1.

What can we learn about the strategies of the firms in the

supermarket industry using the data in Exhibits 1 and 2? 

 Supermarkets traditionally operated on very thin profit

margins
 Supermarkets were struggling with this in 2013 where they
found themselves being squeezed between premium players
such as whole foods at the high end of the market and hard
discounters at the low end

2. What are the key sources of Trader Joe’s competitive advantage? 

 Human Resources
o Employees are paid well
o Get along with each other as they are like-minded
o Opportunity for growth in the company
o Autonomy over their job (generalists who are
empowered to make decisions based on their
knowledge of their local customers)
o Given free food samples, so they can use the product
and be aware about it to serve customers
 Customer service
o Greeted at the door
o Helpful and knowledgeable employees (had tried the
products, even when stocking shelves, would
immediately stop and help a customer who needed
them)
o Can return items they don’t like with no questions
asked
 Product
o Quality products that have been tested by employees
o New and interesting
o Good prices everyday
o Store brand sold primarily so had more control over
the price point and associated profits as could control
costs
 o
 Customers
o Well educated who needed quality product on a
budget
o Hired employees who were similar to their target
customer so they could relate ( this goes to human
recourse no ??)
 Stores
o Did not have the same overhead cost of the larger
stores because of their smaller footprint

3. What are the main threats to Trader Joe’s competitive advantage?

Is the company’s success sustainable? 

 Companies such as Walmart who are branching into the

smaller footprint “express” locations
 Whole foods who also offer healthy options
 Growing too big, too fast and losing some of their small-
town quirky feel as they expand. Potential growing
bureaucracy and competition among crew members seeking
advancement opportunities

4. Should Trader Joe’s modify its strategy moving forward? How?

 No.

Issue

Trader Joe’s has built its business and competitive advantage on hiring
well and treating employees with respect and dignity. They promote
from within, pay well and provide employees with autonomy over their
role. Happy employees, equal happy customers. ( this is not issue to
me)

As Trader Joe’s continues to grow, there is a potential risk they will lose
their competitive advantage.

Increased bureaucracy and processes implemented.

 1. Less autonomy per store, which results in needs of local
customers’ needs not being met.
2. Employees who no longer have autonomy in their role and
as a result feel less valued and engaged, which equates to
poorer customer service. Did not see that please double
check maybe I am wrong.
3. Increased competition for career growth – unhappy
employees, equal unhappy customers.

There is increased competition in the market with giants such as

Walmart and whole food opening their express locations.

Analysis

Increased bureaucracy and processes implemented.

o Decreased understanding of role.

o Not meeting local customer needs as must follow
organizational procedures at expense of customer.
o Qualified employees may not be promoted as they
don’t meet corporate’s expectations even though they
might be the best fit.

Must ensure that crew members continue to understand role and have
autonomy to make decisions on behalf of the customer that meets their
needs. Allow continued input from local stores to ensure that
candidates who are the best fit for the local market are hired and
promoted.

Continue to engage employees in decisions making for the store (e.g.,

what to stock and where and when, who gets promoted etc). they
never took this away.

Due to introduction of new process and procedures company will steer

away form the strategic advantage they possess.

Walmart issue
  Walmart is significant competition as they begin to open
their express location and directly compete with smaller
stores such at Trader Joe’s. They cannot offer the unique
shopping experience that trader joe’s does as they are too
corporate and don’t account for the local market as TJ’s
does.

Recommendations.

TJ must ensure they do not lose their unique shopping experience and
become too corporate. Should keep growing at a measured pace and
continue to stock primarily store brand products that allow for greater
control over cost and associated profits. They should stay in the blue
sea they created for themselves, making them different from
competition and away from the competition of red sea. Continue to
meet the needs of their niche market and get rid of products that are
not selling well immediately (They do this and there is no mention of
them stopping it). Continue to allow customers to feel that it’s an
adventure shopping in their store and not sell traditional products like
Coke that are always available at Walmart to support their unique
customer experience.