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Trader Joe’s combines the value of a limited assortment store with the quality and customer service of a specialty grocer. And shoppers can’t get enough.

In today’s bifurcated grocery marketplace, much of the growth is happening at the two extremes: in limited assortment, extreme-value outlets and high-end specialty stores. Somehow, Trader Joe’s manages to be both. With more than 550 stores across 40-plus states, the Monrovia, Calif.-based chain is something of an anomaly in today’s marketplace. Similar to Aldi, much of its compact assortment is private label, so the value proposition is strong. But the high quality products are so innovative and unique — and the employees so knowledgable and friendly — that it could easily be mistaken for a high-end specialty grocer.

‘Unlike its competitors, Trader Joe’s doesn’t have to buy customer loyalty. They’re already loyal.’

Mini chicken tacos are among the newest frozen items at Trader Joe’s, which is known for its ever-changing assortment.

Because it offers the best of both worlds, Trader Joe’s often finds itself at or near the top of various industry “best of” lists. In just the last few months it grabbed the No. 1 spot on both the American Innovation Index and the Axios-Harris Poll 100, which ranks the reputations of the most visible U.S. companies. The chain was also listed among the top 20 in a special inflation edition of dunn-
humby’s Retailer Preference Index. And that’s just a small sample of recent honors. What’s the secret to Trader Joe’s success? 


“It’s the three Ps: Price (the value is superior), Place (consumers actually enjoy going to the store) and People (the staff is happy and helpful),” says Gary Stibel, founder and CEO of Westport, Conn.-based New England Consulting Group. “Honestly, it’s a great half hour — a very pleasant place to shop,” he says. 

“It’s a winning brand promise that’s backed by superior execution,” adds Jim Hertel, senior vp at Inmar Intelligence, Winston-Salem, N.C. “Own brand names like ‘Trader Giotto’s’ on frozen Italian meals bring a smile, while the hand-drawn prices and on-shelf product descriptions are anything but corporate.” But he agrees that one of the best parts of any visit to Trader Joe’s is that third P, the people. Not only was staff plentiful during his last trip to the store, “Each [employee] was friendly, outgoing and clearly happy to be there, which was really refreshing. It’s one of the many reasons the chain has such a loyal customer base — without an actual loyalty program.”

‘It’s a bit like Aladdin’s cave for food — where hungry people go to search for treasures.’

While industry observers admit that a loyalty card might yield some interesting data, “The lack of it doesn’t seem to stop Trader Joe’s from having an intuitive understanding of its customers,” says Neil Saunders, managing director at New York-based GlobalData Retail. Moreover, “Because the proposition is so strong, customers are naturally loyal,” making a formal program unnecessary.

A robust assortment of “near restaurant quality” ethnic meals helps make Trader Joe’s frozen department a destination.

Stibel puts it more bluntly: “Unlike its competitors, Trader Joe’s doesn’t have to buy customer loyalty. They’re already loyal.” That devotion combined with the chain’s no-promo EDLP strategy makes a loyalty program that offers discounts only to members even less necessary, he says. But doesn’t every shopper love a good sale? “The impression consumers get is that the value is so great that I get the best prices all the time, so there’s no need to wait for a sale like at other retailers,” which can be both frustrating and time-consuming, says Stibel. “So the lack of promotion actually reinforces the value proposition.”

While some may miss the thrill of deal-hunting, Saunders says Trader Joe’s dynamic assortment delivers plenty of excitement. “It’s a bit like Aladdin’s cave for food — where hungry people go to search for treasures,” he explains. (Since the recent return of demos, hungry people can now find samples, too, though the program is expected to focus more on new products versus items already on the shopping list.)

