- 5 months ago
NYC, Entrepreneurship, & Healthy Living
Howdy, I'm Taylor. I'm a 20 something former management consultant and ivy-league grad from California turned solopreneur in New York City, and I love making videos that follow all of the above. Stick around 😊
Howdy, I'm Taylor. I'm a 20 something former management consultant and ivy-league grad from California turned solopreneur in New York City, and I love making videos that follow all of the above. Stick around 😊
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LearningTranscript
00:00This is a grocery store, but not just any grocery store. It is the wildly popular Trader Joe's.
00:06And if you've been on TikTok or walking in the city streets or in your friend's kitchen,
00:11you've probably noticed that Trader Joe's is everywhere.
00:15But what makes Trader Joe's so special? How does it maintain affordable prices and garner a cult-like
00:21following? I dug into it and in this video I'm going to tell you what makes the Trader Joe's
00:26experience so unique, how their store economics and product offerings keeps consumers coming back
00:31time and time again, and why it's winning over Gen Z shoppers while other grocers struggle to do so.
00:37This is how Trader Joe's became America's most cultishly beloved grocery store.
00:45Okay, starting with the Trader Joe's experience, I recognize that a lot of y'all have not been since
00:50it is only present in the contiguous U.S., so let me paint the picture for you. Though no two Trader
00:55Joe's are exactly the same, each location is consistent with a few key things. A very friendly
01:01staff in Hawaiian shirts, hand-drawn signs with a quirky font and fun slogans, and a unique selection
01:07of creative private label items at competitive prices. Starting with the friendly staff, I just
01:12talked to six different Trader Joe's employees inside, each one of them nicer than the last.
01:16Some summary points were that Trader Joe's is extremely picky in its hiring process to choose
01:21folks who are exceptionally nice and have a customer-first attitude. One woman even said
01:25that kindness is free, so if a customer asks them if they have any peanut butter pretzels in the back
01:31because they've run out on shelves, she'll happily just go check and that will make the customer happy,
01:35everyone will be kind to each other, and it just creates a positive feedback loop. Another man who's
01:39been with Trader Joe's for 17 years and who has done a lot of the hiring himself said that Trader Joe's
01:44treats his employees well, and if you have happy employees, you're a lot more likely to have happy customers.
01:49And finally, a lot of them said that the staff all just gets along with each other really well,
01:53which creates for a more fun than usual work environment. Now let's look at the fun branding.
01:58So while the fun, quirky hand lettering catches your eye at every single location, the fun part is
02:03that no two locations are exactly the same. Each location is outfitted with local art that you might
02:09find from this particular neighborhood. So right now we're in the East Village, Manhattan,
02:13New York City location, and look at this. There is this map when you first walk in the store
02:18of all these little landmarks in East Village. Specifically, they got a local illustrator,
02:22Peter Arkell, who's lived in East Village since 2002, pick and choose all these things in the
02:27neighborhood that caught his eye. And then they have the corresponding numbers of the things in East
02:32Village illustrated all throughout the store. And these are the little things that, you know,
02:37the average person might not be looking out for when they go to their grocery store, but pretty much
02:41every Trader Joe's that I know has something special like this that makes it really feel like
02:46a neighborhood grocery store. The attention to detail and customization of each location
02:51makes you feel like you're visiting a local neighborhood grocery store, not a national chain.
02:56In fact, Trader Joe's About Us page on their website opens with Trader Joe's is a national chain of
03:02neighborhood grocery stores. And that's exactly what you feel. And finally, the crown jewel of the
03:07Trader Joe's experience, all the weird sh** that they sell. And not just weird sh**, but seasonal weird sh**.
03:15You see, Trader Joe's is especially known for their seasonal products. Right now, it's the Super Bowl
03:21and Valentine's Day. More recently, it was Christmas items. And it's fall products specifically,
03:27based off my personal experience, it is especially known for pumpkins everywhere. But truly, in addition
03:32to regular normal staple items, their funky creative product offering is something that gets people
03:38talking and makes them feel like they're discovering fun new products every time they visit Trader Joe's.
03:43Cookies and cream pretzel slims. Hold the cone mini ice cream cones. Unsweetened almond cashew and
03:50macadamia nut beverage. This is literally what I use in my smoothies. Dried baby bananas. Soft baked
03:56sunflower butter cookies with roasted sunflower seeds. Do I need this? No. Do I want it? And they
04:04managed to sell these staples and strange items at competitive prices. I'm also not vegan or vegetarian,
04:10but when I was doing my research for this video, I was going on subreddits and apparently Trader Joe's
04:15really, really shines in the vegan and vegetarian section. So, pretty cool. Now, Trader Joe's is famous
04:21for these funky items, but they're almost as famous for discontinuing them. And I have fallen victim.
