Presented By:

Ally Karpstein

Angel Steagall

Trader Joe’s: A Unique Grocery StoreNeighborhood Grocery Stores

with Foods and Beverages

from the Exotic to the Basic’s

Short History• Trader Joe's began in 1958 as a chain of

convenience stores called "Pronto Markets” in the Los Angeles area.

• In 1967, the founder, Joe Coulombe goal was to expand the stores' offerings and enhance their image.

• He doubled the floor space and offered hard-to-find, boutique domestic and imported wines and gourmet food items at outstanding prices.

• He decked out the stores with cedar plank walls and nautical décor and garbed the Captain (the store manager), the First Mate (the assistant manager) and the Crew Members in colorful Hawaiian shirts.

• "Trader Joe's" was officially born.

• Sales have grown an average of 23% a year since 1990.

OREGON LOCATIONS• Beaverton: 1753 S. W. Beaverton Hillsdale Highway Beaverton, OR 97005 (503) 626-3794

• N.W. Portland: 2122 N.W. Glisan Portland, OR 97210

• S.E. Portland: 4715 S. E. 39th Avenue Portland, OR 97202 • Lake Oswego: 15391 S. W. Bangy Road Lake Oswego, OR 97035

• Portland, Hollywood District: 4218 N.E. Sandy Blvd. Portland, OR 97213

• Eugene: 85 Oakway Center Eugene, OR 97401

Where is

Trader Joe’s Overview• Trader Joe's has stores in 19 states.• Their mission is to bring customers

the best food and beverage values along with the information to make informed buying decisions. They focus on delivering healthy choices for their customers.

• There are more than 2000 unique grocery items, including their private label, at honest everyday low prices.

• Their buyers travel the world searching for new items and work with a variety of suppliers who make unique and interesting products, – many of them exclusive to

Trader Joe’s.

•All the private label products have their own "angle,"

-i.e., vegetarian, Kosher, organic or just plain decadent, and all have minimally processed ingredients, which is targeted directly to their target market, the health conscious consumer.

•They strive to source goods locally when ever possible,

-Which results in a different product mix and price points in deli products, breads, dairy and fresh juices depending on availability in certain states.

Store Layout/Atmosphere

• Only about 10% of the number of products found in a typical full-service supermarket.– Trader Joe's doesn't aim to provide everything you need. Instead, it entices

you with things you never knew you wanted, like that tub of dried figs.

• Niche is to create an atmosphere where the customer feels shopping at Trader Joe's is fun.

• Trader Joe's stores are cramped.

• Clerks wander around in Hawaiian-print shirts, praising the newest cheese or chip and occasionally ringing a ship's bell at checkout.

• "The people who work in our stores are the front line, the first customer contact. They are the soul of Trader Joe's."

Trader Joe’s Target Market

• Trader Joe targets a brie-and-chardonnay audience with entices them with private-label brands with almost no promotion, stocking only items it can sell at a bargain price and still turn a profit.

• A consumer who wants to fill their cart with healthy and organic foods without breaking the bank.

• Health conscious environmentally conservative consumer.

• They aim to replicate the aura of a mom-and-pop store.

Merchandise Mix

“They taste it first”...• A tasting panel tastes every

product before they buy it. – If they don't like it, they don't buy

it.

• If customers don’t like it, they can bring it back for a no-hassle refund.

• In order to maintain their pricing structure, they manage our store space well.

– Each of their products must "stand on its own," meaning it must pay its own way. They don't have loss leaders or deep promotional discount programs.

• They introduce about 10 - 15 new items a week. Their merchandise assortment (breadth) is limited compared to traditional grocery store.

– Each product must meet certain sales criteria in order to earn its way onto their shelves.

• They don't ask their suppliers to pay slotting, or promotional allowances.

• Products that don’t sell well need are discontinued to make room for new and exciting products.

– They also have limited quantities of some items such as wines, nuts or dried fruits, which change vintages each year.

