Transcript Innovations in U.S. Food Retailing

Innovations in U.S. Food Retailing
Trader Joe’s
 Founded by a Stanford MBA who owned a number of convenience
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stores.
Repositioned stores to appeal to worldly, health-conscious
consumers. Focused on granola, nuts, dried fruits, vitamins.
Acquired by owners of Aldi in 1979
Now has 253 stores
Sales estimated at $4.5 billion
Average sales per square foot estimated at $1,500
Stores have 2,000 items.
Many suppliers are small; also sends scouts around the world to
find innovative items
Only added scanners five years ago, considered impersonal by
management
Innovations in U.S. Food Retailing
Trader Joe’s (continued)
 Cornerstones of strategy
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Deliver value: “Two-buck Chuck”
Offer mostly private label; sell national brands at major
discount
Have staff wear bright Hawaiian shirts
Merchandise a unique blend of products
“We taste everything we sell. Surprisingly few of our
competitors do that.”
“Did you find everything you need?” If not, cashier will leave
station to pick up item for you.
Unconditional “no questions asked” money-back guarantee.
No loss leaders
10-15 new items per week; treasure hunt
Innovations in U.S. Food Retailing
Whole Foods
 Begun in late 1980 in an Austin Texas neighborhood with a hippie
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image.
Now has 183 stores in U.S., Canada, and the UK. Annual sales of
$4.7 billion
Growth strategy
 Purchasing smaller companies (such as 7 Wild & Fresh stores
in UK)
 Expanding existing stores
 Adding new stores
10 straight quarters of double-digit same store sales growth
Sales per square foot of $783 versus $570 for average
supermarket
Innovations in U.S. Food Retailing
Whole Foods (continued)
 Cornerstones of strategy
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Perishables account for 67 percent of total sales
Image of very high quality and high prices (Whole Paycheck)
High levels of product sampling (breads, cheese, fruits)
Organic foods, private label, salad bars, marinated and semiprepared meats and foods
Deli and meat departments stand out
Environmentally and socially conscious
Unique target market
In-store areas to eat, some outside
Innovations in U.S. Food Retailing
Whole Foods (continued)
 Organizational Issues
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Awards stock options to all employees, not just store
managers
90 percent of employees are full-time; non-union
John Mackey, CEO and founder, has salary capped at 14
times average company salary (not counting stock awards
and options). Had to forego $46,000 in bonus money in 2005.
Innovations in U.S. Food Retailing
• Greenmarket
– Established in 1976 by the Council on the
Environment
– Aim was to help small family farmers sell
fruits, vegetables, and other farm products
– Sells organic fruits and vegetables, eggs, fish,
jams and bread products
– By law, everything sold at market must be
grown or made there
– Emphasis is on visual presentation, and
quality instead of price
Innovations in U.S. Food Retailing
• There are 16 greenmarkets in New York City; the
Union Square market is the largest, by far.
• It’s open year-round, 4 days per week (Mon,
Wed, Fri and Sat) from 8AM to 6PM with an
average attendance of 250,000 customers per
week
• Customers include noted chefs from Union
Square area who can be seen buying produce
for their restaurants, local “foodies,” and the
general public