Industry observers describe the range as “unique,” “innovative,” “on-trend” and “about as far from generic as you can get.”  But what really makes shopping at Trader Joe’s a treasure hunt is the fact that the assortment is constantly changing. “Most retailers invest so much time and resources into product development that they hold on to new items as long as possible to ensure an acceptable ROI. But Trader Joe’s makes no apologies for discontinuing a product as soon as its velocity doesn’t measure up to its benchmarks,” explains Karen Kelso, vp of retail insights for mass and club at New York-based Kantar. “So when you purchase an item at Trader Joe’s, there’s no guarantee it will still be there the next time you visit,” prompting experienced shoppers to pick up favorite items “whenever they see them” lest they disappear. 

“Loyal Trader Joe’s customers have an ingrained FOMO (fear of missing out) that drives impulse purchases,” Kelso continues. “The chain’s obsession with [offering] new and better keeps customers returning frequently. It’s a characteristic that larger, less nimble retailers can’t match.”

The retailer’s commitment to innovation is on full display in the frozen department, which experts agree is a standout. Heavy on meals that combine “near-restaurant quality” with convenience — not to mention the fact that they’re only available at Trader Joe’s — the destination department is a bona fide trip driver, according to Hertel. Beyond the unique assortment, “I love the open coffin freezers, which are very easy to shop, and the shelves above them that are stocked with complementary items like harissa paste and tahini merchandised over ethnic meals,” he says.

“It’s very different from the typical supermarket, which is packed with legacy brands,” adds Stibel. “People go to Trader Joe’s specifically for frozen foods,” which is a real testament to their quality.

Trader Joe’s gets high marks for innovative, authentic frozen items, including pizza from Italy.

That’s no accident, says Kelso. “Trader Joe’s goes to great lengths to source the best quality, most authentic products (think pizza imported from Italy and mangoes from Australia), and it’s very responsive to current food trends,” she notes, citing new plant-based bulgogi and make-your-own boba drinks as examples.

Proof of the department’s popularity with shoppers comes from Stibel’s observation that “I’ve never shopped the frozen department when it’s fully stocked. It’s so heavily shopped that the chain is frequently out of stock on some items.” Though some might interpret that as a strength since it creates demand (“People want what they can’t have, so they’ll keep coming back for it”), Kelso believes some improvements in the area of logistics and supply chain would help Trader Joe’s maintain a more consistent supply of high-demand items. 

‘The frozen department is so heavily shopped that the chain is frequently out of stock on some items.’

“Trader Joe’s has grown beyond its systems, and the network is struggling to keep up with the volume to efficiently service its vendors and stores,” she says. “[I’d suggest] investing in automation and better IT capabilities.” Because even though shoppers can’t buy an out-of-stock own brand item elsewhere, disappointing loyal customers is never a good idea.

But investing in new technologies while still keeping prices low requires a delicate balance, says Saunders. “Things like scan-and-shop and online [ordering] would be beneficial additions and, indeed, are things customers often ask for.” Stores are often busy — and crowded parking lots are legendary (in all the wrong ways), “So people would love to simplify and speed up the shopping process,” he explains. “However, those sorts of initiatives would be expensive and disruptive and would run counter to Trader Joe’s business model of keeping things simple so it can keep prices low.” He adds that some stores would also benefit from a bigger footprint to better accommodate crowds and display its full range to optimal effect. “But again, that would come at a cost, and Trader Joe’s is very good at balancing what it needs to do to stay ahead against spending money just for the sake of improving things.”

After a pandemic hiatus, demos are back! But the company says it will focus more on new items than products already on the shopping list.


OK, but even Aldi, which currently offers online ordering through Instacart, is rolling out its own e-commerce platform. If the low price leader can do it and still keep prices in check, why can’t Trader Joe’s? Beyond the obvious challenges associated with attempting curbside pickup in a Trader Joe’s parking lot, the company doesn’t want customers ordering online. “For us, the store is our brand, and our products work the best when they’re sold as part of this overall customer experience within the store,” said president of stores Joe Basalone in a recent interview with The Kitchn. “We’re not ready to give that up. For us, the brand is too important, and the store is our brand.”