Unique Merchandise Mix

• Organic veggies• Fiber-packed, delicious blueberry-bran

muffins• Organic Gorilla Munch cereal and organic

blueberry waffles

• Organic Flax Pumpkin Seed Granola

• Organic evaporated cane sugar

• Ferrari Corano Fume Blanc

• Nuts

• Dried fruit

• Trader Jose's Habanero & Lime Salsa

• Leg of Lamb

• African, Indian, and Thai simmer sauce

Trader Joe's is a popular specialty grocery store with interesting healthy, organic, and exotic foods.

Notorious "Two Buck Chuck"

Charles Shaw is an easy drinking table wine sold exclusively at Trader Joe's stores.  The real draw for this wine is its rather humble price tag.  The price is so low, some have deemed it "Two Buck Chuck.” The price has been recently increased to $2.99 because of a cost increase to Trader Joe’s, however; it is still known as “Two Buck Chuck.” The price increase has not effected the demand for the notorious wine.

Price StructureHow they keep such honest,

and low prices...• Trader Joe’s mission is to bring the

customer the best quality products at the best prices. – Bargain hard and manage costs

carefully.

• They manage their packaging, distribution and advertising costs well which results in lower prices to the customer. – They don't change their prices

unless their costs change.

• They stick to their Core Competencies: good food at the best prices!

• Whenever possible they buy direct from manufacturers, in large volume.

• Maintain strong relationship with suppliers. – They pay in cash, and on time,

so their suppliers prefer to do business with them.

• Legal Constraints: – Laws, taxes, deposit

requirements and distribution costs are different in each state for a variety of products and because costs are different, prices may vary on the same item in different states.

• Trader Joe’s focuses on Institutional Advertising, – which is an attempt by the retailer to gain long-term benefits by selling the store

itself rather than just the merchandise in it. They focus on a their niche, unique healthy and organic foods.

• Trader Joe’s does not have loss leaders or promotional discounts. – The only advertise with their Trader Joe’s Fearless Flyer and their internet

website.

• Trader Joe’s Fearless Flyer has been described a cross between Consumer Reports and Mad Magazine!  

• The products they describe may be new, seasonal or simply a one-time buy on a great deal on products they think have added value to the customer with:

– top quality ingredients; entrées that are ready to heat and serve in a hurry; products which have special recipes that are reduced in fat and calories; and wines and beers to go with favorite foods and special occasions.  

• The Flyer is like described as a storybook of product stories...

Advertising

Creating a Positive Store Image

• They design donation program at the requests of the local customer’s.

• Environmentally friendly

• Responded to negative publicity and by February 1, 2006, all eggs in Trader Joe's private label will be from cage-free hens.

“It's fun to shop at Trader Joe’s”...

• Customers Quotes, "I never knew food shopping could be so much fun!"

• Some even call them "The home of cheap thrills!" – “We like to be part of our

neighborhoods and get to know our customers.”

• Trader Joe's is committed to being active members in the communities where they have stores.

Trader Joe’s provides a clear positive image that is distinct from other retailers to promote long-term relationship with the customer.

• Currently Trader Joe's has expanded to over 200 stores in Arizona, California, Connecticut, Delaware, Illinois, Indiana, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Virginia and Washington.

• Their future plans call for on-going development of new, one-of-a-kind food items at value prices, and continued expansion of our chain across the country

Sources1Catawampus. “People Watching at Trader Joe’s.”

http://catawampus.typepad.com/catawampus/2005/07/i_heart_trader_.html (Retrieved 25 October 2005). 2Trader Joe’s. “© 2005 Trader Joe's Company, Inc.”

http://www.traderjoes.com/ (Retrieved 25 October 2005). 3Tracking Trader Joe’s. “Not an official Trader Joe Site.” Http://www.trackingtraderjoes.com/ (Retrieved 25 October 2005). 4The Human Society of The US. “Reports from the Streets: Volunteer Advocates Talk About Their Trader Joe’s Efforts.” http://www.hsus.org/farm_animals/farm_animals_news/trader_joes_campaign_volunteers_report.html (Retrieved 25 October 2005). 5Fast Company. “The Grocery Chain that Shouldn’t Be.” http://www.fastcompany.com/magazine/79/zigzag.html (Retrieved 25 October 2005). 6Patrick M. Dunne and Robert F Lusch, 5th eds., Retailing

(South-Western, part of the Thomson Corporation. 2005)