The $16 Billion Store
A coherent experience can turn individual products into a place people return to.
4 minute readBegin readingTrader Joe’s - The grocery store with ‘some of the weirdest yet undeniably intriguing’ food sold on the shelves.
As of 2023, Trader Joe’s has made over 4x the sales per square foot of real estate than any other chain grocery store, and made over $16B in sales last year.
All while:
Operating only in the US
Selling less than half the products of other stores
Not selling the top 5 products bought in stores like table salt
How did they do it?
Is it their weird products? Their branded items?
Or is the CEO some marketing wizard?
The Power Of Niche Pricing
After a few hours of research and tons of late-night Googling, I was able to put a few key sats together:
Trader Joe’s has managed to make over 4x the sales per square foot than the top US chain stores.
So even though Walmart and Target have more room to sell more products, Trader Joe’s is more profitable by selling less in a smaller spot.
How is this possible?
In his book ‘Becoming Trader Joe’, Coulombe talks about the struggles he went through trying to compete with major retail and convenience stores like 7/11:
“What I needed was a good but small opportunity for my good but small company: a non-commodity, differentiated kind of retailing,” - Joe Coulombe
The solution?
Sell only the stuff that people will pay a premium for.
AKA become a niche grocery store.
If someone wants paper towels, where do they go?
Target? Walmart? Whole Foods?
Probably wherever’s cheapest.
But where do you go for an exotic salsa or a bougie appetizer for a party?
Trader Joe's.
This way, Trader Joe’s can rent smaller stores, sell less stuff, and 5x their productivity.
But it’s how they convinced buyers to eat and even crave the weird foods that I think is the secret to their success...
The Weird Food Cult
Every week, Trader Joe’s sends out their Fearless Flyer - An email showcasing the new foods of the week.
Originally, the goal was to introduce buyers to the new food so that they were more likely to buy it within stores.
Today, it’s created a national cult of people interested in really weird food.
Trader Joe's has become a place where people who obsess over unique wines, spreads, or even ketchup sprinkles can band together.
AKA ‘The Weird Food Cult’
We’ve seen this with Redbull, Barstool, and even Product Hunt…
Redbull has a cult of adrenaline junkies and people who love watching extreme sports…
Barstool has a cult of college bros who like sports and hot girls…
Product Hunt started as a newsletter for tech geeks and is now a $20M+ company based on their communities’ thoughts…
Make people fall in love with the community around your business, and let them shape you into the company they want to be a part of.
Joe’s Stamp Of Approval
“Having Trader Joe's on the label means a bunch of things. We think our name will stand for something and mean something, and we're going to build products to show that” - Insider Trader Joe’s podcast, Matt Sloan (VP of marketing)
When you go to Trader Joe’s everything you buy has one thing in common that’s not true for any other grocery store…
Trader Joe’s is one of the only chain stores of the 21st century that do not sell shelf space to major name-brand products.
Instead, everything is private-labeled with the Trader Joe’s logo.
Since the beginning, Coulombe promised buyers that everything sold with the Trader Joe’s logo would:
Be sold from a company that pays their employees well
Pass his taste test
Be as healthy as reasonably possible
This is quite the opposite of Food Lion or Target where 99% of their stores are filled with name brands, forcing them to sell their brand products at a lower price.
Because Trader Joe’s has mastered the art of branding, they can charge more than the average for a product with their logo.
