Trader Joe’s and Creating the Ultimate Branding Model
By Bill Bittner, President, BWH Consulting
Ok, this is not going to be a technology article. I have always thought of myself as a businessperson with a technology habit. I have never been totally enamored with the latest technology, preferring to understand the business results to be achieved. The speed of the latest CPU or the cleverest wireless device have never been that important to me. For that reason, this article is a little embarrassing.
The business has been abuzz over Trader Joe’s for some time, but it is only by chance that I had the opportunity to visit one as I was driving through Westwood, NJ the other day.
First, let me take this opportunity to publicly apologize to the driver behind me when I slammed on the brakes. Having made the turnoff dent free, I proceeded to spend forty-five minutes walking around the store. I really enjoyed it. I talked to a few customers and would have bought something if the lines hadn’t been so long. That didn’t seem, however, to bother the customers. I was even impressed with the men’s room, although that is merely a compliment to the outside service that maintained it.
What I found most interesting was the lack of national brands (nothing new to many here, I know), which caused me to start thinking about what that meant. Here is a retailer that has managed to build the image of their own brand to a level of acceptance that not only means people buy the brand, but are willing to make an extra shopping trip just to get it. All the customers I spoke to admitted this was not their only weekly shopping trip. They were going to have to make another stop for some of their needs. Yet the superior quality and uniqueness of the Trader Joe’s products made it worth the hassle for these people to shop there.
Moderator’s Comment: In today’s time pressed environment why are consumers willing to make an extra shopping trip to a store such as Trader Joe’s? What
is it that makes Trader Joe’s such a success?
I think the lesson I learned from the Trader Joe’s phenomenon is there is a dichotomy of shoppers out there. Yes, there are the time pressed and price conscious
shoppers who wish only to get as much for their dollar as possible in as short a time as possible. On the other hand, there are shoppers willing to take a chance on an “unbranded”
product and even go out of their way to do it.
This reflects back to some of our earlier discussions about branding and banners. Although not promoted nationally, the consumer knows what to expect of
the products in a Trader Joe’s. The extensive store brands enable the consumer to try a new experience with confidence while allowing the retailer to negotiate costs. The private
label costs are determined by the business relationship. This might be considered the “ultimate branding exercise” because the product and retail brand have become synonymous.
I guess another version of this business model is the Save-A-Lot stores for the “extreme price” consumer. Although they are not targeting the same consumer,
they also feature much of their own private label and the limited assortment requires another shopping visit. Again, with over $4 billion in sales, it seems some price conscious
consumers are willing to deal with the inconvenience. –
Bill Bittner – Moderator