There are several key sources of Trader Joe’s competitive advantage, including offering great bargains on products that are not typically found at other supermarkets. Trader Joe’s also chose to sell natural and organic foods aimed at well-educated, sophisticated consumers. Trader Joe’s also believed strongly in paying its employees a good wage, leading to higher employee satisfaction and a better quality of service within each store. In addition, the company embraced an everyday low pricing philosophy.
More than 80% of Trader Joe’s products are private label (including their well-known private label wines). Also, they are able to reduce costs by purchasing directly from the manufacturers (as opposed to the distributors). Their marketing campaigns rely heavily on word of mouth and fan pages created by loyal customers.
Given my answer to question #2, TJ’s business model would be difficult for competitors to imitate given a variety of reasons. First, employee commitment is extremely high due to high wages and increased employee benefits, which generates a very engaging experience for the customers. In addition, the company has thousands of vendor relationships all over the world and this takes time and skills to develop. The company’s model also relies on small stores with an intimate feel, a limited but unique selection of products that are free of preservatives, have no artificial color, and contain no genetically modified content, a highly motivated and well-paid work force, and excellent customer service. The great customer service offered by TJ leads to higher customer retention and loyalty, making it difficult for other firms to steal these customers away.