Trader Joe's: The Biggest Small Store
Inside the company that's winning over customers
By Evann Gastaldo, Newser Staff
Posted Aug 28, 2010 7:02 AM CDT
In this Feb. 11, 2008 file photo, a customer departs Trader Joe's in Los Angeles.   (AP Photos/Ric Francis, file)

(Newser) – Green eaters will probably be dismayed to hear that Trader Joe’s, that enclave of cage-free eggs and organic veggies, also sells pita chips…made by FritoLay. But that’s the most damning revelation in Fortune’s look at the company, which has managed to maintain its “neighborhood store” feeling even as it expands to 344 stores nationwide. How do they do it? By keeping stores small and offering a narrower selection of always-interesting (and, more importantly, consistently good) products that keep its loyal customer base coming back.

While a typical grocery store sells 50,000 items, Trader Joe’s sells about 4,000. Not only does this comfort customers (it can actually be beneficial to offer fewer choices), it allows TJ’s to sell more of each variety of item, thus ordering more—at a deeper discount. That’s one way it keeps its exotic staples (Thai lime-and-chili cashews, anyone?) more affordable; another is by cultivating super-secret agreements with vendors—who often offer the same product at a significantly cheaper price thanks to TJ’s practice of doing away with extra charges like advertising and couponing.

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Showing 3 of 17 comments
joe1148
Aug 28, 2010 2:18 PM CDT
We have an Adventist town nearby. If you want the best in produce you go to the neighborhood store in College Place. To a much larger extent, anyone who shops Wal-Mart has likely noticed they have cut selection in most all given items in groceriee, personal grroming and household detergents etc. Often now, carrying their house brand and 1 to 4 others in a given product. Thus they by in larger volume from selected vendors and pay less. They then and pass much of those savings down to the customer.
dandmcd
Aug 28, 2010 11:44 AM CDT
Interesting, it sounds like the Fareway's we have around here, only possibly with more organic and free range meat options. I like my selection of 50,000 items from Wal-Mart though, don't think I could ever shop at one of these small sized grocery stores.
Jes
Aug 28, 2010 11:11 AM CDT
It's also a German corporation. It's owned by the same people who own Aldi.