Shoppers Buy Into Trader Joe’s Unique Proposition

Ongoing inflation hasn’t stopped shoppers from flocking to Trader Joe’s stores and may, in fact, be a factor in its performance. According to a new report from foot traffic analytics firm Placer.ai, trips to Trader Joe’s were up 6.3% in May 2023 compared to January 2022, while visits to the overall grocery sector slid 5% during the same period.

Moreover, Placer.ai found a divergence between the overall category and Trader Joe’s. The grocer, known for its distinctive store brand offerings and treasure-hunt vibe, tracked with other stores in visits between January and July 2022, before ticking up as wider category trips started to fall.

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In its report, Placer.ai attributed the appeal of Trader Joe’s to a right-place-right-time situation. “Trader Joe’s continued success may be due to the company’s reputation as a budget-friendly grocery option. The California-based grocer’s many private-label products help keep prices relatively low, and this value perception could be driving a consumer trade-down to Trader Joe’s –  a common pattern boosting traffic to many value-grocery in recent months. Still, Trader Joe’s maintains its position as a specially grocer that affords price-sensitive consumers a premium grocery experience when luxuries are few and far between,” analysts shared in the report.

Placer.ai also noted that the retailer's small footprint sets it apart from other grocery stores but doesn’t impede traffic. Looking into store visits at a Los Angeles Trader Joe’s location, for example, the firm found that visits per square foot to that store were three times higher than visits per square foot to a nearby Ralphs store. That said, the Ralphs store had more repeat visitors and engaged in less cross-shopping with Trader Joe’s. “This suggests that while Trader Joe’s specialty nature is an attractive proposition, demand for conventional grocers remains strong,” the analysts concluded.

For its part, Trader Joe’s continues to hang its hat on what makes it different. In a recent episode of its monthly podcast, "Inside Trader Joe's," the company’s marketing VPs Matt Sloan and Tara Miller explained why the grocer remains a brick-and-mortar business instead of expanding into the omnichannel.

“It's that experience of being inside the four walls of Trader Joe's that makes Trader Joe's what it is. That experience would not be the same if you were trying to order something from a website that just showed you the products you already know about,” explained Miller. “Walking through the store and meeting up with a crew member who talks to you about a product that just arrived this week in the store. You might not know about that product when you are shopping virtually as opposed to in a physical space, you tend to have blinders on and you see the products you are already looking for. When you walk into a Trader Joe's, you're confronted with products you may not have ever seen before. That's part of the Trader Joe's experience."

Sloan agreed, and also shared that the small footprint model is effective for similar shopping experience that has helped cement the store’s destination status. “The physical limitations of the space of our stores, it drives a lot of behavioral stuff too. We can only fit so many things, so many products, and people come in and they interact. They have to navigate around other people and they speak with those people and that's all on purpose too, and it's such an important factor. It's something that we see when we look at a new store site, and we say like, ‘Wow, how will we fill it up to make it feel like a Trader Joe's?’,” he remarked. “So when we think about being a brick-and-mortar business, when we think about the store being our brand, we think about our customers’ emotional experience when they're shopping in their Trader Joe's.”

With more than 500 stores in 40-plus states, the California-based Trader Joe’s is No. 27 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named the company as one of its Retailers of the Century.