For a grocery store with a relatively small footprint, limited selections, and measured national growth, Trader Joe's is, perhaps surprisingly, a massive success. Customers act more like devoted fans, and new store openings attract the types of crowds more often associated with the launch of a new iPhone. What's the secret behind Trader Joe's Tasty Bite Indian dinners, Two-Buck Chuck, and folksy, neighborhood feel? Fortune spent two months trying to find out…
"You'd think Trader Joe's would be eager to trumpet its success, but management is obsessively secretive," writes Fortune's Beth Kowitt. The company declined to speak, so the reporter relied on interviews with "former executives, competitors, industry analysts, and suppliers, most of whom asked not to be named" to discover the secrets of Trader Joe's success, it's German ownership, and its suppliers.
One of the more interesting aspects of the article was an examination of the store's limited selections:
Swapping selection for value turns out not to be much of a tradeoff. Customers may think they want variety, but in reality too many options can lead to shopping paralysis .... Studies have found that buyers enjoy purchases more if they know the pool of options isn't quite so large. Trader Joe's organic creamy unsalted peanut butter will be more satisfying if there are only nine other peanut butters a shopper might have purchased instead of 39. Having a wide selection may help get customers in the store, but it won't increase the chances they'll buy.
And who is making that peanut butter (and chips and hummus and cheese...)? Trader Joe's does not publicize its supplier relationships – and forbids vendors from doing the same – but Fortune was able discover a few interesting details.
Read the article:
• Inside the secret world of Trader Joe's (Fortune)