Session 13 (Trader Joe's)

Question 1

Trader Joe’s original target market

Answer 1

Aimed to cater to ‘overeducated and underpaid individuals’

Question 2

Employee pay and culture

Answer 2

paying employees a good
wage. With its distinctive South Seas
theme stores, store managers were called
“Captains.’

Question 3

Rivalry among existing competitors

Answer 3

• threat of new entrants: few new entrants, many smaller stores dying out, consolidation in the industry
• bargaining power of buyers: many customers appear price sensitive
• threat of substitute products or services: many retail formats are competitors (pharmacy, wholesale clubs, online)
• bargaining power of suppliers: varies depending on size of suppliers; large suppliers have power, small suppliers lack power
• overall rivalry: intense rivalry, little differentiation, large players drive down prices

Question 4

Overall strategy of Trader Joe’s

Answer 4

• Combines low-cost operations with unique private-label products, delivering high perceived value at low prices.
• Trader Joe’s creates value by offering a limited but curated product selection, avoiding complexity in operations.
• Success is deeply tied to culture, employee engagement, and a fun, discovery-based shopping experience.

Question 5

Trader Joe’s Trade-offs as Strategic Discipline

Answer 5

The company succeeds by clearly choosing what not to do — no coupons, no brand-name goods, no traditional advertising.

Question 6

Why is their strategy difficult to immitate?

Answer 6

• Its system of tightly linked activities makes it hard for rivals to replicate without undermining their own models.
• But… scaling the business or expanding online presents risks to its tightly woven activity system and brand identity.

Question 7

How might Trader Joe’s lose its competitive advantage?

Answer 7

1. Growing competition from online retailers like Amazon
   and Walmart.
2. Risk of losing brand identity as the company expands.
3. Limited online presence reducing competitiveness in e-
   commerce.
4. Operational issues such as long checkout times and
   crowded parking

Question 8

What are some strategic recommendations for Trader Joe’s?

Answer 8

1. Expand e-commerce presence while maintaining the unique in-store experience.
2. Leverage technology, such as developing a mobile app for personalized promotions.
3. Strengthen marketing efforts through social media, digital newsletters, and in-store events.
4. Grow in targeted areas—specifically highly educated and densely populated regions—while maintaining service and product quality during expansion.