04:27You see, I got addicted to their Aussie-style cookies a couple years ago, which is their version of the
04:33popular Australian chocolate biscuit Tim Tams. And all of a sudden, one day I go to Trader Joe's to re-up
04:39on 50 packs of their chocolate biscuits. Poof! Nowhere to be seen. You don't think it'll happen to you,
04:44and then it does. And these days I try not to get addicted to things like chocolate biscuits. But my point
04:49is Trader Joe's isn't just being cruel. It is all part of their business strategy. Their limited
04:54selection, their small stores, their private label, and yes, even their discontinued products. Let's
05:01dive into it. So let's talk Trader Joe's store economics because the Hawaiian shirts and groovy
05:06signage is all fun and games until you realize that the gross revenue per square foot of Trader Joe's
05:12is over double that of its competitors. And sure, their stores are smaller, but they also carry
05:18significantly fewer products than their competitors. And it is all by design. You see,
05:22Trader Joe's deliberately maintains small storefronts at about 12,000 square feet on average,
05:28compared to traditional grocers at 45,000 square feet. These small stores, even though they can feel
05:34really tight and annoying as a shopper, not right now because I came right at opening to film this,
05:38but these smaller storefronts helps Trader Joe's enter denser urban areas with a lot of foot traffic
05:44that larger grocers cannot access. Exhibit A, even though there are only 608 Trader Joe's locations,
05:51a whopping 11 of them are within a three mile radius of where I live, which happens to be the most
05:56dense urban population in the entire country. And I like having 11 to choose from, I'm not gonna lie.
06:01In conjunction with targeting urban areas, Trader Joe's also deliberately targets yuppies, young
06:07professionals with high paying jobs. And this has been the case since day one. Day one being 1967,
06:13when they opened the first store in Pasadena, California, 20 miles from where I grew up,
06:18by the way, when the founder, Joe Colombe, Colombe, Colombe, when he noted a rise in the number of
06:24college educated people in the U.S., partly due to the GI Bill at the time, which helped to subsidize
06:29World War II veterans, education, and other benefits. The bill did have its problems, but that's a very
06:33different video. But back to their products. The most fun part and a huge component of what contributes to
06:39Trader Joe's cult like following. So Trader Joe's only carries 4,000 products, while typical
06:45grocers will usually carry 30,000 or more. One of the main famous reasons that Trader Joe's doesn't stock
06:51as many products is because it eliminates the paradox of choice, which is when when we are presented with
06:57too many options, we get lost in analysis paralysis and don't end up choosing anything. There's a famous study
07:03that I first learned about in college in one of my behavioral economics classes, where for the shoppers
07:08who were offered 24 different kinds of jams, 3% of those shoppers bought a jam. For the shoppers who
07:14were offered only six kinds of jam, 30% of the shoppers bought one. Studies show that the sweet
07:19spot is between three and seven options, so you still get a sense of variety without overwhelming the
07:24brain. And this is exactly what Trader Joe's does. See, you don't have 30 different kinds of granola here
07:30like you do in most supermarkets. I count 1, 2, 3, 4, 5, 6, 7. And this one is already off the shelves
07:39and it's early in the morning. More on that in a little bit. Now, other smaller selection of 4,000
07:44products, you might notice that almost all of them seem to be private label. Trader Joe's brand. 80%
07:50in fact are private label. I've been looking around the store to try and find the 20% of the products
07:55that are not private label. And a lot of it seems to be in the drinks sections. Obviously not private
08:01label, not private label. One of their teas, Yogi tea, the rest are private label. Here's a random
08:07one, Lundberg rice cakes. That must be a very popular type of rice cake for them to carry that. Wow,
08:13okay, after really looking around for non-private label stuff, I would say aside from this beverage
08:18category, it's higher than 80% private label. And this brings us to a big reason why TJ's is able to
08:24maintain affordable prices. Private label items helps TJ's have more control over their own supply
08:29chain. They buy directly from producers and manufacturers when they can, instead of going
08:33through a middleman that eats into the profits. And this helps Trader Joe's significantly reduce
08:38costs. It also gives them more autonomy to make weird shit and to be more nimble in their product
08:43offerings, like offering seasonal items. Trader Joe's creates a sense of FOMO, fear of missing out.
08:48If you don't get to the store in the next month to check out their fall whatever, then you'll miss out
08:53because it'll be gone. And remember my chocolate biscuits that disappeared? All part of their
08:58strategy. Kind of. You see, normal grocery stores are often paid what are called slotting fees by the
09:04manufacturers that they work with. Meaning the producer of those products will pay the grocer a fee
09:09just to keep their products on the shelf, whether or not they sell, which helps financially de-risk
09:13things a bit for the grocer. Since Trader Joe's is mainly private label, they have to be absolutely
09:18ruthless with discontinuing products that don't sell well enough so they can make space on these
09:23limited shelves for items that do. And in turn, this natural selection method of Trader Joe's
09:29maintain a well curated selection of high quality items at all times. Now, before discussing why
09:34Trader Joe's is winning over the Gen Z consumer segment while other grocers struggle to do so,
09:39a quick peek into Trader Joe's most popular items. So Trader Joe's has the funniest website of all time.
