say, Coca-Cola, which is in infinite supply. For example, we had the only vintage-dated, field-specific canned corn in existence, and it was the best damned canned corn there was. But there was only so much produced every year, and when you're out, you're out. 40 The company required its vendors to maintain complete secrecy about their relationship with the retailer. Trader Joe's did not want rivals or customers to know how and where it sourced its private label goods. Suppliers often wanted complete secrecy as well, because they were providing Trader Joe's a much lower-cost version of their branded product, which might be selling at higher prices at Whole Foods or other retailers. Occasionally reports did surface in the media about Trader Joe's vendor relationships, and reporters questioned how unique some Trader Joe's products really were. For instance, Fortune reported that Stonyfield Farm supplied Trader Joe's yogurt on the East Coast, and Pepsi's snack division produced the retailer's line of pita chips. 41 Customers Trader Joe's claimed that 80% of its customers had attended college. The company described its target market as "intelligent, educated, inquisitive individuals." 42 It focused on people who were health conscious, enjoyed travel, and liked trying new things. Tony Hales, a store captain, described the clientele: "Our favorite customers are out-of-work college professors. Well-read, welltraveled, appreciates a good value." 43 Industry consultant Kevin Kelley described the target customer as a "Volvo-driving professor who could be CEO of a Fortune 100 company if he could get over his capitalist angst." 44 One article about the company described the customers as follows: These are people who wear sunscreen, even over their tattoos; who travel on frequent-flier miles and with the Lonely Planet guide rather than a Frommer's. People who play guitar and pay their taxes. Who roller-blade or bike to work on the days they're not driving the minivan. Who dress their kids in tie-dye but have really good car seats. Such folks might have unfortunate thoughts about their fellow Americans while waiting in the sun for a parking space, but they would never, ever yell at them out the window. 45 Trader Joe's enjoyed a cult-like following. Many customers launched online efforts to persuade Trader Joe's to open a store in their region. They created Facebook fan pages, wrote cookbooks featuring meals prepared with the firm's products, and waited in line for hours before a new store grand opening. Founder Coulombe joked, "My children say that the Albrechts own the business, but I own the cult." 46 One customer, Cherie Twohy, explained her passion for the company: I've always been a Trader Joe's groupie. I grew up in Southern California, as did TJ's. . . As I became more interested in food and cooking, I found myself cruising the aisles of different TJ stores, as they expanded, first in California, and then across the country. When I got ready to open my own cooking school, Chez Cherie, I decided to see how much interest there might be in classes focused on cooking with Trader Joe's products. They've been so popular and are a ton of fun to teach. In 2009 I was contacted by a publisher interested in doing a Trader Joe's cookbook. Since I'd been doing the classes for years, it seemed like a natural next step. The first book came out in November 2009 and so far has sold over 70,000 copies 447 Several years earlier, CEO Dan Bane wrote a letter to employees describing why he felt Trader Joe's customers had become so loyal to the company. He explained, "Our people are warm and friendly. It's fun and an adventure. They find unexpected products. They experience cheap thrills. Our people are helpful and knowledgeable. They know that we have tested each product to ensure quality and satisfaction. They trust us."48 Marketing Trader Joe's marketed primarily through its Fearless Flyer as well as occasional radio ads, and never ran television ads. The company produced the flyer and wrote the radio spots itself rather than hiring an advertising agency. Employees rather than professional actors starred in the commercials. In addition, one or more employees in each store served as the resident artists who produced quirky hand-written signage. Trader Joe's specifically chose not to employ a public relations agency. Bane explained, "They are a waste of money. If you give your customers great products at great prices, why do you need one?" 9 Many customers had learned about Trader Joe's through word of mouth. Unlike many grocers, the company did not have a loyalty-card program. Trader Joe's also did not offer or accept coupons. 50 The Fearless Flyer provided information about various products, but it did not advertise weekly sales. If customers were not satisfied with a product that they purchased, they could return it with no questions asked. The firm explained its pricing philosophy in the frequently asked question section of its website. [Q:] Do you have weekly specials or sales on your products? [A:] "Sale" is a four-letter word to us. We have low prices, every day. No coupons, no membership cards, no discounts. You won't find any glitzy promotions or couponing wars at our stores. If it makes you feel any better, think of it as all our items are on sale, day in and day out. 51 If customers searched social media platforms for information about Trader Joe's, they would not find any official company Facebook pages or Twitter accounts. Trader Joe's had not created any such material. However, they would find a great deal of content generated by fans of the company. Hundreds of fan pages existed on Facebook: the "traderjoesfan" Facebook page had accumulated over 550,000 "likes" as of July 2013. 52 Customers also routinely created pages to try to persuade the company to open a location in their towns. Such pages often attracted more than 5,000 followers in a matter of weeks. One fan's Twitter account@traderjoeslist-described the "yummy, healthy Trader Joe's items" on her shopping list. She had more than 39,000 followers. 53 Customers uploaded videos to YouTube as well. More than 880,000 people had viewed one fan's "If I Made a Trader Joe's Commercial" video. 54 Some experts bemoaned the absence of a company-led social media strategy. Nicole Spector of Direct Marketing News wrote, "But no matter how 'awesome' and 'amazing' Trader Joe's influence on its fan base is, marketing experts concur that not having an authoritative voice in social media is a weakness." 15 She gave the company a zero in the social media category on her marketing scorecard. Sarah Mayer and Jennifer Ashley of Infiniti Marketing Solutions commented, "We think they are missing a great opportunity to spread the loyalty and the customer experience outside of their store. Their customers are talking about them in Twitter, on Facebook and beyond, so why not get involved in that conversation?"56 People Trader Joe's continued to adhere to Coulombe's strategy of paying staff more than they might expect at rival grocers. New part-time hires typically earned $12 per hour. Full-time employees earned approximately $50,000 per year. Store captains grossed more than $100,000 per year. Trader Joe's also contributed 15.4% of employees' pay to retirement accounts. The company even offered some health care benefits to part-time employees. According to Businessweek, the health care policy made the store "a haven for artists, musicians, and other creative types who wouldn't normally seek supermarket jobs." 57 Trader Joe's tended to receive many applicants for each job opening. When the company opened its first store in Kansas City, it stopped taking applications after receiving 1,000 inquiries. The company eventually hired 50 people from that applicant pool. When hiring, Trader Joe's sought extroverted individuals who could empathize with customers. Mark Gardiner, a former employee, described the type of people with whom he had worked: Trader Joe's also extracts a ton of value from one of America's least-utilized natural resources: the pool of artsy, creative, college-educated young people who graduate without the hard skills that would allow them to get technical jobs. As it turns out, kids who graduated from their college theater program and (surprise!) couldn't get a job acting; kids who got their bachelor's degree in history and then realized (oops!) there aren't too many job openings for historians ... lots of those kids make great customer-service employees. . . These kids especially show their value in an environment where they're empowered to do whatever it takes to make sure customers are happy, and they're given some creative leeway. Many of them come to work at Trader Joe's and feel really appreciated and (bonus!) that coming to work is almost an extension of their social life, because they're surrounded by people like themselves. 58 When new employees ("crewmembers" in Trader Joe's lingo) came onboard, they received 10 days of training. Gardiner described the training he received before the grand opening of the firm's Kansas City store: We had spent ten days of indoctrination before the Grand Opening. ... I use the word indoctrination to describe those first ten days, because the actual training was minimal. Admittedly, most of the day-to-day work on the floor of a grocery store is menial. But I was still struck by the ratio of time spent discussing values, compared to time spent discussing