Photo: Getty Images/BCFC
Can Trader Joe’s continue thriving without delivery and curbside pickup?
Trader Joe’s, with no e-commerce presence or curbside pickup, missed the pandemic-driven e-grocery surge and doesn’t seem to mind.
The limited-assortment grocer is also experiencing challenges because its smaller stores are harder to reconfigure for social distancing. Long lines outside locations have appeared over the last few months.
Placer.ai found monthly visits to Trader Joe’s were down 44.4 percent in April, 24.6 percent in May, 12.1 percent in June and three percent in July. However, August turned positive, up 1.0 percent, the first positive month since February.
“Amazingly, it’s done so while other brands who’ve struggled — like Whole Foods — remain down,” wrote Ethan Chernofsky, VP marketing at Placer.ai, in a blog entry.
Trader Joe’s ended a test of delivery in New York City in early 2019 because it wanted to keep product costs down. The grocer also doesn’t use third-party deliverers, such as Instacart.
On an “Inside Trader Joe’s” online episode from April 20, Matt Sloan, VP of marketing, acknowledged that the chain has received requests to add such omnichannel offerings during the pandemic but has chosen to invest in staff.
“Creating an online shopping system for curbside pickup or the infrastructure for delivery, it’s a massive undertaking. It’s something that takes months or years to plan, build and implement and it requires tremendous resources,” he said. “Well, at Trader Joe’s, the reality is that over the last couple of decades we’ve invested those resources in our people rather than build an infrastructure that eliminates the need for people.”
Tara Miller, Trader Joe’s marketing director, added that offerings from outside delivery companies and curbside pickup by other grocers “don’t always translate into positive results.”
The only other major grocer RetailWire found not offering delivery or curbside pickup was Grocery Outlet, the close-out grocer.
RJ Sheedy, president, on a recent quarterly call said that growth potential with physical stores and challenges replicating the in-store experience is keeping Grocery Outlet from selling online. He said, “Ultimately, our customers enjoy the in-store WOW! shopping experience, the treasure hunt, the value, the personal engagement.”
- Coronavirus Update: How Trader Joe’s is Caring for Crew Members and Customers – Trader Joe’s
- Placer Bytes: The Trader Joe’s Comeback, American Dream’s Glimmer of Hope and Home Depot’s Extended Black Friday – Placer.ai
- Did Trader Joe’s make the right decision to end grocery deliveries? – RetailWire
- Episode 24: The Coffee Cuppers’ Guide to Trader Joe’s – Trader Joe’s
- Trader Joe’s explains why the store won’t be starting curbside pickup or grocery delivery – San Francisco Chronicle
- Grocery Outlet Holding Corp. Announces Second Quarter Fiscal 2020 Financial Results – Grocery Outlet
- Grocery Outlet (GO) Q2 2020 Earnings Call Transcript – The Motley Fool
Discussion Questions
DISCUSSION QUESTIONS: Should Trader Joe’s reevaluate its decision regarding delivery and/or curbside pickup if the pandemic persists or is it making the right decision to not offer these services? Does Trader Joe’s focus on the quality of its store personnel justify its decision?
Poll
BrainTrust
Dr. Stephen Needel
Managing Partner, Advanced Simulations
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Trader Joe’s has made difficult choices to prioritize profits over revenues. The cost to fulfill delivery and curbside orders is significant and disruptive to traditional in-store shoppers. While Trader Joe’s has limited the number of shoppers that can be in the store at one time, it has negatively impacted its revenues. Loyal shoppers will wait in line for 30-60 minutes to shop at Trader Joe’s. What that tells me is that maybe they would be willing to pay a premium for curbside or delivery. I don’t think Trader Joe’s should give up on offering these services and find a way to execute the services profitably.
Doing what got you to the dance has always been a sound strategy. However you can’t put your head in the sand and ignore competition and progress. I fear that is what Trader Joe’s is doing if they don’t consider what is becoming a standard way of doing business. Customers want and crave convenience and there will eventually be a time when a customer has to choose between the grocer that has it and the one that doesn’t. The first time or two that may not be a problem, until it becomes a habit and the consumer chooses convenience and modern-day shopping experiences over the traditional approach. I love Trader Joe’s and hope that their focus on quality and the in-store experience makes me say “They were right – and are amazing!”
From what I have seen, yes it can! I’ve visited several Trader Joe’s stores over the past few months and every single one, without fail, has a line of people outside. It doesn’t matter what time of day you go, the stores are consistently busy. Shoppers like Trader Joe’s and they are prepared to make the effort to visit. It underlines that while online is important, getting the product mix and having things people want to buy right are more important still.
Absolutely not. It’s not broken. Don’t try to fix it. Trader Joe’s relies on its loyal customer base, which doesn’t seem to have disappeared. Don’t mess with success.