09:45I don't know why I'm not surprised, but I'm not. Don't be fooled. You certainly cannot shop or order
09:50online. No, that would be so on Trader Joe's. But they have a newsletter called the Fearless Flyer
09:56and some fun posts that I spent way too long poking through just now. Their annual customer choice awards
10:01just came out. This year's overall pick was chili and lime flavored rolled corn tortilla chips. Funny
10:08enough, I see these everywhere, but I've never actually tried them. I assume they're good. And then I
10:12found this breaking news story, their product hall of fame for items that have won many times. I
10:18cannot make this up. Whoever runs this website needs a raise. So why is Trader Joe's winning over
10:25the Gen Z segment? Well, Trader Joe's targeting of yuppies in urban areas and near universities,
10:30plus that treasure hunt shopping experience makes for really great TikTok content. My research did show
10:36that Trader Joe's is certainly not the most sustainable grocery store, which is not very Gen Z of them. But
10:41just about everything else, the must-try products, the social media appeal, the quirky branding, and the
10:47affordable luxury positioning, the Trader Joe's offering aligns with Gen Z's preferences in a way
10:53that other grocers have not been able to replicate. Now, the very things that creates this cult following
10:59also creates Trader Joe's biggest challenges. The small storefronts, though intentional,
11:03do create store capacity issues. The New York City locations specifically, the ones that I have the
11:08most experience with, a lot of the times of the day, the line is wrapping around the whole entire
11:13store. And even though the line moves very, very fast, it is still not the most relaxing experience
11:19to have to push my cart between a lot of customers most of the times that I come. In fact, I have a
11:24friend who deliberately, temporarily, switched from Trader Joe's to Whole Foods for a more relaxing
11:30experience because they have bigger aisles and just it's less congested. Again, I'm here at 8am,
11:35so right now it looks empty. It's not empty. I'm filming among a lot of people and it's kind of awkward,
11:40but usually it's more busy. Not only do they have physical space capacity constraints, but also
11:46inventory capacity constraints. It happens a lot where I'll go shopping at Trader Joe's during peak
11:51hours, so at the end of the day when people just get off work, and they'll be out of my cottage cheese,
11:55or my Greek yogurt, or vanilla almond granola cereal, which I also buy. Finally, even though
12:01Trader Joe's limited selection and private label items is a big part of what makes them popular,
12:06it also lends itself to supply chain vulnerabilities. They're dependent on a few specific manufacturers,
12:11at least in the short term, while other grocers usually work with many different manufacturers and
12:16sell a bunch of versions of the same item. So Trader Joe's can't easily switch between multiple
12:21suppliers. And this happened during COVID. TJ's had more significant shortages than other grocery
12:26stores. And more recently, they've had shortages with their frozen food suppliers, so crowd favorites
12:32like the cauliflower gnocchi have been intermittently off shelves. Although here it is right now fully
12:36stocked, so that's good. Despite these challenges, the Trader Joe's business model is one that so many
12:42businesses look to as a blueprint of success. And it shows Trader Joe's consistently ranks at the very top
12:48of customer satisfaction reports for grocery stores in the U.S. And its unique product strategy, quirky
12:54branding, and warm, welcoming Hawaiian shirt-clad staff are things that other grocers have tried their own
12:59version of with limited success. So I think it's safe to say that no long line or tight aisle, not even
13:06missing chocolate biscuits will keep me or millions of other people from giving Trader Joe's its cult-like
13:11following. Leave a comment what business you want me to analyze next. I thought I would start with my
13:16favorite one. If you enjoyed this, please hit the thumbs up and subscribe for more videos like this
13:20one. And until next time, Turtle out.
13:27After years of heartache and pain, I stopped looking because they were discontinued, I swear.
13:36What a great end to this video.
13:38That's four nanners for under a dollar. They called them nanners.
13:42They called them nanners. They called them nanners. They called them nanners. They called them nanners.
13:46They called them nanners. They called them nanners. They called them nanners. They called them nanners.
13:48They called them nanners. They called them nanners. They called them nanners. They called them nanners.
13:50They called them nanners. They called them nanners. They called them nanners. They called them nanners.
13:52They called them nanners. They called them nanners. They called them nanners. They called them nanners.
13:54They called them nanners. They called them nanners. They called them nanners. They called them nanners. They called them.
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