The original mission is that “Trader Joe’s is for overeducated and underpaid people, for all the classical musicians, museum curators, journalists”. Trader Joe’s offered natural and organic goods, and private label items. Trader Joe’s mission is to focus on providing great value to customers by having competitive prices on all their products. They try to bring a good shopping experience to the customer. The selection of privately labeled products is large. Its weaknesses are that its store locating is not in local urban areas, and it also lacks presence on social media platforms.
After conducting a thorough analysis of the industry, competitors, and the company itself, I have developed two recommendations that will enable Trader Joe’s to gain profitability and increase their market position. My recommendations for Trader Joe’s following course of action are: Recommendation 1: Online Market Recommendation 2: Changing marketing strategy Recommendation 3: Improve technology in stores With the analysis I come up with three recommendations. These recommendations are detailed in the following section. The supermarket industry is a highly competitive industry.
Many companies with viable resources and capabilities are fighting for market share. Recommendation 1: online market Internet plays an important role in modern lives. More and more people like shopping online. The cost of online operation is low. Because of the store location, a lot of people do not have the access to the Trader Joe’s product. “Many customers launched online efforts to persuade Trader Joe’s to open a store in their region. Customers created fan pages, wrote cook featuring meals prepared with the firm’s products, and waited in line for hours before a new store grand opening”.
These facts indicate that consumers enjoy shopping at Trader Joe’s. To open a new store need prepare a lot. It also needs a lot of funds. Trader Joe’s has more than 400 locations across 37 states. Many places still do not have even one Trader Joe’s store. Online store will let more people who like Trader Joe’s shop here. It also requires fewer funds than local stores. According to Competitors overview (Appendix D), Whole Food does not offer online shopping either. This is a good chance for Trader Joe’s to develop more customers.
The Five Forces (Appendix B) indicates that the bargaining power of buyers is moderate to high. Customers have a lot of choice of organic food. To operate online makes Trader Joe’s more reachable to consumers. By investing in online market, Trader Joe’s will be able to take full advantages of its operation strategy and brand image already establish. Recommendation 2: Changing marketing strategy When Trader Joe’s was founded in 1954, the company avoided the traditional supermarket advertising method, such as coupon-filled circulars in the newspapers or television commercials.
It used a customer newsletter, which provide information on certain products and introduced new products. It also used short radio ads. The company did not change its advertising method. Trader Joe’s never ran television ads. Customers typically learned about Trader Joe’s though word of mouth. The SWOT analysis (Appendix C) indicates that Trader Joe’s need to increase its media exposure. Television ads are more attractive to consumers than newsletter or radio ads. Consumers can see and hear the information of products. It just makes people feel like in the store.
It is more reliable to customers. People will pay more attention to the television ads. Television ads usually play over and over again. Television ads will deepen consumers’ impression about Trader Joe’s product and service. Trader Joe’s does not have official social media pages either. The Trader Joe’s only have Facebook fan pages. The potential customers do not have the information access to Trader Joe’s. The company can create the official Facebook pages or Twitter account. It will provide more information about Trader Joe’s. It also can use these social media accounts to advertise.
People pay more attention to television and social media. To step into television ads and social media field, Trader Joe’s will be able gain more customers. Recommendation 3: Improve technology in stores Because of the inefficient checkout process, checkout lines are quite long at Trader Joe’s during busy Saturday mornings and parking lots are crowed. A lot of customers of Trader Joe’s complain about this situation. Trader Joe’s did not invest much in technology in the stores. The company does not offer self-checkout lanes. It also does not have flat-screen television at the checkout counter.
Because of its inefficient checkout system, customer will spend a lot of time in waiting in the checkout lines. It also makes the parking lot do not have enough space for the coming customers. Now time is more valuable for modern people. The inefficient checkout will lose customers. People will balance the price of products with the time they spent in the checkout lines. When they spend more time in waiting to checkout, they will probably go to the place with higher price of product but less time to wait. In that case, Trader Joe’s will lose its customers.
By investing more in technology in stores, Trader Joe’s will be able to make the store operation more efficient and have more customers without complaining about the checkout time or crowed parking lot. Appendix A—– PESTEL Analysis Political factors: The health issue always plays an important role in politics. People consider food safety more seriously. Economic conditions: Trader Joe’s target group is overeducated and underpaid people. The price of organic food is usually high than non-organic food, so consumers must balance their income with desired health benefits.
Sociocultural factors: The organic food market are benefited from an increasingly health conscious consumer. Technology factors: Technology improvement will make product process more efficient. Appendix B——Five Forces Analysis Threats of Rivalry Rivalry within the organic food retail industry is strong for Trader Joe’s as grocers want to gain more market share of the organic market. The main organic grocer competitor is Whole Food. Whole Food is good at communicating effectively with the market. Its stores are located in target market areas and have a larger space than Trader Joe’s.
Threat of Entry The threat of entry by new entrants is low and the exit barriers are strong. It is easier for major corporations to enter the market since they can finance the type of goods the customers are looking for. Threat of substitute products or service Trader Joe’s did not limit their products to only being organic foods. Both Whole Foods and Trader Joe’s attracted health nuts, intellectuals, and foodies. Trader Joe’s primary focus is low price. However conventional store like Wal-Mart, who is known for its low prices, begins offering natural foods as well. Bargaining power of buyers
The demand of organic food is growing. Factors will influence a buyer including costs, customer service, and the store environment. Trader Joe’s wants their customers delighted and satisfied. The demand for food will not decrease and consumers will have a demand for good value products, which have good quality with reasonable price. Bargaining Power of Suppliers The supplier industry is more concentrated. Trader Joe’s has a strong network of suppliers. Stores are expanding the varieties of products they provide like organic product lines and private label store brands.
The supply chain is more integrated than it was in the past. Companies have their own distribution centers, so it is more convenient. Changing suppliers would be difficult for Trader Joe’s. Overall Analysis Based on Porter’s Five Forces, rivalry amongst competitors is high, threat to entry is medium/low, threat of substitute product is medium, bargaining power of suppliers is high, and bargaining power of buyers is moderate to high. Appendix C—–TOWS (SWOT) analysis Strengths Weakness Recognizable brand and loyal consumer Low price Well-known private label throughout organic food consumer
Lacks presence on social media platforms Inefficient checkout system Limited reach and visibility Store location Opportunities Threats Online market New product New market Trader Joe’s competitors have strong social media presence. Trader Joe’s competitors have a larger organic food selection and are located in many local urban areas. Appendix D—-Competitor Overview Whole Foods Market: national leading retailer of organic and natural foods. It achieved 8. 4% same store sales growth in 2012. Whole Food has a stronger social media presence than Trader Joe’s.
It also has a larger organic food selection. Whole Food stores locate in many local urban areas. There are more than 330 Whole Food stores in the United States, Canada and the United Kingdom. Whole Food does not provide online grocery shopping. Wal-Mart: largest grocery retailer in the nation. The company have over 3000 supercenters in the country. It sold groceries as well as general merchandise. Its grocery revenure exceeds $100 billion. The company recently expands its food section. It also provide organic and natural food. Wal-Mart provides some groceries available online.