Since its founding in 1958, Trader Joe’s has grown from a small chain of convenience stores to the leading national chain of organic food stores, focusing on their inexpensive branded products and smaller stores. There are now 350 Trader Joe’s locations nationwide as opposed to the 300 stores operated by its closest rival, Whole Foods.
How has Trader Joe’s captured the market so wholly? Though it may seem counter-intuitive, one key is the fact that Trader Joe’s has smaller stores and fewer products on offer than other grocery stores. Instead of fifty thousand different products, they carry only four thousand. This means that in 2011, Trader Joe’s made $1,750 per square foot while Whole Foods made only $863. The other key to their profits -- $8 billion in 2011 -- is that much of what Trader Joe’s sells is Trader Joe’s brand. They buy direct from suppliers, and don’t need to charge shelf-placement fees to those same suppliers, which drives down cost.
And if you have yet to experience Trader Joe’s, with communities across the United States clamoring to be the site of the next location, chances are good you will.
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