October 16, 2008
A Trader Joe’s Grows in Brooklyn
By Tom Ryan
On the morning of Sept. 26, about 200 Brooklynites stood in the rain to be the first ones to enter the latest Trader’s Joe opening in Cobble Hill, its first Brooklyn store.
“I’m excited,” Bedford-Stuyvesant resident Brandon Wolf told the Daily News while taking a cell phone photo of workers loading boxes of artichokes into the 14,000-square-foot store.
“I’m going to upload it on my Twitter account so that my girlfriend could see that it’s opening tomorrow,” he added.
“I’ve had suburban envy in terms of Trader Joe’s for years,” Stephanie Creaturo, who co-owns a nearby yoga studio, told the News. “We’ll have a place to get quality goods for cheap.”
The uproar comes as crowds continue to throng its 14th St. location in Manhattan since its opening in 2006. Customers regularly endure waits of up to half hour in lines that snake around the store.
“Trader Joe’s knows what the consumer wants and they figured out the magic recipe for cheap, healthy food,” Seth Unger, a Brooklyn Heights resident at the Cobble Hill opening told The Brooklyn Paper.
One skeptic was Gina Provenzano, a blogger at www.epicurious.com. While praising the Cobble Hill stores’ bread, nuts and grains selections as “paradise,” Ms. Provenzano chided the limited assortments of fruits, vegetables, cheese and meats. She also noted that while Trader Joe’s “prides itself on its selection of natural products, what this store really pushes is frozen food,” and harped about its large portion of packaged and canned foods.
Not surprisingly, a host of fans defended the grocer on the blog.
Jamield wrote, “I think you’re missing the point of Trader Joe’s completely. It’s meant to be a place for interesting items packaged, but not processed, at attainable prices. It is not meant to have as elaborate a cheese department at Whole Foods, but when the two have intersecting products, you can bet Trader Joes will offer it for at least 20-30 percent less…The real beauty of it is that it isn’t a gigantic food emporium.”
Wrote Travesty1, “I’m a chef by trade and after 14 to 18 hours of cooking the last thing I want to do when I get home is more cooking. TJ’s offers a lot of healthy meal options that are quick and simple. It beats the hell out of fast food.”
Although not on the scale of New York City, the retailer’s store openings
-even rumored openings – regularly gain press attention in many parts of the
country.
Next up for Trader Joe’s in the New York region is a two-level store
at Broadway and 72nd Street in Manhattan opening in 2009. New York Magazine noted
that Trader Joe’s will be entering one of the New York’s best-known “foodie
neighborhoods,” with Zabars, Fairway and Citarella nearby.
Discussion Questions:
Why is Trader Joe’s doing so well in New York City? How does it create so much
buzz wherever it goes? If the concept is so successful, why aren’t other retailers
doing more to replicate its formula?
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Trader Joe’s creates excitement because it provides value. Consumers are tired of getting ripped off and having to play games to get quality products at great prices. Trader Joe’s provides great products at great prices and makes it easy.
Just look at Two Buck Chuck. TJ’s has been doing this for years with a great deal of success and received major free publicity because of this value almost from day one. Now all this information is free, but other retailers have not decided to follow suit until just recently (about 6 years later).
If TJ’s can get that kind of lead over the competition in the grocery industry on every value they present then they will continue to prosper and will grow profits much faster than the rest of the industry. TJ’s has been blessed to have developed in an industry that seems to hate to do any actual work. While the rest wander around buying every silver bullet imaginable, TJ’s sticks to its knitting and grows the value proposition.
There’s something about Trader Joe’s–real or perceived–that makes its customers feel special, upbeat, cool, even exclusive. TJ’s offers up fun, unusual, quality items and they get a “full ticket” price except for their Charles Shaw wines. Not many food retailers develop these perceptions…but wish they did.
Trader Joe’s has done a brilliant job of creating a brand that is based on a different and delightful customer experience. TJ’s is to grocery what Southwest Airlines is to the airline industry and what Toyota is to the car industry, in that they have a culture of giving customers what they want instead of selling customers what they want to sell them.
TJ’s does no advertising and has grown by word of mouth. It’s definitely a cult brand. The selection of items that you can’t find anywhere else, gourmet and natural, unprocessed food at low prices (a liter of extra virgin olive oil is about $7.00, compared to $14.00 for Safeway’s private label EVOO, and the “2-buck Chuck is actually good wine), combined with great service by friendly, knowledgeable employees who obviously like their jobs, makes Trader Joe’s so popular.
New Yorkers, like everyone else, hear about Trader Joe’s from their friends and must try it. Once you try it, you’re hooked.
What few people know is that Trader Joe’s, started in 1958 by Joe Colombe, was acquired in 1979 by Aldi, and is still owned by the German based discount retailer. Neither company mentions this on their websites, which helps the entrepreneurial folksiness of the Trader Joe’s brand to endure.
