Tuesday, March 29, 2011

Trader Joe's

Most of us have probably found the Trader Joe's near Bakery Square by now. Whenever I go grocery shopping there it is always busy and attracts all different sorts of customers. It seems odd to me that this grocery store chain is doing so well in and industry that is being overtaken by big box suppliers like Wal-Mart and Costco.

Trader Joe's has been able to due this with a unique strategy of competitive positioning, as discussed in "Competitor Analysis". TJ provides highly selective products that do not contain preservatives or artificial flavors. Soft drinks, for example, are not sold at Trader Joe's. Most of the items sold at TJ are store labels and thus cannot be found in other grocery stores. Additionally by providing products without preservatives or artificial flavors, TJ positions itself to cater to the food customer who would NOT shop at the big box chains and thus does not need to compete with Costco and Wal-Mart based on price (although TJ does offer many low prices on its store brands). Although the grocery/supermarket industry is shrinking as a result of the entrance of big box TJ manages to retain its core customer, who looks for food items not traditionally sold among these major competitors.

My question would be to ask you whether or not it will be possible for TJ's to maintain its profitability and market share as Wal-Mart and Costco move into organic and private label products?

Resources: http://www.traderjoes.com/about/faq.asp

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