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Trader Joe’s has developed a cult-like following over the years. Trader Joe’s made $13.3 Billion in 2017.
Trader Joe’s is America’s favorite, but have you ever wondered why it’s so easy to spend money at Trader Joe’s? The answer goes a bit deeper than you would think.
Narrator: Okay, so imagine yourself at the grocery store. You’re hungry but you don’t really feel like cooking. I guess pasta’s pretty easy. Suddenly you’re faced with this. That’s so many choices. Do you go for the classic tomato basil? How ’bout creamy Alfredo? But what exactly is the difference between these two or these three? Wait. Why is this so hard? Trader Joe’s is the surfy, laid back grocery chain know for it’s cheap prices and floral print clad staff. Data science professionals have ranked it number one in customer preference for two years running. The brand has held off on going high tech. They keep it simple with no online store, no loyalty programs, and no sales. When you break it down to square footage, Trader Joe’s is actually selling more than double its competitors like Whole Foods. But how much money you spend at Trade Joe’s ultimately comes down to what you are choosing to buy. But what about Trader Joe’s makes it so easy to choose?
Barry Schwartz: I spent, I’ve spent the last 25 years studying how people make decisions.
Narrator: That’s Barry Schwartz, a psychologist, a professor, and a Trader Joe’s enthusiast himself.
Schwartz: I think Trader Joe’s is the best example of how the world should be constructed.
Narrator: Whoa, take it easy there Barry. Barry coined the term the paradox of choice and quite literally wrote the book on it and it basically describes how you would think that the more–
Schwartz: Choice we have, the better off we are. That turns out empirically not to be true. When you give people too many options, they get paralyzed instead of liberated.
Narrator: The store has always focused on a unique selection of products rather than a large amount of them. I wanted to find out if there was choice-limiting going on at Trader Joe’s. So I went to my local market to count some things. I counted 144 pasta sauces, 44 olive oils, and 172 cereals. That’s a lot of choices. So then I went to Trader Joe’s. And they had an approachable 14 pasta sauces to choose from. Same goes for olive oils, canned beans, and cereals. At Trader Joe’s, there’s simply less to choose from. So then I asked Barry if he thought Trader Joe’s perhaps had inklings of the paradox of choice in mind when designing their shopping experience.
Narrator: Well then what exactly would explain why Trader Joe’s practices a scaled down approach to shopping?
Schwartz: They probably did it as a way of controlling costs. Managing inventory, you know, simplifying the supply chain. And somebody thought that if you offered other kinds of value, people would be willing to forgo options. You can’t have everything but anything we’ve got is worth having and we make your life simpler.
Narrator: In fact, when you look at Trader Joe’s humble beginnings, the original Joe, Joe Coulombe, founded the business on quality over quantity. Trader Joe’s made $13.3 billion in 2017 a number that’s likely going up. The core of any business is the customer service which Trader Joe’s excels at. The employees, or crew-members as they’re called, are all extremely attentive and helpful. In short, they’re there to make your life easier. This ideology is embodied in their food as well specifically their frozen food. And Americans have always had a certain affection for a heat-and-serve mentality. Frozen dinners are easy, fast, and little mess. However, about half the time, the frozen section aisle remains pretty empty. According to Phil Lempert, a supermarket analyst, this is due to the frosty barrier of the freezer section. Opening that icy cold door likely means you’ve already committed to purchasing something which doesn’t tend to lead to much product discovery. Compare that to Trader Joe’s open freezer bins and you can start to see the difference.
What role do unique product labels play in convincing customers to spend more at Trader Joe’s?
Sneaky Ways Trader Joe’s Gets You To Spend Money
As one of the biggest grocery chains in the United States, Trader Joe’s has a reputation for offering affordable and high-quality products. But, behind the colorful packaging and charming atmosphere lies a well-crafted strategy to get consumers to spend more money. In this article, we will explore some of the sneaky ways in which Trader Joe’s encourages shoppers to spend more.
1. Enticing Product Placement
One of the most effective ways that Trader Joe’s gets you to spend more money is by placing their most alluring products at eye level. The store’s most popular and visually appealing products are usually placed in the middle shelves, making them easy to spot at first glance. This can cause a customer to buy more than what they intended, as they may make impulsive purchases based on the placement of these products.
2. Private Label Products
Trader Joe’s has a collection of private label products that they sell under their own brand, often at a lower price than brand-name alternatives. While this may seem beneficial to shoppers, it can actually lead to overspending. Customers may trust the Trader Joe’s brand so much that they end up buying more products than necessary because they believe they’re getting more bang for their buck.
3. Limited Time Offerings
Trader Joe’s consistently introduces new and exciting products on a seasonal basis. These limited-time offerings are usually the talk of the town, attracting shoppers to the store in droves. The anticipation of these products and their limited availability can drive customers to spend more money than they usually would, ensuring that Trader Joe’s products remain in demand.
4. Custom Labels
Trader Joe’s unique and quirky product labels make it a standout grocery store. These product labels feature fun and eye-catching illustrations and catchy names that make you want to try whatever product is inside the packaging. This tactic makes customers feel more connected to the product, as they are buying an experience rather than just a product, leading to increased customer loyalty and, consequently, increased spending.
5. Sampling Stations
Trader Joe’s is known for its generous sampling stations scattered throughout the store. These sampling stations offer customers the opportunity to try products before purchasing them. While the purpose of these stations is to convince customers to buy a product, they often lead to customers trying new items and buying more than they initially intended.
In conclusion, while Trader Joe’s may seem like a humble neighborhood grocery store, it employs several tactics to get customers to spend more money. From enticing product placement to private label products and limited-time offerings, Trader Joe’s knows how to appeal to its customers. While these tactics are effective at getting customers to make purchases, it is crucial to be aware of them to avoid overspending. Remember to stick to your shopping list and not let the store’s tactics sway you.
