What You Can Learn From Trader Joe

Lauren and I LOVE Trader Joe’s — a chain of small grocery stores that are in 25 states plus D.C. If you’ve shopped at TJ’s, chances are good you love themm too.

So I found this article from the Fortune really interesting. Some of it relates to my Essentials Project, too.

One example — Trader Joe is twice as profitable as Whole Foods Market per square foot and their secret isn’t more but less selection.

With the greater turnover on a smaller number of items, Trader Joe’s can buy large quantities and secure deep discounts. And it makes the whole business — from stocking shelves to checking out customers — much simpler.

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. “People are worried they’ll regret the choice they made,” says Barry Schwartz, a Swarthmore professor and author of TheParadox of Choice. “People don’t want to feel they made a mistake.” 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.

1 Comment

  1. And the interesting thing is that I never would have guessed that this was Trader Joe’s secret? I have never felt that they provided fewer options – it always seems “just right.” In fact, now that I think about it, the small market I shop at (Crosby’s … not as hip as TJ’s, but closer to where I live) uses the same technique. I LOVE shopping there because I don’t have to agonize over which of the 47 kinds of crackers I’m going to buy. They have maybe 3 options and I just pick one. They are my grocery filter & I’m glad they’re there!
    ;)

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