TJ’s has never tried to be all things to all people. they know exactly who their customer is, the quality they require, how they like to shop and how they like to eat. They’ve mined a narrow niche and have created a shopping environment where there always seems to be a buzz. The other important factor, in my view, is that they work on a scale that makes the store quick and easy to get through, and that convenience is very important to their customers.
Trader Joe’s has a unique business model in grocery. They have no stockholders to answer to, and they don’t carry much debt. These two factors really put them in a good position vis a vis other groceries in the current economy. And they care about their employees–and happy employees mean happy customers.
Trader Joe’s generates that special “club” feeling. Even though they don’t have membership cards, the customers all feel like part of the same elite club. There’s an excitement, a feeling of adventure. I think it’s precisely because they aren’t a big box store, they aren’t the generic grocery that everyone goes to. There’s a special cachet attached to Trader Joe’s. Shopping at Trader Joe’s makes people feel like they’re making a smart choice, a healthy choice, an adventurous choice, and they’re getting a good value.
(Full disclosure–my husband works there. But I’ve always been a fan!)
The buzz surrounding Trader Joe’s reminds me so much of the same type of excitement with Krispy Kreme donuts. They couldn’t do anything wrong and people were lined up at new openings. This lasted for them until they grew too fast and lost their uniqueness.
Of course, they weren’t selling healthy foods as Trader Joe’s is and there are other differences too. But expanding too fast and losing that excitement is a real danger for them as well. Usually, as a chain grows, it becomes harder to maintain their core values and the culture that caused their rise to fame. Trader Joe’s has a good formula and it will be interesting to see how well they can manage that as they continue to grow.
Trader Joe’s has made shopping fun–great products, fair prices and unmatched customer service. Staff is engaged with the products they sell, and their delight in sampling new products with you continues all day. It has to be one of the best examples of consumer centric marketing–they work very hard to understand local shoppers.
The retail model is well differentiated. The local sourcing, area specials and private label items would be not be easy to replicate, but the culture of innovation and customer focus is truly unique. The sense of humor is contagious from the product names to the Fearless Flyer to the zany in-store decoration. How could you not have fun at a store that offers an assortment of California wines from Charles Shaw starting at $1.99 a bottle–known as Two Buck Chuck?
I have found that with a regular reading of RetailWire.com that I have become more acutely aware of the various grocery formats and why they are successful. It isn’t much different than any other successful branding effort.
There hasn’t been a new traditional grocery retailer in decades. The new and exciting and successful ones have been those who have studied the market and the consumer and found a need for service, and then built their company to service those needs. The breadth of consumer preferences is as diverse as retailers like Wal-Mart, Whole Foods, Aldi, Wegmans, Price Chopper, Fresh Direct and Trader Joe’s.
Consider Jamield’s comments, “…It’s meant to be a place for interesting items packaged, but not processed, at attainable prices. It is not meant to have as elaborate a cheese department at Whole Foods, but when the two have intersecting products, you can bet Trader Joe’s will offer it for at least 20-30 percent less…The real beauty of it is that it isn’t a gigantic food emporium.”
Running a business to meet Jamield’s needs is structurally different than running a chain of “gigantic food emporiums.” Business operations, from buying to warehousing to delivering to retailing on the floor are best structured to meet a single focus. When that focus starts to deviate, parts of the system will start to become less efficient. Successful operators know their strengths and customers, and stay focused.
Trader Joe’s could be 2,000 stores tomorrow. The only question is, with such an unusual assortment, CAN they be 2,000 stores tomorrow? But that’s up to them to figure out. Their uniqueness is based on the very consistent feeling you get in any of their stores: one of a kind. They have an innate ability as a corporation to create that feeling, without trying really, they just do it. That alone makes them a very, very valuable retail entity.
They are a key emulator for retail experience, in our minds.
One thing nice about Trader Joe’s is that they are not on every corner. They typically locate in fun, upscale areas and they hire upbeat, educated employees. I agree with the other panelists. TJ’s has found the right formula of product mix, store size, quality, service, and a cult like following. I like to wear Trader Joe’s shirts. It’s like being in cult. Other cult members will stop and acknowledge they are also Trader Joe’s shoppers with a comment or nod of the head. Maybe someday they will hold Trader Joe’s conventions like they do Harley Davidson rallies.
I’m a fan, as are the countless people who crowd the aisles every day. Whether it’s the inexpensive and unique gourmet treats (love the sesame snacks) or the great service, their audience loves TJ’s. No wonder they’re expanding.
In the late 60’s, I worked for Pepsi and called on Trader Joe’s in Downey Ca. It was one of my best accounts for sales and interaction with employees. The joke with the sales people that called on them – “I will give up 20 Thrifty Drugs stores for Trader Joe’s.” Although the original owners sold TJ’s some time ago, the current owners have kept the uniqueness of the stores. The changes over the years have been subtle: bulk nuts & seeds back to packages; a few vitamins to a full line of private label back to a small selection; small amount of frozen to large amount; big increase in snack items. Huge increase in ready-to-eat meals and wines.
