Case Study #1 – Trader Joe’s: Managing Less with More
Due Date: No later than 9:40 AM
Thursday, February 7, 2013
Remember the importance of deadlines, both in and out of class. Please do not ask to hand in the assignment past the due date. If you miss this one for some reason, there will be another. Thanks!
Directions (use this as a checklist):
* Read Chapter 1 thoroughly
* Read both cases. One is about Trader Joe’s and the other is about Chobani Greek Style Yogurt.
* Answer each of the four questions with significant thought and further research. Rushing through this the last minute will show loud and clear.
* Your ...view middle of the document...
Affectionately nicknamed “TJ’s” by its loyal customers, the retail grocery chain of 365 U.S. stores typically stocks their 4,500 SKUs (stock-keeping units) in stores between 8,000 to 12,000 square feet. Compare this to 50,000 SKUs, the bustling variety carried in most mega-markets, in average store sizes of 46,000 square feet. Due to word-of-mouth advertising, Trader Joe’s spends a mere 0.2% of sales on advertising compared to competitors who typically spend at least 4%. Trader Joe’s is a model of how a company effectively performs the management functions of planning, organizing, leading and controlling. Today, the company stands for unique quality items like olive oil, Greek olives, brie and baguettes at peanut butter and jelly prices. Well known for its wine, in 2002, Trader Joe’s became the exclusive distributor of the iconic, alarmingly cheap two dollar bottle of Charles Shaw wine aptly nicknamed “Two-Buck Chuck.” Take a walk down any Trader Joe’s aisle and you’ll see the fundamentals of management at work -- a testament of how TJ’s has become more than just the average Joe of food retailers.
“Planning” Growth: From Corner Store to Foodie Mecca
In 1958, Joe Coulombe, an MBA from Stanford Business School, started a “7-11 style” corner store in the Los Angeles area which soon grew into a chain. While on vacation in the Caribbean, the Trader Joe South Seas motif resonated with Coulombe when he saw tourists returning home from their travels with hard-to-find food delights. In 1967, he opened the first Trader Joe’s store – and twelve years later, he sold the chain to the Albrecht family, German billionaires and owners of a discount supermarket chain based in Germany. How did this retail grocer grow to $8.5 billion in sales and attract an obsessive and diverse cult following of foodies, hipsters and recessionistas? Much has to do with its corporate culture, which includes everything from to how the company meticulously plans its store locations, manages its employees, and purchasing and branding strategies, to name just a few. Planning for new stores is premised upon offbeat strip mall locations. Purchasing is direct from manufacturers and sent to distribution centers to minimize “the number of hands that touch a product.”
Trader Joe’s Upside Down Pyramid
The notion of an upside-down pyramid can be used to describe the mindset at Trader Joe’s. Rather than given orders, crew members (nonmanagerial employees) are coached. They’re also given the go-ahead to open up a bag of goodies for customer sampling and taste tests. At the top of its pyramid are nonmanagerial (stockers and checkers) workers who interact with customers to provide a unique shopping experience. Shoppers are led by cheerful guides in Hawaiian print shirts to culinary discoveries such as lime and chili cashews, Chicken Gyoza pot stickers, salmon jerky, ginger almond and cashew granola, and baked jalapeño cheese crunchies. As evidenced by its cheerful and enthusiastic...