It's a small grocery chain that moves into abandoned retail stores in second-rate locations. Parking is all but impossible. There's not a deep selection in the cramped aisles, and you'll be lucky to spot a national brand on the shelves. Welcome to Trader Joe's. About all this 344-store U.S. chain shares with its parent, Germany's Aldi Group, is its rigorous control over costs. But where Aldi carries such basics as toilet paper and canned peas, TJ's, as it's known, stocks eclectic and upscale foodstuffs for the wine-and-cheese set at down-to-earth prices. It's a phenomenally lucrative combination. 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: while the 43-year-old chain quintupled its store count from 1990 to 2001, it will open just five more locations this year. The company selects relatively small stores with a carefully curated selection of items. The result: Its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods'. The company has no debt and funds all growth from its own coffers. Finding popular foods for TJ's is the job of the 15 "category leaders," who travel the world visiting all kinds of food businesses  restaurants, farmers' markets, artisanal pasta makers, street stalls and supermarkets  and then translate their finds to the stores. When a category leader was served an ideal tiramis at a small restaurant in Italy, he spent months working with the chef on a version that could be mass-produced, frozen, exported to the United States and sold for $6.99. But first it had to pass the TJ's "tasting panel," which is a daily critique conducted by the company's best-trained palates. And getting the panel's approval can take years. "The tasting panel is what takes us from having good products to having addictive products," said Doug Rauch, the president. Like TJ's Thai Lime & Chili Peanuts: rich, spicy, fragrant, sweet and not quite like anything else on the mass market. Such new products line up next to the popular peanut-butter-stuffed pretzels, chocolate-covered espresso beans and green chili tamales, all of them additive-free, all-natural and capable of driving grown men to unnatural acts. "Before we got our TJ's I used to drive up to Chicago every couple of months to stock up on those pretzels," said a lawyer from St. Louis. The products that make it through but do not find a loyal customer base meet an implacable fate. "The bottom 10 percent is always being rotated out" said Matt Sloan, the vice president for merchandising. TJ's began expanding outside California in 1993. Today, each store carries only about 4,000 items (a large supermarket will stock 55,000 or more), in proportions that invert the industry norm: a tiny selection of canned soup, for example, but case after case of French ice cream confections and frozen Indian entrees. About 80 percent of the items carry the TJ's label, many imported from small producers in Europe and Asia, and all free of artificial colors, preservatives, flavors and MSG. 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 the crowd of urbanites and college kids who shop there, Trader Joe's is nirvana. Kevin Kelley, whose consulting firm Shook Kelley has researched Trader Joe's for its competitors, jokes that the typical shopper is the "Volvo-driving professor who could be CEO of a Fortune 100 company if he could get over his capitalist angst. "All employees wear Hawaiian shirts at work, whether they are shelvers or the chief executive. "It helps us keep a sense of humor about what we do," said Mr. Sloan, who, like many senior staff members, began working for the company as a college student and never left. The chain has a strong health food streak, making its three Manhattan stores competitive with the seven, much larger Whole Foods stores scattered across the island. A stunning amount of shelf space is devoted to trail mixes and energy bars like LraBar and Clif, which the chain discounts deeply. "You should have seen it a few years ago," said Lori Latta, who buys dried fruit and nuts for the company "The bars almost took over the store." It will soon be clear whether TJ's will take hold in New York City, where scores of local retailers specialize in top-quality imported house-brand products. When food-loving New Yorkers first heard of TJ's it sounded like a kind of glorified convenience store, good for party snacks and cheap wine. Then the chain expanded its house-brand food lines and its reach into the nation's suburbs. Web sites and singles events dedicated to TJ's fans in New York appeared, and locals grew curious. "I have a friend who moved from Brooklyn to Portland, Ore., a few years ago," said Nathalie Chase, who lives in Brooklyn, "and she started calling me every day to tell me about the new hummus or potato chip flavor or whatever. Every single day." Some former employees say Trader Joe's has already lost its quirky cool. "In the early days we never tried to be the neighborhood store," says a former employee. They didn't have to: Trader Joe's was the neighborhood store. And yet walk into the Chelsea location on a busy weekday night and you'll see something you almost never see in Manhattan: strangers chatting with one another. Veteran customers tell newbies what products they absolutely have to try, and serious cooks share tips on how to spike sauces and semi-prepared foods to make them even tastier. As well, as they have expanded, Finally, the expansion of Trader Joe's raises questions about their ability to maintain their reputation as the "neighborhood store." A recent salmonella outbreak that sickened more than 30 people in 19 states has taken more than a month to fully clear up, and resulted in a nationwide recall of several products. While most Trader Joe's customers seem to be giving Trader Joe's credit for being proactive in the recall, the incident raises questions about the ability of a large national firm with hundreds of suppliers to maintain the intimacy and quality control of a small neighborhood chain

For more information on Trader Joe's, visit the website:https://www.traderjoes.com/(Links to an external site.)

Write a short report (100 Words) onTrader Joe's

1. Write a quick industry analysis for Trader Joe's Industry and describe where the market power lies in the industry-- i.e., in which of the Porter's five forces (possibly more than one) does their competitive advantage lie? The industry analysis should indicate which industry Trader Joe's is in, list a few types of competitors and briefly describe each of the five forces in the industry.

2. Describe Trader Joe's strategy. How do they create, capture and deliver value and which of the five forces does their strategy address (if any). 

Do you think their strategy is effective? Why or why not? 

 

2. What is the generic strategy that Trader Joe is following? 
3. What is Trader Joe's core competence? 
4.  
5. Identify and explain/analyze one SMART goal of Trader Joe's.

Answer rating: 100% (QA)

Trader Joes is a unique grocery chain that operates in secondrate locations and repurposes aba... View the full answer