Analysis of Trader Joe



Trader Joe’s

In July 2013, Market Force Information released the results of a new study in which over 6,000

Americans ranked their favorite supermarkets in a variety of categories. Trader Joe’s ranked No. 1

overall.1 Consumer Reports ranked Trader Joe’s the second-best supermarket in the country in 2012.2

One year earlier, Fast Company named Trader Joe’s the 11th most innovative firm in the U.S.3

Hundreds of people waited in line for the doors to open on March 22, 2013 at the grand opening

of Trader Joe’s in Columbia, South Carolina. Local police directed traffic, and people hunted for

parking at nearby businesses because they couldn’t find a spot in Trader Joe’s parking lot.4

Customers arrived at 3:00 a.m. on June 29, 2012, to line up for the opening of a new Trader Joe’s in

Lexington, Kentucky.5 That same scene played out at new store openings around the country. Job

seekers flooded the firm with applications when they learned of a new store. Meanwhile, retail

experts marveled that the quirky grocer generated much higher sales per square foot than any of its


With all that success, Trader Joe’s had attracted imitators. Tesco, the world’s third-largest retailer,

had launched a chain of small neighborhood markets in the western United States. The British firm

appeared to borrow extensively from the Trader Joe’s concept with its Fresh & Easy stores. In April

2013, Tesco announced that it was withdrawing from the U.S. market, hoping to find a buyer for its

approximately 200 stores. The British retailer recorded a $1.8 billion loss associated with its failure in

the U.S. market.6

Tesco’s troubles did not discourage other retailers from introducing smaller-footprint stores. Wal-

Mart, the world’s largest retailer, had experimented with its Neighborhood Markets concept since

1998. These smaller grocery stores differed from traditional Wal-Mart supercenters in size and

product variety. They were roughly 38,000 square feet in size and only offered grocery and pharmacy

items. The Neighborhood Markets concept had evolved over the years and recently began to show

promising results. In 2011 the firm launched Wal-Mart Express, a 12,000–15,000-square-foot store that

the company described as a “bit of a hybrid between a food, pharmacy and convenience store.” The

first 10 stores turned profitable in one year.7

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