When it comes to filling my belly, I consider myself more of a free-range grazer than a three-square-meals-a-day kind of guy. So when my editor offered me the opportunity to go on a snack spree for this article, I thought first with my delighted stomach. My head later clicked in, reminding me that one of my least favorite pastimes is parading through a grocery store, which normally I’d no sooner volunteer to do than scrape the barnacles off a capsized barge.
But a reporter must investigate to draw the facts for a story—and in this case, it’s about Trader Joe’s impressive array of snacks, from creamy cookies and bags of almost every nut imaginable to horseradish potato chips.
Perhaps it’s hard to believe, but this was my first trip to a Trader Joe’s. There is none near the Chicago suburb where I live.
Trader Joe’s frequenters may snicker at my naiveté, but my first impression upon walking into the store and scouring for goodies was that they can be found virtually everywhere the eye can spy. Snacks are as ubiquitous a shelf-dominating category and as omnipresent in every department as the Trader Joe’s private-label logo is on the packaging. But while putting your name on just about every product advertises confidence and consistency, a bunch can be spoiled, they say, by only one bad apple—in this case, a bag of Cinnamon Apple Snack Sticks that might leave a bad taste in the mouth.
Determined to keep an open mind and maintain journalistic objectivity, I loaded my basket with a healthy smattering of snacks from the obvious categories: chips, chocolate, nuts, fruit, cookies, crackers, bars, dried vegetables, popcorn, dairy and spreads. Once the legwork was done, I headed home and prepared for the heavy lifting: tasting the fruits of my labors.
Click here to see the results of our own Trader Joe's taste test.
Looking back, I probably should have taken a page from the memoirs of a hot-dog-eating contest world champion: You have to pace yourself when gobbling up rich and tasty munchies.
But in all honesty, every Trader Joe’s treat I sampled rewarded my taste buds to various degrees of delight and pinged my value radar.
Verdict? My snack-insatiable stomach wishes there were a Trader Joe’s in my neck of the woods. My head, on the other hand, says the lack of a nearby location is probably best for my waistline.
Not Your Average Joe
To better understand why and how Trader Joe’s (TJ’s) excels at snacks, one first needs a big-picture view.
The theme, of course, is fresh and better-for-you foods, as demonstrated by the wide array of organic and healthy items stocking the shelves—most of which bear the company logo. In fact, nearly 80% of the merchandise is TJ’s-branded and available exclusively at TJ’s. While not necessarily healthy in the “low-fat, low-carb” sense, the products entice ingredient-conscious consumers because they contain no preservatives, artificial flavors or colors, trans fats, genetically modified ingredients or MSG.
“The big strategic focus is on creating differentiated private label,” says Neil Stern, senior partner with McMillanDoolittle, Chicago. “They excel at creating non-brand-comparable programs with a healthy spin and maintain this strategy to grow. It enables them not to have to compete directly very often with well-known brands.”
The chain’s product mix is generally geared toward encouraging the weekly shop, with low-cost staples and packaged goods dominating the shelves. But there’s also an increasing emphasis on fresh perishables that could entice a shopper to come in daily, including produce, grab-and-go sandwiches and wraps, cold-case packed soups, salads and chef ’s case pasta for either immediate or later reheating and/or consumption.
To keep prices down, the company buys in high volume directly from smaller vendors, doesn’t participate in slotting fees (whereby suppliers pay for shelf space, resulting in higher prices for consumers) and has no service departments in its stores. Following Costco’s formula for success, TJ’s often limits the choices among product categories. Typical grocery stores can carry 50,000 SKUs; by comparison, TJ’s stocks about 4,500 SKUs, Stern says.
“The offerings are not overwhelming—perhaps two to three SKUs per category, tops—and the prices are reasonable for the quantity,” says Tim Powell, principal, Think Research and Consulting, Dublin, Ohio.
TJ’s runs relatively small stores, ranging from 8,000 to 15,000 square feet, but generates, according to a Jones Lang LaSalle estimate, an extraordinary $1,734 in sales per square foot—nearly double that of Whole Foods, its main rival. (The famously private company, which keeps its financials pretty hush-hush, did not respond to multiple requests for an interview.)
Powell says TJ’s caters to wellness-minded consumers who yearn for creative snacks with exotic-sounding ingredients and the low price associated with the retailer. “Their stores appeal to a broad audience: both affluent and middle-class, organic-seeking and indulgence-seeking,” he says.
Accenting its inventory is a no-frills yet fun atmosphere dotted with chalk-scribed promotions, a brick, bamboo and cedar tiki-themed décor and employees clad in Hawaiian shirts. These and other reasons are likely why TJ’s also scores high in consumer sentiment. For the third consecutive year, consumers ranked Trader Joe’s as their No. 1 supermarket in a recent Market Force Information survey; and Consumer Reports subscribers named it the third-best grocer in its April 2015 issue.
