PLBuyer: Trader Joe’s Remarkable Journey
By Mary Gustafson
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
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,
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.
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.”
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