Brand secrets of Trader Joe’s
Business Week reports on what makes Trader Joe’s so attractive to customers. It includes a number of examples comparing the shopping experience at Trader Joe’s vs. shopping at conventional supermarkets. Well worth reading.
Brand first, store second
As I see it, the key to Trader Joe’s success is that it’s a brand first, and a store second. The brand imparts a unique customer logic (or customer predicate) to the store, and customers interact with—and evolve—this logic, giving the store a very intimate feel, even without the usual jam-packed aisles. It’s a brand approach in which Trader Joe’s presents itself as a buying agent for customers rather than as a grocery chain trying to unload stuff from its shelves.
Private labels are the stars of the show
Trader Joe’s carries about 2000 products, and about 80% of these are Trader Joe’s own brands. At most grocery stores, such private labels maintain a secondary presence. They exist as a means to under-price selected “name” brands in certain categories. At Trader Joe’s, however, the store brands are the stars of the show. They evoke the brand logic; they forge customer connections; and they produce a much more integrated shopping experience than the brand cacophony of conventional grocery stores.
Trader Joe’s scales its brands to customers
What’s also unique is that Trader Joe’s scales its own brands to customers. There’s no marketing megaphone hyping products from on high. That helps make the brands eminently social, and sociable. They are brands in the context of the customer, not brands in the context of a far-off producer, or a third-party media campaign. At Trader Joe’s, store, products and customers move largely as one.
March 12th, 2008 at 6:38 pm
Hi Brian - thx for your post. I don’t live in the States, so forgive my lack of experience with Trader Joe’s, but I was interested to get your perspective on how you feel these three ideas play out for a retailer like Costco? Having met buyers there before, it feels to me like there are some possible parallels.
March 12th, 2008 at 9:58 pm
Damon — I think you’ve made a valid observation. A lot of people I know do much of their shopping at Costco and Trader Joe’s, and consider the stores complements. Both stores are known for obtaining high quality/high value items for customers. In terms of buyer philosophy and approach, there’s probably not much difference between the two, except, of course, for Costco’s scale and package sizing.
At both places, shopping feels like an adventure. Even though a Costco may be 20X the size of a TJ’s, and by no means “intimate,” I never feel lost in one. The value landscape is quite friendly.
The big difference (apart from scale) is that Costco carries many more basics, hard goods, clothing, bulk foods, books, etc., while TJ’s is mostly a packaged food store.
Most brands in a TJ’s are TJ’s own brands. Historically, Costco has relied much more on major name brands, with some co-branding. However, the Costco brand (Kirkland Signature) has recently become more prominent at Costco stores, effectively taking over some categories. It’s generally of very good quality at a great price, so it’s hard to beat. (A Costco co-brand generally seems to be the precursor of a Costco own brand, 12-18 months down the road.) I foresee many more Costco brands in Costco’s future.