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Case Study: Trader Joe’s Discount Grocer’s Success Story

Case Study: Trader Joe’s Discount Grocer’s Success Story

During a time when many brick-and-mortar retailers are feeling the pressure from e-commerce and retail giants such as Walmart, Trader Joe’s has relied on simplicity, value and a fun shopping experience to remain competitive. Other grocery retailers, especially discount grocers, can learn from the Trader Joe’s case study. While many others, such as Safeway and Piggly Wiggly, are closing stores or otherwise declining, Trader Joe’s is able to expand and continues to have massive shopper demand.

The discount grocer, which is owned by Aldi, has experienced a lot of recent growth and success. As of 2017, Trader Joe’s had 474 U.S. stores and growing, with about $13.3 billion in revenue, according to UX Collective. Also, Forbes notes that it has plans to open 30 to 35 stores per year in the contiguous U.S. while remaining cautious about creating each store to follow the brand’s values.

A major reason for the grocery chain’s success is a loyal customer base. Supermarket News shared that the 2018 U.S. Customer Experience Index from Forrester Research, which surveyed more than 110,000 U.S. shoppers, listed Trader Joe’s as number one among multichannel retailers. In the index, 87% of shoppers reported that they found shopping with Trader Joe’s an easy experience.

The grocer ranked third in another report, which surveyed 26,000 U.S. shoppers on how well a company understands them and how it ranks on certain emotional cues. The survey found that the best customer experiences had to do with connecting with shoppers by recognizing loyalty and making them feel smart, among other factors.

What Makes Trader Joe’s Different?

Trader Joe’s has set itself apart from other discount grocery stores, creating a real difference that shoppers notice. It helps them stand out from its counterparts, and even people without a Trader Joe’s nearby hear about it and desire this shopping experience.

The store has made this distinction a main part of its brand. The difference comes down to details throughout every part of the shopping experience. The store has recognizable private labels and unique, minimally designed packaging that balances price and value to appeal to shoppers and attract sales. The customer service involves genuine connections, while the store is experiential through samples. Trader Joe’s also offers specialty items that shoppers won’t find just anywhere, encouraging them to return to this retailer.

5 Unique Strategies Trader Joe’s Uses to Boost Shopper Loyalty

Creating shopper loyalty is a prime way the store succeeds. These are some of the ways it creates and maintains loyalty:

1. Simplicity

Trader Joe’s doesn’t complicate its stores, instead offering a streamlined experience. Generally, one of its stores is about a third of the size of a normal grocery store, at 15,000 square feet, with 80% of its products carrying the store’s brands. While those larger grocery retailers tend to stock close to 30,000 products, each Trader Joe’s carries around 3,000.

The freezer section gives a strong example of the store’s simplicity. With open-top coffin cases instead of freezers with doors, shoppers bypass the condensation that gets in the way of viewing and can easily and quickly see the products and grab what they want.

2. Variety

Despite carrying far fewer items than traditional grocery stores, Trader Joe’s provides an abundance of variety. It customizes its inventory based on each store’s location, seasons and other factors, which leads to about $1750 in sales per square foot of store. This customization attracts local shoppers who come for the specialized experience.

The grocer also focuses on stocking innovative, great-tasting foods that shoppers often can’t find elsewhere, which it packages under its own brand name. It provides everything from natural, low-cost staples – like cage-free eggs – to exotic, affordable luxuries – like Belgian butter waffle cookies. And when a product doesn’t sell as expected, Trader Joe’s will replace it with a new item that better caters to shoppers’ needs.

3. Non-Traditional Marketing

Trader Joe’s doesn’t focus on major marketing initiatives like other grocery retailers. It has a simple ad called Fearless Flyer that circulates just eight times per year, and an email newsletter. Other than that, it relies on in-store experiences to market itself. Forbes explains that its marketing goal is to get current customers to purchase more products during each trip rather than to bring more shoppers to the store.

The brand markets through its customer experience, which includes the store, the products and sampling. Sampling accounts for the store’s main marketing expense, which it executes through sampling stations. Also, according to Insider, shoppers can ask to try any product and a staff member will open it to provide a sample.

4. Customer Feedback

The discount grocery chain makes an effort to understand its shoppers by gaining customer feedback. While shopping, store captains and crew members engage them in conversation. They talk to them about their wants while offering samples. The store uses this information to understand which products they don’t currently carry that shoppers would desire while also taking away items they don’t express much interest in.

By talking to shoppers in person, Trader Joe’s creates a more personable experience than if they used focus groups or other detached methods. The grocer is good about listening to feedback and applying it. One example, as reported by Fast Company, shows how a store began stocking a specific soy ice-cream cookie simply because a shopper tried it at a different location and requested it.

5. Local Store Environment

Trader Joe’s focuses on giving each store location a neighborhood feel that is welcoming and friendly while also customized to the area. Each site decorates the walls with location-specific decorations and art. For example, there may be murals depicting local landmarks. This helps shoppers feel at home in the store and feel like the store is an integral part of the neighborhood.

Key Takeaways

Other discount grocers can follow Trader Joe’s example with these strategies:

  • Take a shopper-centric approach. Keep shoppers needs and expectations first when carrying out different business initiatives.
  • Create a memorable in-store experience. Determine what will resonate with your target audience, while focusing on features that will make you stand out from the competition.
  • Simplify the store while offering unique items and variety. Today’s shoppers expect convenience when shopping for groceries. Find ways to keep things simple, while catering to their diverse needs and tastes.
  • Customize the store to cater to the local shopper. Every community is different. To increase loyalty, you must understand local shoppers’ needs and demands, and find innovative ways to meet them.

Trader Joe’s offers a prime example of a discount grocery store that is successful and growing. Other stores can look to it as a case study for strategies and takeaways on developing a successful business model. Ultimately, the grocer’s success comes down to its ability to connect with its shoppers and provide products and experiences that keep them returning. By doing so, the store is able to continue current sales, drive increased shopping loads and create word-of-mouth marketing that brings new shoppers to each store, where they then turn into loyal customers.