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Lessons from Trader Joe’s

by Ryan Joy — August 26, 2010

This month’s Fortune Magazine features a wonderful article on Trader Joe’s, and it made me think about the kinds of competitive advantages that are often overlooked.

1. Distinctive private brands are a competitive advantage. From “Two Buck Chuck” to “Trader Jose’s” to “Reduced Guilt Potato Chips,” Trader Joe’s does not carry generics; they skillfully craft private brands.

2. Culture is a competitive advantage. Employee culture is a source of innovation and authentic customer connection. It’s also a powerful advantage in employee recruiting and retention. Trader Joe’s pays higher than average, encourages creativity and fun, and has built a reputation as being a great place to work.

3. Stories are a competitive advantage. Who knew that procurement was such a resource for storytelling? The tales of the Trader Joe’s buyers trotting across the globe to find the most interesting products have become a powerful part of the store’s identity. What are your most potent stories?

4. Customer experience details are a competitive advantage. Like any other relationship, your relationship with customers is won or lost in the little things. Trader Joe’s has developed specific, standardized customer service practices, like commenting on a product in your basket as you check out, carrying stickers for kids, and ringing a bell for front end service help. These are practices that flow from an empowered employee culture, and a management team that recognizes a good idea worth spreading.

5. Personality is a competitive advantage. Most businesses don’t talk about the personalities of their brands, much less develop them as competitive advantages. But think about it: if you take away TJ’s fun, offbeat approach to everything from uniforms to the Fearless Flyer, they lose a key component of their appeal.

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