Trader Joe’s and the power of private labels

If you’re in retail, you can use private label brands for strategic advantage. The key is to make your private labels deliver a brand experience that’s totally tuned to your customers. Trader Joe’s is a classic example of how a retailer can use a private label approach to attract legions of devotees. “The Tao of Trader’s Joe’s” in the June 6 SF Chronicle describes the Trader Joe’s phenomenon and some of the reasons for its success.

The power of private labels
Eighty percent of Trader Joe’s merchandise carries TJ’s private label. The logic: why sell someone else’s brands when you can use your own brand to add value to your merchandise, to strengthen your identity, to deliver more value to customers, and to bolster your bottom line? A private label brand strategy gives you control of the brand experience within the store, at macro and micro levels.

If you’ve been to a Trader Joe’s, you’ve noticed that their brands are low-key, playful and down-to-earth. They’re friendly. Conversational. They don’t slam you with a retina ravage of graphics, nor do they pretend to be Olympian icons. You soon realize that the store and its contents are designed in the context of you. It’s a personal place. The Trader Joe’s brands don’t advertise themselves; they accent you.

In many respects, the pleasure of shopping at Trader Joe’s is that it’s not a supermarket. It is the anti-supermarket.

A contrast of brand experiences
In most supermarkets, the “brand experience” consists of wheeling a large cart through virtual gauntlets of brands up and down freeway-sized aisles. Thousands of brands compete for your attention. Although you are the “shopper,” it’s the brands who act as predators; you are the prey. Typically, the supermarket acts as impartial host in this free-fire zone.

In contrast, Trader Joe’s turns down the brand volume. Their brand voice is chatty, often witty. Even though most TJ stores are small, and often crowded impossibly jam-packed, you amble through them in a spirit of relaxed discovery, eyes alert for anything new that might be tasty, special, healthy and affordable. Finding all four is not that hard.

Private labels and value opportunity
The private label strategy is part of Trader Joe’s brand vision. The Chron cites a quote from Trader Joe’s President Doug Rausch: “We went into private labels because of the value opportunity, so we could put our destiny in our own hands.” Rausch then adds: “Over time, the consumers built confidence in our private label. That made them more likely to try new things in our stores.”

A graphic comparison of the aisle experience at Trader Joe’s and most supermarkets might look like this:

(Graphic made with Gliffy beta as part of ongoing test. Jpg rendition still quirky.)

I previously wrote about Trader Joe’s here.


2 Responses to “Trader Joe’s and the power of private labels”

  1. David Armano Says:

    THAT is a wonderfully simple and accurate visual of the Trader Joe’s experience. The store is much more organic in flow than the traditional Supermarket and don’t even get me started about the checkout. It blows away the big chains. I only shop at the biggies when I need “kid food”.

    BTW, fantastic blog. I’m adding you to my blogroll and will check you out more often.

  2. Brian Phipps Says:

    Thanks for feedback. I get L+E in my Bloglines RSS, and it’s always interesting. I’m way behind in updating my blogroll, and when I do L+E will be on it.

    I think Trader Joe’s demonstrates that it really doesn’t take all that much to produce a winning brand experience. You just need a brand vision that includes the customer as an equal. That’s something the “bigs” have a hard time grasping.