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Trader Joe’sCASE STUDY

MARRIOTT CONFIDENTIAL AND PROPRIETARY INFORMATION

CASE STUDY: TRADER JOE’S

Founded: 1958

Industry: Food retail

First Location: 1967 Pasadena, CA

Current Number of Stores: Over 300

Vision: The mission of Trader Joe’s is to give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit.

Total Revenue: $8 billion

Brand Highlights:• Employee Uniforms- Hawaiian Shirts• Manager Title: Captain• Maritime bell used to get

employee’s attention• Company Newsletter and main

advertising vehicle: Fearless Flyer• Signature Wine- Charles Shaw

infamously called “Two Buck Chuck” referring to its low cost

• Use of Trader Joe’s Private Label for more than 80% of products

Trader Joe’s, originally called Pronto convenience stores until 1967, was the brainchild of founder, Joe Columbe in the late 1950s. While completing his business degree at Stanford University, Columbe developed a business plan for a new and unusual neighborhood style grocery store. He envisioned a store that catered to educated lovers of gourmet and exotic foods by offering new and unusual products, but at budget friendly prices. He also wanted to give customers a unique shopping adventure that took them away from a routine grocery store visit, allowing customers to go off to faraway lands, but in a laidback, relaxed atmosphere that reflected the West Coast vibe that Californians loved.

Out of this vision, Trader Joe’s created a niche for itself standing out among small boutique grocery stores and large grocery chains. Today, Trader Joe’s operates over 300 stores across 25 states. It has managed to maintain its neighborhood-like atmosphere, expand its’ base of loyal almost “cult like” supporters, while undergoing aggressive ex-pansion to the Midwest and East Cost. As a result, Trader Joe’s continues to rank at the top of the list among grocery store options with consumers citing outstanding customer service and great prices as the reason they come back.

Introduction

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Consumer Reports Grocery Rankings

89 -88 -87 -86 -85 -84 -83 -82 -81 - 80 -

Customer SatisfactionIn a survey by Consumer Reports the following top five brands ranked 83 and higher in overall satisfaction. Trade Joe’s ranked second at 86. *Range is out of 100.



“At the end of 30 days, if you are not having fun, please quit. You spend most of your life at your job. If you’re not having fun, get out of here.” -John Shield, Former CEO, Trader Joe’s (Famous saying to new employees at pre-store openings)

The Foundation

Trader Joe’s was never intended to be a one-stop shop for customers’ grocery needs, but rather a side excursion for customers in search of products that they could not find elsewhere. Founder, Columbe, envisioned a store that catered to customers’ tendencies to be impulsive in their grocery shopping and seek adventure. He believed that Trader Joe’s should be a place “where people with champagne tastes and beer budgets could feel like they were on holiday.” Trader Joe’s, therefore is a balance between unique style and budget friendly products and services.

The Trader Joe’s approach is based on a distinct set of philosophies and principles including:

• Asceticism - simple layout including limited amenities for customers and staff

• Simplicity - structure, technology, products, marketing, and workflow

• Economy and cost awareness - maximizing efficiencies

• Leadership - belief in company philosophy and culture including modesty, discretion, and self-discipline

• Secrecy - employees are prohibited from interacting with media or third parties

• Fairness - treating people fairly and motivat-ing people to excel

• Customer Focus - understanding the target customer and educating on their products

• Trustworthiness and predictability - consistently offering quality products at low prices

The less is more philosophy and quality over quantity is evident in Trader Joe’s physical layout, staffing, and basic daily practices. To start, Trader Joe’s is one-sixth the size of an average grocery store with most stores having no more than 5 or 6 aisles of food. Instead of traditional white walls, Trader Joe’s walls are lined with photos from customers, highlights of new products written in chalk, fun facts, recycled bags for purchase, and other quirky items that reflect the store’s signature Hawaiian theme.

While most grocery stores pride themselves on having a large fresh produce department, Trader Joe’s produce department is relatively small, and in some instances only 1-2 display tables and 1 refrigerated section. Each store offers only 600-700 products. Additionally, instead of carrying national brands like Kraft and Kellogg, Trader Joe’s products are sold under its own private label. While the products are similar in use, Trader Joe’s puts its unique spin on the titles, often with titles gathered from customers or staff. Store staffing is also relatively straight-forward but with a stylistic twist. Each store is run by a store manager called the ‘Captain’ and an assistant store manager called ‘First Mate’. The remaining staff is called ‘crew members’. Similar to a shipping crew, the Trader Joe’s staff works within close proximity to one another. The managers’ office typically sits in an open space with no doors or walls at the front of the store near the registers. The Captain and the First Mate are regularly seen shouting directions to crew

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members across the store or assisting at the register after hearing the maritime bell ring. Trader Joe’s employees can be found throughout the store wearing company t-shirts or Hawaiian shirts, which are usually earned after working for the company for several years. Every crew member is responsible for delivering the experience while keeping the ship moving at full steam. All crew members stock shelves, provide taste tests of new products, explain product uses, provide alternatives, and share their opinions of their favorite products.

