Through a special arrangement, what follows is an excerpt of a current article from Private Label Buyer, presented here for discussion.
Undoubtedly, Trader Joe's success rests on the strength of its private label products, which comprise, according to some estimates, about 2,000 products or about 70 percent of its sales. The rest of its selection, primarily in the produce, prepared meals, baked goods and dairy departments, is filled in with national and regional brands that vary by location.
But it's the products that bear the Trader Joe's brand, and the variations of that brand, that are responsible for the cult following the retailer enjoys.
Lynn Dornblaser, a new products analyst at the Mintel International Group Ltd., said Trader Joe's employs savvy buyers and scouts who are always on the lookout for products that fit the chain's philosophy, as well as the company's commitment to sustainability, organics and innovation.
"One of the interesting things is that they're able to take niche products, or products you can only find in a small specialty shop, and bring them to a wider audience," said Ms. Dornblaser.
Laurie Demeritt, president of the Hartman Group, said consumers seem to respond to the brand Trader Joe's almost as if it were a real person. And because they see Trader Joe's as a person, they trust that the private label products are safe, organic and sustainable - and most importantly, taste good.
"Consumers think they can relax because T.J.'s has done all the research," Ms. Demeritt said.
While one of retailer's most successful products has been its Charles Shaw wine, frozen foods - namely seafood, frozen entrees, veggies, appetizers, desserts and breakfast items - are the biggest draws.
"They bring the quality and the taste," said Jim Hertel, managing partner of Willard Bishop. "Given space allocation, they certainly have a much greater representation of frozen meals and foods compared to other retailers."
Ms. Dornblaser thinks the best Trader Joe's products are the ones that are completely original, as opposed to knock-off versions of national-branded products such as Cheerios.
"I think some of their most unique attributes is what they've done with ethnic foods in general - with Indian flavors, frozen bowl meals. For example, the Trader Giotto line is much more authentic-looking and tasting than other mainstream products in supermarkets ... in terms of raising the bar," Ms. Dornblaser said.
However, some weak spots are produce and fresh-prepared meals, a place where competitors such as Whole Foods shine. To some extent, those challenges are related to infrastructure and distribution. A universal problem for all retailer private label programs - how to compete with heavily marketed national brands when it comes to beverages, particularly carbonated soft drinks. Packaging is also seen as an area in which the retailer could really improve.
"Because they've had such success with their quirky stores and positioning, and great products, consumers have given them lots of permission to not be a leader in offering great packaging or leading-edge design," said Ms. Dornblaser. "Ever try to open a bag of T.J. potato chips? You nearly need a chainsaw."
Discussion Question: Why do you think Trader Joe's has been so successful with its private label assortments? On the other hand, how can it improve its private label programs?