Trader Joe's is a privately held American grocery store business headquartered in Monrovia, California. The name of the company comes from its founder, Joseph Joe Coulombe, who launched it in 1958. Once 7-Eleven, a competitor to Pronto Markets, entered the market in 1967, the company that was originally known as Pronto Markets renamed to Trader Joe's. In this aspect, Joe believed that the competition would be detrimental to their success. He came up with the idea of Trader Joe’s after noticing the large number of American nationals who upon travelling returned home having a taste for wines and foods that the supermarkets by then were not able to satisfy. In the year 1979, Theo Albrecht bought the company from Joseph Joe as a personal investment. The company has experienced many changes over the year that has shaped them creating competitive advantages for the company. Furthermore, the company created a brand and bond with the customers that they looked forward to shop at Trader Joe’s (MIT, 2011).
Analysis of Trader Joe’s
Competitive Advantage
This is something that puts a corporation in a position that is superior to other companies in the same field. Competitive advantage by a company can be gained from a number of concepts such as differentiation advantage and cost advantage. Cost advantage is a situation where the firm works to ensure it is the leader in the industry in terms of the costs hence employing a cost minimization strategy. On the other hand, a differentiation strategy is a situation where the company providing services or goods that are unrivaled and unique in comparison to the competitors. These two strategies are a way of value creation hence creating competitive advantage for the company (QuickMBA, 2017). However, there are many ways of achieving competitive advantage and leading other organizations.
Trader Joe’s has managed to gain a competitive advantage by being a cost effective leader in the retail grocery industry. This is where Trader Joe’s management have incorporated a business strategy where they only pack their products in their branded or private labels as opposed to the name brand for the products in the store. Differentiation is also a strategy that Trader Joe’s has used in its measures to stand out in that they have constantly changed their stocks. This is in light of the demand they get from their customers as they travel. Trader Joe’s as a result has always satisfied their customer needs by availing these products to their customers packaged and sold at relatively low prices profitably (Kleiman, 2015).
Furthermore, Trader Joe’s has managed to gain competitive advantage through other means of cutting down the cost such as renting of space that is cheaper in the existing shopping centers in the neighborhood that they operate. This has been done through eliminating the middle men by directly dealing with the producers of their products. Consequently, the costs associated with their products is reduced. Additionally, a very efficient inventory system has helped in cutting down the expenses and therefore improving the company’s competitive advantage. As such, Trader Joe’s little room does not allow them to have excesses hence they have to capitalize on the space they have. This has helped made the company have precise orders for their distribution centers (MIT, 2011).
Others factors such as the employees being adequately remunerate and provision of benefits even to the casual workers is also another way that the company has been able to motivate its employees who as a result lead to the best customer service in the retail grocery business. A happy customer is what they advocate and this is an achievement by their happy workforce. In addition, the unique attire that that the employees wear; Aloha shirts and nautical titles prefacing employee names makes it fun to shop at Trader Joe’s. Safeguarding their supply chain by ensuring high levels of secrecy and trust ensures a unique relationship with their suppliers. All these qualities in the company give it a competitive advantage over other companies that are in the same industry (MIT, 2011). Trader Joe’s therefore, has been successful in their competitive advantage strategies with many ways that have given them chance to be a step ahead of its competitors.
Change Management
This is the structured approach where the individuals, organizations, and teams undergo transition from a current state to the future state in pursuance to the implementation of the organizations vision. Change management can be view from the perspective of a systematic process, as a means for transitioning people, and as a competitive mechanism.
Therefore, as a systematic approach, change management is the way corporations deal with the changes that arise from the internal and external conditions. In this regard, these conditions necessitate the definition and adaptation of company’s strategies, procedures, structures, and technologies. As an end to transitioning people, Change management entails the activities that in effect will lead to a smooth transition from the way the organization currently work to the intended way that they should be working. As a competitive tactic, this is where the organization has to acclimatize itself to the market place. It is a continuous process of ensuring that the organization metamorphosis leads to the organization being aligned with the marketplace, and even being more efficient in the alignment than the existing competitors do not possess (Daniella, 2016).
Trader Joe’s has been able to employ all the three Change management approach in its history. As a systematic approach, Trader Joe’s has been able to adapt to the external conditions that were seen in their initial stages when they were called Pronto Market. Pronto Market rebranded to the current name Trader Joe’s because the company needed to stays afloat. Trader Joe’s therefore, sought to rebrand the organization to a different strategy and structure that would ensure that they are unrelated businesses with the 7 Eleven hence ensuring the continuity of their business to date.
Trader Joe’s has also been successful in using change management as a means intended to transition people to work from how they presently do to how they ought to. After changing from Pronto Market, Trader Joe’s has received ranking in being a customer service provider that is unrivalled. However, this has come at a cost because of set of activities aimed at achieving it. All the set of activities are aim at ensuring that Joe’s has a motivated and a happy work force. The trader Joe’s company remunerates its employees well from the store managers and the supervisory crew. The company has also been able to plan and ensure that their staff can receive astonishing salary increments. They also have a provision for their crew to have a retirement benefit and health related plans are available for the eligible crew. These health benefits include dental, medical and vision plans, the retirement benefit plans. As such, good remuneration are activities that have led to the transition change ensuring that the employees change to the ideal way of working.
