Trader Joe’s Secret To Success (2024)

While other, larger grocery chains have raised prices over the last year, Trader Joe’s has kept its smaller selection relatively unchanged—and still profited handsomely.

Why it’s news

Unlike other big-name brands, Trader Joe’s predominantly sells its own private-label products. The chain is known for selling rarely known goods, often foods popular outside the American market. By selling foods outside of what the shopper typically sees, Trader Joe’s customers keep coming back to see what’s new.

Over the years, the grocery chain has cultivated a loyal customer base. These customers appreciate the unusual products and competitive prices in the store. Trader Joe’s smaller selection can also be considered more of a benefit than a downside.

By keeping product options limited, customers can have a faster, more efficient shopping experience. Rather than choosing between dozens of bread brands, a Trader Joe’s customer has only a couple to select from.

Consistently lower prices are another major draw for the company. It manages to keep prices down by cutting out the middleman and working with suppliers itself. Trader Joe’s also frequently buys products in bulk and tends to make foreign purchases with local currency, giving the store greater negotiating power with the supplier, The Wall Street Journal reports.

Trader Joe’s loyal customer base also helps the company cut down on advertising costs. While the grocery store does little marketing itself, its fans tend to frequently promote the products they find on social media.

The company also keeps products moving on the shelves. If a product is not selling well, it simply removes the option from the store. Customers keep coming back to find what is new and exciting on the shelves.

Backing up a bit

Walmart is pushing back against high prices from suppliers, telling the distributors that it can no longer continue price hikes. Price variations, even by just a few cents, can send Walmart shoppers looking elsewhere since the company promotes its “Everyday Low Price” policy.

Last year, the retailer had to raise prices on products such as milk, detergent, and frozen meals as shipping costs and raw material prices rose. Now that costs such as transportation and cardboard shipping cases have declined significantly, Walmart is pushing back against more price hikes.

As consumers are less willing to pay inflated prices, Walmart is growing more hesitant to pass costs on to its shoppers.