What: The American supermarket chain has achieved an unprecedented combination of cool and hard-discount.

Why is it important: The retailer’s low-tech business model is e-commerce-free, the in-store experience being the brand’s stronger asset.

Born in California, Trader Joe's has been breaking grocery retail codes for fifty years. It has been owned for more than forty years by the Albrecht family, owner of the German hard-discounter Aldi and which has just bought its alter ego Leader Price in France.

Trader Joe’s has not changed a lot in 50 years and continues to offer competitive prices and a positive customer experience. Today, the brand has 515 supermarkets, opens about 20 stores a year and accounts for about USD 15 billion in sales per year.

A low-tech company

Almost absent from online commerce, Trader Joe's didn’t suffer from the pandemic, despite competitors offering delivery or click & collect options. The queues outside the stores only got longer. This is what is obsessing retail professionals and economics professors with the Trader Joe's model: customers are ready to queue to shop and accept there are no delivery options.

The company assumes being low-tech. It collects almost no data on its customers, does not have a loyalty programme, and mainly runs its communication through a pamphlet printed with "soy-based" inks in which customers discover the best products. "The store is our brand, our products work best when they are sold as part of the in-store customer experience," explains Jon Basalone, in charge of stores. "Amazon's strategy is simple: ‘If you hate shopping, we deliver to your home’. The only way to compete with them is to make the in-store experience something entertaining," says Mark Gardiner, a former publicist who was hired for a few months at TJ's ten years ago and dedicated a book to it.

Revenue per square meter

Trader Joe's is much smaller than Walmart or Albertsons, but its revenue per square metre is unprecedented: almost twice as high as Whole Foods Market (bought by Amazon four years ago). "Trader Joe's strength is to be attractive to all categories of consumers. It's far from the 'discount punishment' model, where you accept a degraded shopping experience to access low prices, "explains Frank Rosenthal, who has taken a multitude of French executives to the U.S. to study Trader Joe's magic.

Nineteen cents a banana

Trader Joe's banana price is unchanged since 2000 (19 cents). The key to the equation: more than 80% of its offer is sold under its brand name. The brand sources itself from a myriad of manufacturers around the world, negotiating ultra-competitive prices in exchange for the promise of volumes.

To optimize its costs, Trader Joe's also has a limited offer: it offers around 4 000 references when competitors can display 50 000. Each store is between 750 and 1 100 sqm, compared to 3 500 sqm for a Whole Foods Market. The customer must be able to shop in fifteen minutes while having that sense of local grocery.

An army of teammates and cashiers

Unlike the European hard-discount, the stores have a lot of teammates and cashiers. They choose people who are naturally extroverted. Restocking is done in real-time to encourage customers and employees to exchange. There is no automatic cash register, but two crew members organising the queue. Trader Joe’s pays better than most other supermarkets and offers good health insurance that attracts seniors in particular.

Trader Joe's, l'américain qui gentrifie le hard-discount