To prepare crew members, Trader Joe’s does not conduct hours of operational training. Instead they combine culture and service training with on-the-job procedural training. The culture and service training involves orienting crew members to the culture, building their understanding of the customer experience and the company values including:

• Integrity• Product driven company• Create WOW customer experiences everyday• No bureaucracy• National chain of neighborhood grocery stores• Kaizen! (Japanese for 1% improvement every

day, or helping others) • The store is our Brand

During daily operations, crew members are expected to constantly multi-task. Unlike other grocery stores, Trader Joe’s crew members stock shelves during peak operational hours to maximize the opportunities for customer interaction. In addition to stocking, they are expected to deliberately make eye contact and start informal conversations with customers. If asked a question about a product, a crew member should never simply tell the customer where the product can be located, but physically

lead them to the product while asking questions and promoting other items along the way.

The company’s successful daily practices stem from the type of people Trader Joe’s hires. In some instances, a store may receive over 200 applications per week for crew member positions. Trader Joe’s focuses on finding people who are passionate about the products and the people with whom they work. Crew members have been known to have their own taste test parties to try new products or work extra hours to support their fellow crew members. The company is disciplined in finding crew members who have innate empathy and judgment, are comfortable carrying on conversations, genuinely care about people, and can deliver an authentic ‘wow’ experiences on a consistent basis.

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“I’ve become a regular [customer] since moving to California. I love them, and I can’t live without them now. They have so many things I didn’t know that I needed.” -Libby Sartine, former head of Southwest Airlines, Human Resources

The Customer Experience

Trader Joe’s creates the experience from the moment the customer enters the front door. The store provides an entertaining and adventurous experience, opportunity to fulfill the customers’ lifestyle needs, and creates a community-like connection.

Fun decorations dot the store where customers move through the cramped aisles to the beat of fun and lively music. Customers can stop by the Tiki-style taste testing hut and get advice on new and exotic products. The fun maritime bell, which became a standard feature in the store in the 1970s, is how crew members signal one another


CASE STUDY: TRADER JOE’S PAGE 4

for help or announce when there’s something exciting in the air. The company has developed a loyal following that is drawn to its cool and unusual products which they cannot find elsewhere. Half the experience is making new discoveries and getting additional recommendations of what may compliment the product. With over 90% of the products offered on Trader Joe’s private label, Trader Joe’s has built another vehicle for building customer loyalty and recognition. The brand introduces 20-25% new items on a weekly basis to entice customers to come and see what might be new and appealing.

Trader Joe’s approach is to invest in the direct customer experience rather than reach out through advertising or other engagement strategies. The famous weekly Fearless Flyer (store newsletter) and chalkboard signage at the front of the store demonstrate a bit of mystery each time the customer returns to the store. The Fearless Flyer introduces customers to new products, recipes, and suggested uses along with a shopping list for the recipes. The flyer style also communicates the laidback and informal store experience with old time cartoons and comics.

Trader Joe’s does not offer deals or discounts as one might see in traditional grocery stores. Rather it relies on regular item sales and the excitement that comes with regularly offering new products. New products offerings are immediately tracked by watching and listening to customers and then communicated to store managers. In many cases this is a simple email notification. Crew members are also given the autonomy to provide their personal product opinion, open any product to provide the customer a taste test, and redirect customers to a better product solution in the store that better meets their needs. Beyond the floor experience, crew members communicate with customers via email with additional product solutions, ideas, or solicit feedback.

The check-out process is the last step in creating the wow experience. Where major grocery chains like Giant, Stop and Shop, Kroger, and Ralphs have a combination of manned and self-check-out cash registers stands with conveyer belts, Trader Joe’s opts for no conveyer belts and no self- check outs. Crew Members maintain informal conversations as they organize items and place them into brown paper or recycled bags. Before saying goodbye, crew members ask if the bags are too heavy, shift items as needed and ask if the customer needs assistance to the car.

Trader Joe’s aims to ensure that every customer leaves the store feeling as if they had fun and that they got a good deal. Customers have bought into the warm and friendly attitude of the store and connect with the crew members who act is if they are their friends while creating an in-timate, neighborhood environment. The focus is on informing and establishing a need among their customers which often results in a sale. By consistently delivering quality gourmet products at discount prices, customers seek the deals and communicate those deals to their friends which ultimately increase demand.

Standing Out

References• Inside the Secret World of Trader Joes, www.money.cnn.com,

August 23, 2010• Lewis, Len. The Trader Joe’s Adventure: Turning a Unique Approach

into a Retail and Cultural Phenomenom, Chicago, IL: Dearborn Publishing, 2005. Kindle AZW file

• The Supermarket of Struggling Artists, New York Magazine, 2007• Gardiner, Mark. Build a Brand Like Trader Joe’s. Bikewriter.com,

2012. Kindle AZW file.• www.traderjoes.com• McGregor, Jena. “Leading Listener: Trader Joe’s” Fast Company,

October 2004.• Trader Joe’s Quirky Mart, www.brandchannel.com• Why The Most Social Brand in the Worls Isn’t Evan Social, http://

smallbusiness.yahoo.com/advisor/why-most-social-brand-world-isn-t-even-224505452.html


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