Unlike some competitors, Trader Joe’s carries unique offerings with a dollop of quirky culture. These aren’t commodity items. Given that, it’s likely that Trader Joe’s will survive this time without BOPIS or delivery.
The last time we went to Trader Joe’s we waited in line for about twenty minutes before getting in. I can’t see where delivery or curbside pickup would benefit them. Part of the aura of Trader Joe’s is being in the store and interacting witht the staff. I, for one, would much prefer going in the store and selecting what I want for myself rather than driving up, blowing the car horn and waiting for someone to bring my order out to me. It just does not seem to be a fit for Trader Joe’s.
I think there would be a lot of support for the curbside or delivery (I would be one of the supporters since I live four hours from the closest Trader Joe’s) but I also know they want to serve the public with the best assortment and best shopping experience at the lowest prices and this would definitely involve an investment in capital and people.
I think Trader Joe’s is making the right decision here. While shoppers would certainly love to have these options, rushing into delivery would require both e-commerce and delivery to ramp up in a hurry. Implementing e-commerce (and real-time store inventory) would be a huge undertaking, to be sure, but more than those challenges I think delivery is the greater strategic challenge. Getting home delivery figured out, executed, tested, and monitored is a huge undertaking with their brand on the line with every delivery. And I would be shocked, simply shocked, if Trader Joe’s were to choose to outsource shopping and delivery – and their brand experience – to a third-party service like Instacart. Costco’s brand reputation has taken enormous hits from Instacart failings, and I just don’t see Trader Joe’s following down that road. So I suspect they will stay the course for the foreseeable future.
Trader Joe’s has a laser focus on their value proposition and it works. I’ve always thought that when it comes to omnichannel, support those capabilities that allow you to extend your brand and build your value proposition.
For Trader Joe’s, I like this quip when asked about their e-commerce strategy and perceived shortcomings: “Trader Joe’s doesn’t have pick up, they don’t have online ordering and they don’t have any empty spots in their parking lot. Somethings working there.”
The investment that Trader Joe’s has made in developing customer loyalty is paying off, but the pandemic has changed the way many people choose to shop. I don’t see curbside pickup and delivery completely disappearing even once all customers feel comfortable shopping inside a store, so Trader Joe’s will need to revisit this decision. While refraining from implementing these services quickly without the necessary underlying structure and processes makes sense, this needs to be part of their future strategy.
Trader Joe’s will continue to be successful, as they built a very powerful following. Their stores are in high-end neighborhoods and will continue to do well. Curbside pickup and home delivery is a monster cost that even Trader Joe’s wants no part of. If you have a reason for consumers to come to your store you will be OK but, if you do not, home delivery won’t save you either.
for any retailer, the quality of store personnel is paramount. But I believe to Trader Joe’s it is considerably more than that. The only retailer in NYC at which I see anybody waiting is Trader Joe’s. And the lines can go around the corner. That is good and unique for Trader Joe’s. But at some point, they will have to reconsider. In 10 years, the landscape will be very different. The combination of technology and the convenience factor will make delivery paramount.
Why? If they do change positions they’ll have to raise prices or sacrifice margins, and either of those moves hurts them in the long run. And yes, people line up outside the store — so that must mean the majority of the customer trading base accepts the approach. What happens in the winter in Northern and Midwestern states remains to be seen. And finally, Trader Joe’s really does invest in its people as a point of differentiation so, yes, I’d say the decision is more than justified.
This is a welcome article this morning. Chasing all the shiny baubles of online shopping, curbside stop/run into store (it’s not usually curbside pickup in truth), and the rest of the “shoulds” of modern retail costs a lot of money. Glad to see Trader Joe’s is figuring out that looking clearly at what happens — without dashing around throwing money out the window — leads to the best success.
I have more recently started going to Trader Joe’s as they aren’t as close to me as about six other grocery/specialty food stores. The stores are well maintained, the product is interesting and it feels like a safe environment to actually go shopping (as opposed to dashing around with a list). I think they will do just fine.
This has never been about the technology, it’s about the value exchange with customers. Trader Joe’s just happens to have a different value proposition and they do deserve a few points for staying true to their vision even with tremendous outside pressure. Personally, I would have liked it if Trader Joe’s at least offered curbside pickup as they lost my business mostly because of the unbearable lines to get in during the pandemic occupancy control. Chasing short-term opportunities will only yield incremental gains at best. Staying true to a vision will always win big in the end and Trader Joe’s seems to know it.
Trader Joe’s is applying one of Sam Walton’s directives: swim upstream. When everyone is going in one direction look for opportunities upstream. Trader Joe’s has made its mark based on the in-store experience which combines a treasure hunt and good value with an exceptionally friendly and helpful crew. Trader Joe’s represents one of a handful food retailers which are still fun to shop. Stay the course.
