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Merchandising and marketing efforts could also help. It could start selling diapers, for example. In the meantime, the company could focus on getting shoppers to buy and spend more by finessing its product range. (Its bananas, sold individually, are famously low-priced at 19 cents each.) That would bode well for Trader Joe’s, as its products are estimated to be about 10-15 percent cheaper than comparable ones at traditional supermarkets. This is a problem for all value retailers, which rely on a high number of relatively low-value transactions.Īs the economic consequences of the pandemic grow heavier, consumers may be prepared to give up some of the comfort of shopping in a big store in exchange for lower prices. In order to adhere to social distancing guidelines, the stores are limiting the number of shoppers allowed inside at a given time. The chain’s small floor plan – each location is typically 10,000 to 15,000 square feet – is also a pandemic-era challenge. It’s bad news for any limited-service grocer. This trend favors big-box stores, such as Walmart and Target, that carry far more household essential items. However, fear of infection has pushed many consumers to embrace one-stop shopping, where they consolidate spending into fewer trips out.

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If the company won’t be adding any sales via online orders, it will have to figure out how to maintain its industry-leading productivity. Using an intermediary would be a good way for Trader Joe’s to dip its toe in the water too.

Aldi Sued is taking its first steps in this direction, teaming up with grocery-delivery company Instacart in the U.S. Having employees fulfill online orders would swell the number of people inside stores, and translating the company’s high-quality service to home delivery would be costly.īut Trader Joe’s should experiment. In its weekly podcast, “Inside Trader Joe’s,” the company said it would rather invest in its staff than in digital infrastructure. The first is that COVID-19 has driven a surge in online grocery shopping, and the company doesn’t sell via the internet. All of this adds up to sales per square meter – a proxy for profitability – more than twice the industry average.īut Trader Joe’s currently faces two big challenges. What’s more, about 85 percent of its products are private label – another discount trait – which have higher profit margins. This limited product range, along with lower prices, generates high sales volumes. That’s more than would be found in a German discounter, but only about 10 percent of what’s carried by the grocery retailer Kroger Co. Trader Joe’s stocks less than 4,500 products. Yet it shares many characteristics with the German discounters, and these have helped make it, on one measure, the most profitable supermarket in America. With its epicurean products, hand-written price labels and friendly staff sporting Hawaiian shirts, Trader Joe’s is a world away from its more austere cousin.

The Aldi Sued branch trades as Aldi in the U.S. Trader Joe’s continues to be owned by one of the three family trusts that control Aldi Nord, although it’s run as a separate company. Theo took north of what has been dubbed the “Aldi equator” through the center of Gemany, in the form of Aldi Nord, while Karl took the south through Aldi Sued. In the early 1960s, after disagreeing on strategy, the brothers split Aldi. In 1979, Theo Albrecht – one of the two German brothers behind the Aldi empire – acquired the chain. Trader Joe’s began life in 1967, when Joseph Coulombe (who died earlier this year) opened the first store in Pasadena, California, offering affordable wine and speciality foods. In fact, its future is more uncertain than ever, as it contends with changing shopping habits precipitated by the pandemic. Mark Kauzlarich/Bloombergīut that doesn’t mean the 53-year-old retailer is in the clear. Shoppers walk past a Trader Joe’s grocery store ain the Brooklyn borough of New York on July 18, 2017.