Mgt 86500 - Trader Joe's Case Analysis

Trader Joe's Case Analysis

Trader Joe's is one of the hottest and most innovative grocery stores in the U.S. (Kowitt, 2010).  It stocks some healthy items, but is primarily known for its tasty and affordable products (Ram, 2012). It’s demonstrating a high level of CSR(Corporate Social Responsibility), while it is branding itself and positioning itself as a community-oriented, eco-friendly brand.

It’s highly profitable.  It offers the cheapest sources of food, minimal space to lower real estate expenses, and a signature shopping experience (Gustaveson, 2011).

It  is growing at a surprising rate.  Let’s analyze the reasons for its success.

Trader Joe's describes their mission as a simple one: Great food + great prices = value (Ram, 2012).  Its low costs may be its greatest appeal to customers.  It searches out tasty, unusual foods from all around the world.  Then it contracts directly with manufacturers and labels each product under one of several catchy house brands  (Schermerhorn, 2011).

Trader Joe's has a deliberately scaled-down strategy.  The company selects relatively small stores with a carefully curated selection of items.  Typical grocery stores can carry 50,000 stock-keeping units, or SKUs; Trader Joe's sells about 4,000 SKUs, and about 80% of the stock bears the Trader Joe's brand.  As a result, its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods' (Kowitt, 2010).

The products of TJ’s are 100% safe for customers because it does not sell anything with preservatives, artificial flavors, colors, MSG, etc. in it.  It does not sell even GMO and China-made food products.  

Trader Joe’s core value is eco-friendly and ethical management.  It has used its Corporate Social Responsibility Initiatives and it is popular with educated consumers interested in health and environment.  The socioeconomic view of CSR is that business should focus on broader social welfare as well as profits (Schermerhorn, 2011).  TJ’s donated a lot of foods.  There are four CSR strategies : Proactive strategy, Accommodative strategy, Defensive strategy, Obstructionist strategy.  The highest end is a proactive strategy which meets all the criteria of social responsibility- economic, legal, ethical, and discretionary responsibilities.  TJ’s has taken the proactive strategy.  It is one of successful examples in business ethical practice.  It was named one of the most ethical companies in the United States by Ethisphere Magazine in 2008~2010.  It proved that ethical companies would achieve growth, innovation and customer loyalty in long term.  And it affected other retailers and businesses.  

Trader Joe’s has performed the management functions of planning, organizing, leading and controlling effectively while fulfilling CSR.  TJ’s Planned growth from corner store to foodie mecca. TJ’s organized following the notion of an upside-down pyramid.  Rather than given orders, crew members are coached.  TJ’s has leaded workers by example.  Teaching managers imbue their part-timers with the customer-focused attitude.  TJ’s controls by Economic Food Democracy.  The control function of TJ’s is the model of an open system.