From the genesis, Trader Joe’s was concerned about the provision of products that would satisfy the taste of many people travelling and coming home looking for products that were not readily availed in the local stores hence meeting the demand. Over time, they have been able to align themselves with the market and currently much as a typical store may stock over 50,000 items, they only stock 4,000 items where more than 80% of these bear their brand name. In addition to that, Trader Joe’s has been able to align itself with the changing environment by providing products that are environmental friendly. Their distributor’s policy of having utmost secrecy and trust has also been a factor that has seen Trader Joe’s aligning itself with the market and being ahead of their competitors. This is because they are able to control what they want and when they want by placing orders that are always on time. In this view, they have specificity in terms of what they want, and their business is a secret hence competitors cannot copy their moves (MIT, 2011).
Diversity Management
Ability to acquire dynamic skills and necessary knowledge allow effective and appropriate management of differences (Guilherme, 2011). Diversity on the other hand is the degree to which we have sameness and differences. Trader Joe’s has managed to handle its diversity in exemplary ways that has seen it have high competitive advantage and brought uniqueness in its processes. Currently, Trader Joe’s has over 4,000 items and of this, they have over 80% of this branded by themselves. Diversity here is all because of the customer demand that is unique and different from one to another. Their ability therefore to deal with the diversity of the consumers and that of their myriad products shows their level of effectiveness, efficiency and skill in management of diversity.
Recruitment and Selection
A sure way that Trader Joe’s has used to ensure success in their business is the ability to pick the right employee. Trader Joe’s looks for fun loving employees who take their work seriously and in addition can wear lightly. Trader Joe’s employees are classified according to Crew, merchant, Mate, Captain, and Office Crew. In order to achieve their desired need to provide customer service that is excellent, proper recruitment and selection is key for Joe’s. In recruitment and selection, Joe’s require highly motivated employees; this would allow the performance considering the system and a structure of the Joe’s that is decentralized. This means that an employee employed in Trader Joe’s ought to be able to handle customers and meet the customer needs. The reason for a strict recruitment is because with a decentralized system, employees have a personal thought in the service provision to their employees and they are able to work without being followed and bullied around. This will lead to employees being and feeling like they are a part of the company and they own the company. Owing to the fact that Trader Joe’s has received recognition as among leading service providers means that they have been successful in their recruitment and selection.
Compensation and Benefits
Trader Joe’s act of 2010 pays its members fulltime as from $40,000 to $60,000 per annum for the crew members and more than that for their store managers. This means that Trader Joe’s pays its employees above the union wages. Other benefits that the Trader Joe’s employees have are the health insurances that are the dental, medical, and even vision plans for their employees. Trader Joe’s provides their employees with generous discounts on their products, which is a motivator and a benefit. Furthermore, trader Joe employees are evaluated after every six months, this is a measure to keep the employees on toes and also a motivator or benefit as this evaluation can come with a pay increase.
The rigorous selection and recruitment process acts as is key because they need highly motivated individuals who can multitask as described in their job description. In addition to that, employees need to be trained on communication and marketing skills. This is where the Trader Joe’s University comes in as a benefit to the employees in bid to equip them (MIT, 2011). Therefore, Trader Joe’s has been successful in its compensation and recruitment strategies.
Organizational Climate
An organization behavior is governed by their organizational culture or organizational climate. It is a system of assumptions, beliefs, and values shared by the employees and it governs how the employees behave. In Trader Joe’s, the organizational culture entails an autonomous system where the employees have the autonomy to deal and handle employees in their own best way that is decentralized. Here, employees are valued as people and are treated individually. Through this autonomy, employees can be able to develop a personalized customer relationship (MIT, 2011) . The organizational climate on the other hand is one where employees are motivated and not disgruntled as angry employees because of poor pay.
This in effect will lead to an effective and efficient customer service that is desired by the management as the employees are taxed with obligations to provide an excellent customer service. This therefore means that Trader Joe’s is able to create an organizational culture of highly responsible and motivated workforce basing on their positive customer relationship. As such, Trader Joe’s have been successful in creating and maintaining an organizational culture that will produce best results and lead to better service provision.
Conclusion
Trader Joe’s strategies has made it stand out and had been successful in terms of their competitive advantage, change and diversity management, recruitment and selection strategies, good compensation of their employees, and above all an ideal organizational culture that promotes its core value of a happy customer relationship.
References
Daniella, G. (2016). Change Management Leadership Guide. Ryerson University.
Guilherme, M. K. (2011). Diversity Managment. ICOPROMO.
Kleiman. (2015, 2 13). Human Resource Management and Competitive Advantage. Retrieved from QuickMBA: http://www.quickmba.com/strategy/competitive-advantage/
MIT. (2011, 2 21). Trader Joe’s vs. Whole Foods Market: A Comparison of Operational Management.
QuickMBA. (2017, 11 1). Strategic Management. Retrieved from QuickMBA: http://www.quickmba.com/strategy/competitive-advantage/