The grocery buyers are doing a good job in bringing in new items that are difficult to find in other stores. Produce as a small convenience is just OK; should do a better job in rotating. Would be nice if they could show some type of traceability on the produce – would help with the sales and marketing of it. I think Fresh and Easy will lose this battle.
Who doesn’t love Trader Joe’s? Why great companies like this and In-n-Out Burger don’t establish locations in Denver is a mystery to me. There is a petition online to bring Trader Joe’s to Colorado which I’ve signed and hopefully the new legislation regarding alcohol sales will help as well. I don’t buy the distribution excuse since they try and source locally as much as possible. Trader Joe’s could be HUGE if they ever decided to go on an aggressive expansion.
Trader Joe’s has 3 things going for it–high quality (read tastes good) products at a good price with great customer service. Unlike Aldi, it’s not cheap products, it’s very good products at a fair price.
Why don’t other retailers do it? Perhaps because the limited assortment idea goes against their grain–they grew up being full assortment retailers. And imagine what it might take to be a number two player at Trader Joe’s game? Perhaps the profit margin isn’t there given what you would have to spend in r&d and advertising to try and build the buzz.
Trader Joe’s does well because it offers an interesting variety of foods, presented in a fun and not too serious environment, and is staffed by people that reflect that reflect that environment. Their prepared foods are good and reasonably priced.
Compared to the sterile environment of Fresh & Easy or the overwhelming big box stores, TJs shines.
It’s all about service and selection at Trader Joe’s. I have shopped several locations in the Southern California area and I always get blown away by the enthusiasm staff. In some of my workshops, I talk a lot about leadership and ownership. Trader Joe’s really stands out in that department. Observing some of the staff, you can see that they really take ownership in their store. I have yet to walk into a location and find an image issue. Product knowledge and customer service is always excellent.
Trader Joe’s has built its success through word of mouth marketing. I lived in San Diego for almost 5 years and never heard about the place until my uncle told me about it. Now I make it point to stop in whenever I am in a city that has one (my wife will be pleased with the New York addition).
Why haven’t other retailers caught on? Some retailers have lost customer focus and have put more priority on operational objectives. There must be a balance which TJ’s seems to have achieved. Without customers, we would all be out of a job!
Trader Joe’s has mastered the art of hiring people with a genuine interest in the products they sell and with an equally genuine interest in engaging with and assisting customers. Coupled with an interesting store design, the brand is naturally flourishing.
It is not unlike what Apple has achieved, and both benefit from tremendous word of mouth customer advocacy.
Here’s another example of how focusing on evolving customer needs is paying dividends. The ability to eat healthy, get a discount, and buy something that tastes great meets the needs of anxious consumers who need to pamper themselves in a climate of economic and environmental anxiety.
In a lot of ways, Trader Joe’s uses many of the same strategies of classic 1980’s Wal-Mart, geared for their target customer, which they describe as the unemployed college professor–smart and sophisticated, with a less than full wallet.
Like classic Wal-Mart, they are faux folksy, but substituting a charmingly unsophisticated island theme, akin to hipster tiki-decorated lounges. Instead of one greeter, everybody’s a greeter.
They do a great job with PR. New and old media both gush over their unique operations, and highlight their devoted fans and the lines out the door. Our newspaper ran more than one soft feature on their arrival in Milwaukee, almost totally focusing on the TJ mystique.
They are also rather secretive. When’s the last time you read an interview with a TJ executive? Most shoppers don’t even know they are sister stores to the bare-bones Aldi discount division, or that both are run by the private family operation Aldi Sud. (The world and Germany are divided up by the family–other Aldi stores are run by Aldi Nord.)
Despite the fact that many TJ shoppers would not be caught dead in an Aldi, it’s fun to walk through both store formats and notice how many parallels there are.
I don’t mean to be gruff. If we’re talking about branding, few retailers have done it better than Trader Joe’s in the last few years. And as a retailer, I can’t help but admit that I have sometimes wished I was located next door to one.
As long as Trader Joe’s doesn’t have stores too close to each other, and pays reasonable rents, they’ll do fine. Long ago they understood that great retailers are great editors. Trader Joe’s only sells what’s profitable for them AND a good buy for their customers. Each item has to pass both tests.
Two big hurdles for Trader Joe’s in New York City: (1) chain stores can’t have more than one license to sell alcohol, statewide and (2) the “reasonable rent” requirement.
Trader Joe’s does well in NYC and so many places because they are so unique in their products and overall shopping experience. They offer an exciting ethnic variety of products in produce, prepared foods, meats, dairy, packaged and frozen foods. I recently found TJ’s “mango salsa” with mango slices, cilantro, jalapeno peppers and hot sauce you could mix to taste. What an unusual combination. That is only one example among many private label products.
They offer consumers a unique experience–great quality private label products at good value, always fresh coffee and a product demo sampling, and balloons for the kids. And consistently I find that their associates are engaged and truly seem to enjoy working there. Consumers can “feel” their connection.