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Dan Bane, chairman and chief executive officer of Trader Joe’s, has honed a strategy that could have been designed for these recessionary times. While it wasn’t, it certainly stands Trader Joe’s in good stead as shoppers become more and more price-conscious.
Not only does the Monrovia, Calif.-based retailer make use of high-quality private-label items — more than 2,000 of them — it also puts a focus on customer service. And recently, via its Fearless Flyer, the company is acting candid with its shoppers about how it keeps costs and retail prices down.
“He [Bane] matches private label with quality and so the company isn’t beholden to any of the big manufacturers,” said Simeon Gutman, analyst at Canaccord Adams, New York.
Gutman added that the small format is a positive, too, because it offers consumers convenience and gives the company a better margin structure.
Overhead is kept down by vertical merchandising in small-footprint stores, while a dash of excitement is added in ways that prevent a bare-bones ambiance.
“Dan Bane is one of the best merchants and thought leaders anywhere in the world,” said consultant Burt P. Flickinger III, whose family goes back three generations in the grocery business.
Flickinger, who is managing director of Strategic Resource Group, New York, told SN that when food industry people come here from other countries, one of the first stores they want to see is a Trader Joe’s. “What’s very impressive is the company’s productivity per property — a quarter to half a million a week per store.”
Neil Stern, senior partner, with McMillan Doolittle, a Chicago-based retail consulting firm, sees Trader Joe’s strategies working particularly well in the current economic environment.
“While Trader Joe’s strategy hasn’t changed, a number of things have happened in the down economy that brings even more relevance to their positioning,” Stern said. “As private-label sales have grown and customers have sought out more value-driven retailing, Trader Joe’s seems to be at the right place at the right time.”
— Roseanne Harper