Trader Joe’s creates a unique shopping experience with its tropical theme, free samples, and a constant rotation of products. According to the Labor Department data, grocery prices surged 1.8% from December 2023 to December 2024, marking the fastest increase in over a year. With 608 locations and an average revenue of $16.5 billion a year, how is Trader Joe’s able to keep its products so cheap?
The real Trader Joe was a man named Joe Coulombe, who was born in 1930. Coulombe opened his first Trader Joe’s in Pasadena, California in August 1967. Filling into the name Trader Joe’s, gives what kind of strategy Coulombe had with his suppliers and making deals. It all started with his egg supplier having an overabundance of extra large eggs and offered to sell them for the same cost as their large eggs. Coulombe was thrilled that ordinary supermarkets could match his lower price. Because of this transaction, he set out to find other suppliers that could give him similar deals. Creating the mindset of product discontinuity and became something known in Trader Joe’s. Now Trader Joe’s buyers search throughout the world to find products they think their consumers will like.
About 80% of the products Trader Joe’s carries are private label, which means everything sold by Trader Joes will be labeled with “Trader Joe’s.” While other grocery chains pay extra for buying the name-brand products from mass-market suppliers, they are able to cut out mass-market suppliers and buy the food directly from the source.
Trader Joe’s has low costs on their advertising and operational costs. All stores don’t have a full-service butcher shop, bakery or café. The brand is heavy on energy-efficient lighting and cost-efficient packaging. Because of these cuts, Trader Joe’s is able to pass those savings on to the customer. Mostly relying on word-of-mouth and social media to bring in more customers, Trader Joe’s only advertising is their exclusive newsletter, Fearless Flyer. The goal of the newsletter is to keep their customers informed about new products or older products that might be leaving the shelf.
Trader Joe’s is able to make a fun, affordable and unique shopping experience. Having affordable options makes Trader Joe’s stand against its competitors without having a huge amount of money going to advertising, suppliers and operational costs.
Sources
https://www.businessinsider.com/why-trader-joes-is-so-cheap-2018-10
https://dailyvoice.com/ny/manhasset/rise-in-food-prices-goes-beyond-eggs-heres-rundown/
