Case – Trader Joe Harvard Case Solution & Analysis

Case - Trader Joe Case Solution

Introduction

Trader Joe is a retailer company based in the United States.The company uses a different business model, which is a small departmental store in the local areas of the different cities in the United States. During its inception, the company had low capital and started with a small department store. Trader Joe targeted those customers who wanted value for money products. Products with low price also have low margins since the volume of the sales is high. Trader Joe sells products under the label of the company’s such as Trader Ming and Trader Jose and etc.The employees and staff at the company are highly motivated and passionate about their work, which is why the employee turnover rate is low at Trader Joe as it pays higher salaries to the employees as compared to its competitors.

Trader Joe is ranked 1st in the recent survey of best super markets. Trader Joe is one of the most innovative super markets in the United States.Trader Joe’s business model is very effective and profitable, which focuses on small stores in the local area of the different cities in the United States. Due to the attraction of the business model, multinational and big domestic retailers also wanted to get into this sector through opening the small local stores. Thus, this issue threatened the profitability and future prospect of the company. Recently, the world’s largest retailer, Wal-Mart entered in this sector by opening small stores in different cities, and within a year the first ten stores opened by Wal-Mart became profitable. Many other retailer companies also showed interest in this business such as Target, Kroger, Giant and Tops etc. These large companies threaten Trader Joe given their new and innovative ideas. The biggest example of innovation is Amazon as it provides online grocery market.

Problem Statement

What should Trader Joe's do to ensure continued growth?

Analysis

SWOT

Strength

Motivated employees: Recently, there was a survey in the United States regarding the “best employer with whom the people want to work with”, and in that survey Trader Joe was ranked the top most preferred company where people would want to work. Employees are highly motivated and passionate to do their work better than previously done. Moreover, the employee turn over rate is also low at Trader Joe as it provides higher salaries as compared to its competitors.

Low capital intensive business: The business model shows less amount of capital in this business as there are small 10000 square feet stores and their fixed cost and overheads are also very low, which is why running such a business can be possible with low investment.

Lower pricing: Trader Joe consistently considers reducing the cost of its products from suppliers without decreasing the quality of the products, overheads and relevant costs minimization can be done easily by Trader Joe. Therefore,it gives better reasonable margin.

Respect in market place: Trader Joe is one of the most respected brands in the industry as well as its products labels have also become competitive brands in the market. The survey indicates that Trader Joe is the leader in the small store business.

 Weakness

Less space for parking: It has become a major issue for Trader Joe now a days as local customers find it difficult to get a spot to park their car, and since this is the case, the company may lose its customers’ loyalty.

Lacks innovation: This is one of the main challenges being faced by the Trader Joe as customers tend use better and innovative products, which are different from the previous products used by them. However,Trader Joe has good pricing however,it is less innovative which might result in the reduction in customer satisfaction

Difficulties in financing:Trader Joe should seek low cost of financing, which would increase its profitability, however its management has some problems in convincing the financiers to finance the company at lower rate of return....................

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