Nibbles and Bits
Home in on TJ’s snack program, and winning strategies become clear.
“They have a best-in-class assortment of unique, appealing and indulgent snack options. And they merchandise these products liberally in every department and aisle of the store,” says Jon Hauptman, partner with Willard Bishop, Barrington, Ill. “You find snacks adjacent to the produce department, which is early in the trip. Then you see a wide variety of snacks merchandised on shelves above coffin-case freezers in the frozen-food department. Next, you find a dedicated snack aisle, and finally you typically find snacks merchandised at the checkout.”
These strategic snack placements buttress an in-store culture of impulse and what Jay Jacobowitz, president/founder of Retail Insights LLC, Brattleboro, Vt., describes as TJ’s talent to “draw in spur-of-the-moment traffic and daily-shop traffic, as opposed to its traditional pantry-stockup-at-low-prices customer profile.”
TJ’s appears to position snacks as a “destination driver” and key differentiator, says Hauptman.
Stern agrees: “Trader Joe’s aspires to create ‘destination’ reasons to buy their snacks.” He cites Peanut Butter Filled Pretzels—one of the chain’s all-time best sellers—as a good example of how to create a compelling reason to return to a fan-favorite retailer.
Kirk Cornell, director of research and innovation for Centric Brand Anthropology, Seattle, says that although the typical TJ’s visit is more of a planned destination trip, “there’s also a lot of exploratory and speculative shopping that occurs in the store—discovering and buying new products, snacks among them.”
CONTINUED: Taste, Price and Variety
Taste, Price and Variety
“Consumers are willing to try new mixes and products TJ’s develops and are open to testing new flavors,” says Stern.
Indeed, it’s the unique house-brand flavors that help create loyal customers, many believe.
“[TJ’s is] great at taking something like a traditional corn chip or potato chip and flavoring them with something unexpected,” says Cornell. “The nuts they offer are the most distinctive snack products for a lot of people, like their bags of Thai Lime & Chili Cashews.
“Their products are interesting and pique the intellectual interests of foodies.”
Consider the latest edible items added to the chain’s arsenal of munchies: Rosemary & Thyme Maple Toffee Sunflower Seeds, Baconesque White Cheddar Popcorn, Speculoos Cookie Butter Cheesecake Bites, Kettle Popped Sweet & Salty Popcorn Chips, Crispy Crunchy Broccoli Florets, Sweet Sriracha Uncured Bacon Jerky, Seasoned Kale Chips, Truffle Marcona Almonds, and Fruit Bars with Flax and Chia Seeds.
Hauptman says the grocer understands that shoppers will treat themselves if the snack item is tasty, attention-getting and different.
“Snacks are an affordable indulgence, and Trader Joe’s avoids ‘belly-filling’ items in place of unique, fun items,” he says.
Also, the chain’s snack program slots into the emerging movement of snacks as meal replacements.
“Trader Joe’s more substantial, nutritious and natural snack offerings serves the current trend toward low-preparation, immediate consumption, informal, more frequent feeding times that is gaining traction,” says Jacobowitz.
TJ’s also has its bases covered when it comes to providing the snack categories that IRI has identified as trending across the retail landscape, including salty snacks, natural cheese, chocolate candy, fresh eggs and baked goods.
Cribbing from Joe’s Playbook
Considering TJ’s modest footprint, there is much convenience operators can draw on for their own stores, from understanding the customer to the company’s remarkable snack appeal.
“Just like [at] c-stores, snacks are prominently merchandised and account for a high percentage of shelf space at Trader Joe’s,” says Hauptman of Willard Bishop. “However, while c-stores offer multiple brands within traditional/mainstream product types, Trader Joe’s chooses to limit its brands and instead expand the number of product segments they carry, mostly under their proprietary brand.
“Their focus is on delivering a unique product experience, not a wide choice of brands for everyday snack options.”
James Russo agrees. “Think about what meal replacement-seeking consumers who shop at premium fresh grocery stores are looking for,” says Russo, senior vice president of global consumer insights for Nielsen, New York. “It sits in the wheelhouse of what c-stores can deliver on: accessibility, portability, convenience and nutrition.”
C-stores, though, need to hit the sweet spot on snack prices and variety.
“Millennials are not necessarily deal-reliant, but they are price-conscious,” says Sally Lyons Wyatt, executive vice president and practice leader, client insights, for IRI, Chicago. “It’s also important to provide a good balance between types of products—healthier as well as indulgent offerings—and offer snacks with more unique flavor combinations and authentically sourced items.”
The convenience channel could also benefit from studying TJ’s milieu and warm hospitality.
“The atmosphere is fun, thanks in part to its tiki-themed decor,” says Powell, “and the friendliness of the staff, down to the stock boy, is undeniable.”
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