Trader Joe's Business Research

Executive summary

The purpose of this report is to examine how Trader Joe’s will be able to increase its market share and to recommend courses of action that will also increase sales and customer satisfaction by offering an organic coffee shop in its stores.

The specialty food grocery store has become one of the fastest growing segments of the grocery market, which has resulted in becoming an increasingly competitive environment as new chains are opened. Trader Joe’s has become one of the most successful specialty food retailers, with revenue of over $12 billion for FY 2014 at 418 locations that employ over 10,000 people, placing it in the top twenty of the Supermarket News rankings for sales among the top 75 retailers (SN’s Top 75 Retailers, 2010). Additionally, Businessweek reported on the company having the highest sales per square foot of any grocer in the United States while Fortune magazine estimated Trader Joe’s sales of $1,750 per square foot is more than twice the sales generated by its nearest competitor, Whole Foods (Armstrong, 2004; Kowitt, 2010).

Introduction

In order to focus our efforts and develop the most comprehensive business strategy while maximizing our potential to increase Trader Joe’s market share, the team utilized the six steps of the business research process as the foundation for developing recommendations. The research purpose was to identify if a customer interest/market exists for Trader Joe’s to include an organic coffee shop in its stores.

As Trader Joe’s contemplates the addition of in-store coffee shops that provide a variety of healthier options at a competitive price point, the team identified several risks that are associated with expansion. These risks include current level of management, coffee shop operations knowledge and experience, and the store capacity to accommodate the additional strategy. Additionally, the team concluded there being a positive outlook for the growth of the organic coffee shop market that Trader Joe’s could successfully enter due to its current market dominance. Furthermore, in order to solidify Trader Joe’s commitment to local community growth, the company is exploring ways to contract some of the store coffee shop operations to local coffee shops, to include the possibility of participating shops offering a limited number of their products for sale in the Trader Joe’s store. The addition of an organic coffee shop would increase traffic into the store; a coffee run could result in the consumer also visiting the grocery section and ultimately purchasing Trader Joe’s products.

Trader Joe’s is a fully self-financed company that is privately held, with the owners being passive investors who have relinquished operational control to the CEO. The current CEO is Dan Bane who approaches expansion with caution due to the challenges traditionally associated with