Trader Joe’s Summary

Please provide summary of attached paper and answer following questions:

– How do firms in the supermarket industry make money?
– What are the key sources of Trader Joe’s competitive advantage?
– What are the main threats to Trader Joe’s competitive advantage? Is their advantage sustainable?
– How would you modify Trader Joe’s strategy going forward?

Ager and Roberto (2014, p. 4) offers an account of how the supermarket industry has evolved with the key focus on Trader Joe’s. According to the review, the increase of players in the industry has led to significant reduction of the market share for others. Notably, some companies have left some markets due to the competitiveness presented by rivals. The focus on Trader Joe’s competitive strategy and sustainability shows how the company has relatively faired well compared to rivals. The authors identify that supermarkets in the past operated on very thin profit margins. Innovations and effective strategies have transformed the industry into a high-end medium market or a discount market (Ager & Roberto, 2014, p. 4).

Supermarkets make money by engaging in many strategic channels. In this light, the supermarket industry has been consolidated into either premium, where they sell specialized products or low-cost outlets, where they sell discounted products. For instance, Whole Foods was the leading retailer of organic natural foods in 2012, following the consumer trends and willingness to pay a premium for organic natural products. Subsequently, the company was able to grow in profits. Other stores such as Walmart have large consumer following due to their low-pricing strategies that lead to more sales.

The key sources of Trader Joe’s competitive advantage include the value chain, employee satisfaction, and motivation through good compensation, the supply chain; strategic locations, effective marketing strategies, and focus on the target market.

The main threats to Trader Joe’s competitiveness and sustainability include increased rivalry within the industry, the analogy of Trader Joe’s strategy by rivals, lack of technological innovativeness, increased use of ecommerce by consumers, and a high number of substitutes in the industry.

Modification of Trader Joe’s strategy should focus on embracing technology and ecommerce. The approach will enable the company to compete effectively with industry leaders such as Amazon and Walmart. The company can exploit cheap marketing strategies through social media channels, which have become popular among the consumers.

Reference List

Ager, D. L. & Roberto, M. A., 2014. Trader Joe’s, s.l.: Harvard Business School.

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