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3 Ways Trader Joe Innovates and Destroys the Competition

 

The world of supermarket retailing is far from a mouth watering business proposition. Razor thin margins, high competition and a mundane customer experience - this is what the traditional supermarket business has come to represent.

Somehow Trader Joe's has made the world of groceries a tasty extravaganza of business performance - they sell more goods per square foot than any other supermarket in the US. They smash retail giants like Whole Foods and Costco.

Equally brilliant is the culture the company creates for employees on the shop floor. Trader Joes has only 4% staff turn over in an industry that averages over 35%.

So how did a bunch of Hawaiian t-shirt wearing sales assistants create the most innovative supermarket on the planet?

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The success strategy of Trader Joe’s:

High differentiation to the category

Simplicity in store

Decentralised organisation

How Trader Joe’s are Different

  • Small stores approximately 10,000 sq. ft versus the industry average of 50,000.

  • Be fun and folksy in store and wear Hawaiian t-shirts.

  • No big brands! 80% of the assortment is private label.

  • Conduct very little marketing. Product in the store is the most significant marketing tool, so they give it away for tasting.

How Trader Joe’s makes things Simple

  • Fresh food focus. You'll only find 1 detergent but ten versions of hummus.

  • Carry much less product. The stores carry an assortment of approximately 2,000 versus the industry average of 30,000.

  • No CRM! Understanding customers through in-store interaction, not data.

How Trader Joe’s empowers each store

  • Treat every store as a business, no central budgets.

  • The objectives are kaizen-based - aim to be a bit better every year.

  • Create stability at the centre. Only 3 CEO's in 60 years.


There's no one magic ingredient for Trader Joes. Instead, this company is a compelling case for systematic innovation. In every single part of the business, you can witness simplicity and empowerment that leads to the highly differentiated customer experience.