M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 4

First founded in 1967 in California, Trader Joe’s is composed of 344 stores in 25 states plus the District of Columbia. Despite its large reach, Trader Joe’s exudes the same neighborhood store atmosphere that it did back in 1967. Trader Joe’s excellent operations and customer service has generated a loyal customer following that has made it a success.

One of Trader Joe’s biggest assets is uniqueness. In addition to maintaining a neighborhood store feel, Trader Joe’s maintains smaller facilities and product lines than comparable stores—a deliberate operational move to create its specialty image. Trader Joe’s stocks about 4,000 items compared to the 50,000 stocked by the typical grocery store. Inventory control has been a key advantage to reducing costs and focusing on a limited number of quality products. While many markets sell as many as 50 selections of one food item, Trader Joe’s sells only a few. With sales of roughly $8 billion, Trader Joe’s also sets itself apart with its private label products. Today, 80 percent of company sales come from private label items.

 Additionally, Trader Joe’s excels at quality and supplier relationships. It employs four product developers who travel the world in search of best product/price combinations. Suppliers covet contracts with Trader Joe’s, which charges less in fees and is known for on-time payments. Trader Joe’s has vowed to sell only sustainable seafood by 2012 and refuses to carry products containing genetically modified ingredients. Its responsible measures make it a regular on the Ethisphere “World’s Most Ethical Companies” list. Trader Joe’s has also crafted its distribution process to create efficiency and reduce costs. It expands only into areas that can support this streamlined distribution system. With its popularity continuing to rise, customers seem impressed by the way Trader Joe’s is redefining the grocery shopping experience.

 Why do supplier relationships and a focus on price/quality relations help create loyal Trader Joe’s customers?

Step 1 of 2

Customer loyalty is a high return on the time, effort and funds one invests in providing customer services. Making it a priority helps in gaining more loyal customer base, brand identity and reputation. Understanding customer’s need in order to provide good service, handling their concerns and staying in touch with them is the key to build customer loyalty.