Laura Nguyen

Professor Jeon
WPC 480
05 February 2020
Trader Joe’s Case Analysis
In this case study, it focuses on the supermarket industry, specifically Trader Joe’s. Trader
Joe’s was different in the sense that it was a smaller-footprint supermarket. One threat that Trader
Joe’s saw early on was the fact that they had tons of imitators. These imitators weren’t just small
mom and pop shops, they consisted of some of the largest retailers in America from Walmart
introducing the Neighborhood Markets to Amazon expanding its grocery business (Ager, 2014,
pg. 2). One strategic action when it comes to addressing these threats is continuing to provide
sufficient value to the consumer which would make the customer want to return more than once,
whether this being by offering lower cost products, deals, innovative products, or a great shopping
experience. These smaller format stores performed well across multiple channels which was
where Trader Joe’s saw the opportunity to open up a store like this. Their main goal was to build
a brand/market for better educated, underpaid people near centers of learning (Ager, 2014, pg. 4).
Their competitive advantage was being able to offer products aimed at sophisticated consumers
who wanted good prices. Their products are known to be of quality yet are low in price, merely
due to the fact that they purchase straight from the manufacturer. Trader Joe’s caters to
“urbanites” and college kids, offering only a select range of products that cater specifically to that
demographic. Young college kids love adventure and trying new things, as well as urbantes. This
allows Trader Joe’s to be able to introduce ~10 new products every week or so without facing
critical backlash. The only input they receive from consumers by doing so is that it creates a
demand since the produce is seen as “scarce” or Rare, which is a part of the VRIO framework. A
strength they have is being able to advertise merely based on Word of Mouth. Trader Joe’s has
never had any form of marketing material, as they lack in the “Technology” portion of the
PESTLE framework. They are very slow to adopting technology in and out of their stores. This
could be seen as a good thing because they are still driving massive revenues yearly, even with
just their Flyers that they give to consumers that just showcase their products. They do not give
out coupons, have a publicist, advertise on TV or the internet, or use social media! This could be
a major weakness because they are not using these resources to their upmost potential. Coupons
lure in customers, especially college students on a budget. If the company started utilizing the
internet or coupons to advertise certain products, this could be the difference between a million-
dollar company and a billion-dollar company! Traction is all the company needs, they already
have good products but if the consumer does not know of or think of the brand in their decision-
making process, then they will possibly never shop here. They saw the opportunity of using their
loyal customer following to give them publicity, thus increasing their chance to even withstand
the highly demanding market without falling into trends such as social media. This takes away a
huge marketing expense that Trader Joe’s would have to pay if they did have it. This can also be
seen as a weakness by some, marketers suggest that having social media could potentially boost
their sales by expanding their marketing efforts. “No matter how awesome Trader Joe’s is, not
having an authoritative voice in social media is a weakness” (Ager, 2014, pg. 6). A strategic
action they could take by counteracting this possibility is to slowly start integrating social media
into their marketing plans. Since their target audience is typically younger college students, they
are most likely than not using some form of social media. By slowly entering social media, this

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 could help them to reach the part of their target audience who don’t even know what Trader Joe’s
is or have ever been in one. This would potentially increase their market share and lure in new,
potentially loyal, customers. Another opportunity Trader Joe’s saw was being able to sell less
products and have smaller stores with about 4000 SKUs, this limited their product selection and
differentiated them from other supermarkets, big or small. 80% of these products were private
label, which meant more exposure for their brand and more profit for the company since they
weren’t using brand names that would otherwise mark up their product cost and take some
proceeds off Trader Joe’s sales. Although they didn’t sell everything that a family would need on
a grocery run, they sold everything that their target demographic wanted from the “cheap-chic”
wine to their sold by unit produce. For the “Imitate” portion of VRIO, Trader Joe’s overall
strategy might seem easy to replicate but with their high-quality natural and authentic products at
very low costs, it’s very hard for any company to come close to replicating their strategy,
especially with a brand that’s built on customer loyalty and trust. They have developed close
enough relations with their suppliers that they both have sworn to secrecy, meaning that their
suppliers do not want other people to know which brand(s) they are due to the fact that they may
be selling at higher costs to other big competitors. This can be seen as a competitive advantage
also. When it comes to the firm’s resources and capabilities, they do a great job at training their
employees with the knowledge and skills of their products, allowing their employees to taste each
of their products so they are well-informed of what they are selling to consumers. They also train
their employees at different tasks/jobs, for example, one employee is not just standing at the
register for hours on end, they are circling and doing different tasks. Their variety of products that
they offer can be seen as a crucial resource because the product and the price are what keeps
consumers coming back. When it comes to their locations of stores, this is a good resource and
capability because they strategically place their stores near or around their target market, which
are located within learning centers. Their innovation is another key capability, their ability to
come up with 10 new products every week and introduce them into stores is unmatched. When it
comes to the “Organization” part in VRIO, Trader Joe’s does exceptionally well at capitalizing on
their culture, resources and capabilities. Their management system allows employees to be well
trained and informed on not only their products and job but their customer service. They are
trained to walk with customers when they are searching for items which builds loyalty and trust
between the company and their customers. It is definitely right to say that Trader Joe’s has a
sustained competitive advantaged based on their VRIO results.

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 Work Cited

Ager, D., & Roberto, M. (2014). Trader Joe’s. HBS No. 9-714-419. Boston, MA: Harvard
Business School Publishing.

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