Trader Joe’s Inspires Store-Brand Cult

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My friend Ray, a Milwaukee native now retired and living in Florida, is a fanatic Trader Joe’s shopper. Ray and thousands of other shoppers across the country have a cult-like desire to shop for exclusive grocery items at bargain prices. The national chain has established a unique position for its offerings:  Inexpensive gourmet groceries.

A typical Trader Joe’s stocks only about 4,000 products, compared to the 50,000 items found in the average store.  And the assortment of products is uniquely Trader Joe’s: high-quality packaged foods, ready-to-eat soups, fresh entrees and appetizers, and gourmet items, such as wasabi peas, dark-chocolate-dipped fruit, and fair trade coffee.

Eighty percent of the store’s brands are private label, which means you can’t get them anywhere else.

The increased popularity of store-brands nationwide can be explained by frugal shopping during the recession. But, according to a recent article in the New York Times, “to the surprise of consumer and food analysts, sales of store brands have remained strong even as the economy recovers.”

“There is really widespread acceptance of store brands among consumers,” Janet Eden Harris, senior vice president of Market Force Information, reported in the Time’s story. A recent Market Force consumer survey found that 96 percent said they bought private-label brands at least some of the time.

A taste test done by the Huffington Post compared Trader Joe products against the suppliers’ brand name products. They concluded, “The difference in taste and quality is so slight that it’s almost nonexistent.”

How does Trader Joe’s keep their prices low? One factor is buying direct from suppliers. Private label products reduce space requirements and keep inventory costs low. Trader Joe’s also partners with their vendors to introduce innovative products. The stores spend almost nothing on advertising. Promotion is primarily through word-of-mouth, supported by their website and a consumer-friendly monthly newsletter.

Trader Joe’s regularly ranks highest among supermarkets in industry studies. Their small store size and high sales volume results in average sales of $1,750 per square foot. That’s twice the industry average.

For years, my friend Ray has been emailing and urging Trader Joe’s to build a store near his Florida home. Last month, he finally was rewarded when the retailer began construction for a new store in Tampa. Ray is a happy member of the Trader Joe’s cult!

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