News highlights, market trends, and original data analysis related to the U.S. retail food & beverage industry … by Jay Nargundkar

“Quirky” Trader Joe’s Riding High

From an article this week titled “Quirky, cult-like, aspirational, but affordable: The rise and rise of Trader Joe’s”:

“If you want to see what success looks like in US grocery retailing, look no further than Trader Joe’s. Its unique combination of affordable prices, innovative private label items and gourmet, organic, and natural foods have helped drive sales per square foot to a jaw-dropping $1,723 versus an industry average of $521 (even Whole Foods can only manage $973)… and it’s got there without coupons, loyalty cards, print or TV advertising, or a corporate presence on social media.”

I’m a frequent Trader Joe’s shopper myself, and while the chain features solicitous staff members, a variety of ethnic foods and flavors, and “yuppie” staples, what keeps me coming back is prices a fraction that of Whole Foods. TJ’s focus on health and quality allow it to capture the same “good food” halo that its rival enjoys, yet I regularly cram a basket full of products at TJ and fail to break the $20 barrier at the register; at Whole Foods, I hit that mark even if I run in quickly to grab three items.

“As for who shops at Trader Joe’s, it targets ‘singles, couples, and small families with its comparatively small package sizes, eschewing large families and bulk buyers’… While 46% of Trader Joe’s shoppers have an annual household income of $100,000+, households earning $25K to $99K account for just as many of its shoppers.”

Trader Joe’s, a privately-held company, doesn’t disclose its sales nor many other basic details about its operations. Outside estimates suggest the chain topped $11B in sales in the past year at ~415 stores. Despite low prices and a limited selection of SKUs in its relatively much-smaller stores, they are keeping up with Whole Foods — the latter claimed 2013 sales of ~$13B from 362 stores.



This entry was posted on April 22, 2014 by in Retailers and tagged , .

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