Trader Joe's and the Natural Food Channel

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Published Feb 14, 2014 | 136 Pages | Pub ID: LA5200995
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Trader Joe's and the Natural Food Channel

Rarely is a retailer a “destination,” but in the case of Trader Joe’s, consumers seek and travel long distances to shop there. A quirky personality and unique products have propelled Trader Joe’s to an $11.3 billion phenomenon, a chain of more than 400 boutique-like stores that appeal to both natural food shoppers and gourmets and command intense fandom.

The chain’s retail strengths echo market strategies similar to its competitor Whole Foods, as both seek to capitalize on growing consumer interest in natural and organic products. Trader Joe’s and Whole Foods share a consumer base. Yet, the striking differences between the two chains are what keep the same consumers shopping at both. At Trader Joe’s, the focus is a sharply edited assortment of great products at great prices. At Whole Foods, the focus is premium quality and huge selection.

In separate chapters, Trader Joe’s and the Natural Food Channel analyzes Trader Joe’s historical growth and expansion strategies, mission/position, store location and design, product standards and programs, use of private label, pricing, advertising and use of social media, organizational structure, ethical and environmental initiatives, consumer demographics and psychographics, and more.

In addition the Retail Competitors chapter examines the wave of up-and-coming competitors in the natural foods space. In the past two years, several growth-oriented specialty food retailers and natural food chains, including Sprouts Farmers Market, The Fresh Market, Fairway Market, and Natural Grocers by Vitamin Cottage, tapped the stock market with initial public offerings (IPOs). Natural Markets Food Group, which owns the Mrs. Green’s Natural Market chain, is said to be eyeing an IPO as well. Then there is startup company Fresh Thyme Farmers Market, backed by Midwest-based supercenter retailer Meijer Co. It also is strongly rumored that billionaire investor Ron Burkle’s private equity firm Yucaipa Cos. plans to revive the Wild Oats Market name, converting the Fresh & Easy stores it acquired from Tesco Plc in November 2013 into Wild Oats natural foods markets. No. 1 supermarket operator Kroger Co., which maintains more than 2,400 stores across the country under regional banners including Kroger, Ralph’s, and Fry’s, is also making a play for the natural and organic food space and considers itself the second-largest player in this market after Whole Foods.

Our sources of information for Trader Joe’s and the Natural Food Channel include primary research entailing interviews with retailers and other members of the industry, and on-site examination of retail stores. Secondary research involved the evaluation and comparison of data from articles found in financial, marketing, and industry publications, as well as on corresponding websites and in consumer social media. Other sources for secondary data include annual reports, 10-Ks, transcripts of earnings calls, and literature from individual companies. Consumer data are derived from Simmons National Consumer Surveys for Summer 2013, from Experian Marketing Services.

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