Trader Joes - Harvard Case Analysis

BUS 478 – Strategy (D400)

MEMORANDUM

SUBJECT:        Harvard Case Analysis (Trader Joe’s)

Trader Joe’s has been successful in the grocery store industry since its inception. Despite being a smaller store and offering less products than its competitors, Trader Joe’s still manages to keep customers coming back. Their unique strategy makes their business differ from other grocery stores and supermarkets and this will allow Trader Joe’s to continue to have a competitive advantage.

The supermarket industry is highly competitive as almost all the revenue is strictly from the sale of products and they have low annual sales growth. The industry have very low profit margin on sales as well, with the largest company (a publicly traded one), Whole Foods, only hauling 5.4%. But Trader Joe’s, a private company, is still able to compete with them.

Part of Trader Joe’s success in the industry is having quality in all their products. Many popular brand items (Coca-Cola, Oreo, eg.) won’t be found in their stores. The majority of their products are their own brand which have become highly reputable to consumers over the years. In turn, the company is able to lower their costs by not needing to purchase merchandise from large distributors.

Unlike other supermarkets (which targets all consumers), the majority of Trader Joe’s target market are college students and graduates, and other well educated people. They describe their customers as intelligent individuals who like to try new things. This strategy plays well with their merchandise because they sell unique products that are not mainstreamed and constantly introduce new goods in store.  Aside from its popular products, the company is also known for offering exceptional customer service consistently. Internally, the company offers above average wages and great benefits to its employees, and remains a well sought after company to work for.