The keys to Trade Joe’s success are its unique product assortment and fun in-store environment, led by its staff. That’s thought to replicate online or in a curbside pickup experience, and it’s hard to fault them to staying the course when it works. While I’m sure many shoppers would love to have online shopping and pickup/delivery from Trader Joe’s, if they can’t make it work profitably to their ROI standard, then they are making a solid business decision as it does not appear to hurt foot traffic to their stores. That said, at some point, there is the potential that growth will be stalled if they can’t convince new customers to shop with them without those services. Of course, as long as they continue to have the unique products that other grocers don’t /can’t have, customers may still decide to wait in line if they deem it worth their time!
Proof positive that loyalty can outshine convenience. This plays more to its market and brand strength as the neighborhood grocer with a unique product set. However, in grocery this will be the exception, not the rule.
Trader Joe’s has made the uncommon decision not to go digital in terms of eCommerce, pick up in-store or curbside pickup. And it has been the right decision for them and their strategy. In a land of many-times cookie-cutter grocery retailers, it is important to align with your strategy and play to your strengths to remain distinctive.
In visiting various retailers on the West Coast, I believe that Trader Joe’s employees are among the best in customer service, communication, and engagement. And, I personally go to Trader Joe’s for the fair prices, unique products, fun experience, and great customer experience. Anything to take away from this would be detrimental to Trader Joe’s and their customers, unless it offers tremendous upside in customer experience and sales.
You’d might never know it if you don’t read RetailWire, but those services cost money. So someone has to pay for them; and given that part of TJ’s business model is low cost — even if implicitly more than explicitly — it’s understandable that management feels that neither they nor their customers should be the ones.
I don’t know any consideration was given to this earlier, but regardless, I see no point in starting it now.
Trader Joe’s challenge is not that they don’t deliver or don’t have curbside pickup, it is the size of the store. People still want to shop TJ’s but lines create a problem. Once capacity controls are gone, TJ will be back stronger than ever. Great move on their part.
In April, Matt Sloan, TJ’s Vice President of Marketing said the reason the grocery store chain hadn’t implemented curbside pickup, or even self-checkout, is a simple one. The company would rather invest in its employees, their most valuable resource. That sounds like TJ’s believes in outstanding customer service above all else.
Trader Joe’s is in denial. A long-term aversion to ecommerce simply is not practical in today’s economy. However, their stores perform so strongly with such a loyal following that expansion to ecommerce simply may not have been on their near-term radar. Now, the pandemic has them on their heels and instead of acknowledging that they, (like so many other retailers), were unprepared to leverage an unprecedented surge in ecommerce sales, they are saying they made the decision to invest in people. Maybe so, but they should also be investing in their future and that looks a lot like Trader Joe’s with alternative ways to buy/pick up goods from this beloved retailer.
Admittedly, curb-side pickup is not an easy undertaking and trying to start ecommerce from ground zero for such an established retailer, in the middle of a pandemic, has to be an intimidating proposition at best. However, to intentionally opt-out from the rapid growth we are seeing in ecommerce grocery begs some hard questions. Consumer behavior is shifting. Ecommerce is not going back into the bottle. The pandemic will not leave us unchanged. Yes, Trader Joe’s has some of the most loyal customers of any retailer. But even loyal customers will seek modern conveniences in the absence of change.
TJ’s has definitely created a model that values community and personal interaction in their stores. I like that they are sticking to their core values and taking care of employees. Offering early morning shopping to seniors and limiting the store capacity are smart choices that have produced goodwill and show they are willing to make changes during the pandemic. They just don’t match everyone else’s choices.
While I understand the “if it isn’t broken, don’t fix it” argument, and Trader Joe’s does have a successful format, I still don’t think it wise to just ignore e-commerce. Look at how you can augment the success rather than just not engaging in a new opportunity.
Prior to the pandemic, online grocery was growing faster than the overall grocery market and predicted to more than double from 2018 to 2023. Of course, the pandemic will have expedited this trend that was already in motion.
Has Trader Joe’s missed out on an enormous opportunity to capture a massive market by losing online grocery shopper segments? It’s possible, but the fact of the matter is that many Trader Joe’s shoppers go there for the experience itself—sampling and discovering new, novelty products and plucking them off the shelves, the small, neighborhood feel, etc. This could explain the trends found by Placer.ai as the general population begins to warm back up to (masked) in-store shopping.
And there’s something to be said for the emotional appeal they make with the prioritization of “their people” in a very emotional time. Trader Joe’s has always been distinct from other grocery stores and is continuing to make that distinction during this time, further solidifying their brand identity and what they stand for. Time will tell if this noble endeavor pays off.