Stibel gets it. “Driving people to [a computer] is a poor alternative to asking them to visit you in-store because it’s the experience that makes Trader Joe’s unique,” he says. “It’s a key differentiator. So the chain doesn’t want to do anything that makes customers not want to visit their stores.”

Kelso agrees, but only to a point. “Trader’s Joe’s considers its in-store experience, including friendly, knowledgable team members who can provide advice and assistance, a fundamental part of its brand. And having shopped multiple retailers, I believe its customer service really is head and shoulders above everyone else.” However, she continues, “all of our data indicates that e-commerce and omnichannel options are firmly embedded in shopper preferences, and this is a long-term, sustained trend that we don’t expect to change.” Will the lack of online ordering hurt Trader Joe’s during the next year? Probably not, says Kelso. But will it impede the chain’s ability to compete in three to five years? “Almost certainly.”


As shoppers battered by inflation traded down from mainstream supermarkets, Trader Joe’s almost certainly picked up market share during the course of the past year, says Saunders. He expects continued growth in 2023, but more so from singletons than families, who may gravitate more to Aldi (which, contrary to popular belief, is not owned by the same company as Trader Joe’s, though they do share a common ancestor).

But Kelso believes Trader Joe’s could do better than expected as the impact of inflation finally trickles down to the chain’s middle- and higher-income customer base. “When high inflation rates became evident, lower-income shoppers were affected immediately and changed their purchase behaviors,” she explains. “But as inflation drags on and becomes more pervasive, it’s affecting more affluent shoppers as well, [and] they’re behaving more cautiously.” 

She adds that Trader Joe’s positioning is similar to Whole Foods (better-for-you, natural, organic, etc.). “But unlike Whole Foods, Trader Joe’s everyday value offer is much more accessible.” Might some of those shoppers make a change? Time will tell. Bottom line, says Kelso, “As away-from-home eating continues to be affected by macro conditions, we believe grocery stores with value positionings will thrive, and that includes Trader Joe’s.” 

Still, margins will be a challenge, says Saunders. “Trader Joe’s needs to walk a tightrope between maintaining its margins and maintaining its reputation for value.” 

What other obstacles could get in the way of growth? Stibel says inflation will be the biggest, but he believes Trader Joe’s private brand assortment will help lessen the impact. “If Coke or Doritos are on sale somewhere for 25 cents less, I might go there. But Trader Joe’s offer is mostly captive brands, so I can’t buy them at Kroger or another supermarket,” he explains. “Yes, it will be painful when a $50 or $75 trip turns into a $90 trip, but I think Trader Joe’s will tolerate the inevitable price increases better than the average grocery chain.”

Supply chain disruptions, on the other hand, could have an outsized impact on Trader Joe’s compared to other retailers. “In small-format limited assortment stores, each SKU plays a disproportionately important role because there aren’t as many substitutes on the shelf,” says Hertel. “What’s more, the many unique items in Trader Joe’s range with destination appeal mean that out-of-stock items are that much more meaningful to shoppers and that much more difficult to source from other suppliers.”

‘Trader Joe’s needs to walk a tightrope between maintaining its margins and maintaining its reputation for value.’


With a dozen or so new stores already open or scheduled to open yet this year, Trader Joe’s continues its steady expansion. However, says Saunders, there’s still plenty of room for growth as many communities still don’t have easy access to a store. “People will travel further to Trader Joe’s than for most grocers, but there are limits. There are a lot of pockets where the chain could infill with new stores.” He adds that since Trader Joe’s isn’t online, “Having good coverage of stores is critical for growth.”

“Trader Joe’s is firing on all cylinders,” concludes Stibel, who says the chain’s slow and steady approach to expansion is on the money. “I think it’s an incredible retailer, and as long as it sticks to the current strategy, I expect it will continue to do very well.

Denise Leathers

Denise Leathers

Denise is the Editorial Director for Frozen & Refrigerated Buyer.

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