Trader Joe’s is a perfect model for success. Although small, they know how to maximize their profit and provide excellent customer service to all. Despite lacking many of the typical features of a “successful” grocery store, they still remain at the top of the charts for sales for their size. We can learn much from the way they run their business. Perhaps America as a whole could be improved by implementing some of the Trader Joe’s business techniques.
Origins of Trader Joe’s
This small, unique grocery chain originated in Pasadena, California. The founder, Joe Coulombe, had several convenience stores before this and decided to rebrand as Trader Joe’s. He opened up his first store in Pasadena and decided to focus on specialty foods. They rose to greatness, and now have around five hundred stores across the nation. There are no branded items; all items sold are private label. Despite having no advertisements or promotions, they still thrive (and even have quite a fan base). How do they do this?
Why It Works
Although Trader Joe’s doesn’t follow the traditional model of grocery stores (big parking lots, wide aisles, a massive selection of goods, crazy sales, etc.), they do very well. In fact, they are financially thriving; sales (per square foot) are about triple to quadruple more than top competitors. This is due to a number of reasons. Whereas a typical grocery store holds around 35,000 items, Trader Joe’s keeps around 3,000 private-label items. By replacing name brands with private labels, Trader Joe’s is able to buy directly from suppliers, as opposed to paying fees to middlemen, marketers, and more. Because of this, there is no need for sales or rewards cards. People simply purchase their groceries at prices that are already lower than usual. Additionally, the low number of items proves to be highly beneficial to Trader Joe’s.
Also, stocking less means less waste, which works for their customers. And the low number of “specialty items” turns grocery shopping into a type of treasure hunting for people. Constantly rotating items means there are new products in the store during each visit and makes shopping more fun (although there will always be that wonderful Speculoos Cookie Butter, which is amazing).
What They Value
Studies have also shown that having choices should be limited. If people are given too many choices, they are likely to become overwhelmed and not want anything. However, when given a limited number of choices, people are more actionable. Trader Joe’s certainly uses this concept to their advantage.
Lastly, they have amazing employees. They value outgoing, people-loving workers, and it shows. Trader Joe’s trains their employees to focus on customer service and provide shoppers with a great experience, which subsequently leads to customers returning to the store. There are also many employees; there are many in the aisles and waiting at the checkout.
What to Learn from Them
Plentiful employees help make the experience easier and faster. It’s important that checkout goes smoothly, as this is the process of people paying for their products. It is also important that there is great customer service provided to ensure that their shopping experience is a pleasant one. To have a successful business, you must treat and train your employees well. You must also make sure those same employees treat customers well.
Having private-label products is also an extremely wise decision. A limited amount of choices also leads to more action from customers. The overall experience of shopping (or any sort of sale) should always be wonderful. This will lead to word-of-mouth and loyal customers, which can be more powerful than mass advertising. Trader Joe’s can’t be cloned, but we can learn from them and the way they run their business.
What are some other unconventional businesses like Trader Joe’s? Let us know down in the comments.
This article was originally published on GREY Journal.