Private labels 80% of Trader Joe’s SKU’s are private labels Some resemble familiar brands (Joe’s O’s) Some well known manufacturers will make a variation of their product specifically for the Joe’s label Example: Trader Joe’s pita chips are made by Stacy’s, a division of Pepsi-Co’s Frito Lay
Their Secrets to Success? Limited Selection-High Turnover Model Example: Joe’s sells 10 varieties of peanut butter while the average grocery store sells 40 varieties Sells about 4,000 SKU’s vs. average 50,000 SKU’s “With greater turnover on smaller number of items, Trader Joe’s can buy large quantities and get deep discounts” Smaller number of items makes stocking shelves and checking out customers much simpler Sells estimated $1,750 in merchandise per sq. ft More than double what Whole Foods sells
Their Secrets to Success? They’re trendy “Trader Joe’s doesn’t pick up on trends – it sets them” High list celebs are consistently seen at its stores Mom & Pop feel (neighborhood stores)neighborhood While being a national chain, it maintains the small town feel Smaller selection = happier customers “A wide selection can lead to shopping paralysis” Specialty Items “Exotic affordable luxuries”
Too Secretive? They keep their image by keeping things “hush hush” Declined many requests to speak to Fortune about business operations Few customers know they are actually owned by the Albrecht family (ultra private supermarket empire) Famous in Germany for not talking to press This article was obtained over a 2 month period by speaking with former executives, competitors, industry analysts, and all involved asked not to be named.
Relation to Class? Trader Joe’s supply chain (minimize length of channel) Purchase directly from manufacturers Product then shipped directly to Trader Joe’s distribution centers Keeps costs low and supplier relations strong