Trader Joe’s opened its first Austin store on Sept. 20.
BIZMOLOGY — I don’t consider myself a Trader Joe’s super fan. I never had stepped foot in one of the specialty food chain’s stores before. But there I was, on a rainy Friday morning, along with hundreds of other people waiting for the grand opening of Austin’s first Trader Joe’s. I had to find out for myself: What’s so great about this place?
People have been buzzing about Trader Joe’s opening in Austin for a very long time. The grocery chain from California has more than 375 stores in more than 30 states, and that footprint is aggressively expanding. Trader Joe’s first entered Texas (home to natural grocer chain giant Whole Foods) in 2012 and plans to open around a dozen stores here within the next two years. The one that just opened in Austin will soon be joined by two more, and people couldn’t be any more giddy about it.
Once the doors opened for the 8 a.m. grand opening, people were greeted by employees draping flower lei around their necks and festive steel drum music. Inside, everyone was happy, smiling, chatting with friends in the jam-packed aisles, waxing poetic about things like mango shaving cream, and debating the merits of Cookie Butter (crunchy versus creamy).
I turned to one very happy shopper as we stood in the checkout line and asked, “What is it about Trader Joe’s that gets so many people excited?” She had a simple answer — the products.
Trader Joe’s now carries more than 3,000 private-label products, and the segment accounts for around 70 percent of the grocery chain’s sales. One of its signature offerings, Charles Shaw brand wine (also known as Two Buck Chuck), sells for $2.99 a bottle. Colleague and grocery guru Alex Biesada writes in the Hoover’s Trader Joe’s profile that the chain’s exotic mix of private-label products, along with its hip vibe, draws shoppers into its stores despite its limited selection relative to traditional grocery chains.
Trader Joe’s offers more than 3,000 private label products.
Put simply, you can get things at Trader Joe’s that you can’t get anywhere else. And people can go to some rather extreme lengths to get their hands on Trader Joe’s goods. A quick search on eBay returned more than 1,500 results. A shop in Canada (where there are no Trader Joe’s) also resells Trader Joe’s private-label goods at a premium.
But Trader Joe’s isn’t the only grocer to have its own line of products. Most other stores including Kroger, Whole Foods, Wal-mart, and Costco have them. Private-label products are increasingly popular, and companies within the grocery store and supermarket industry are pushing to increase sales of store brands.
The main reason for the explosion in private labels is that they are more affordable than nationally branded items. Consumers appreciate that. Private-label brands also help boost stores’ profit margins, and that’s huge in an industry with extremely low margins and big competition.
Other benefits to private-label brands is customer loyalty and exclusivity. People get attached to certain items, foods, and flavors and can only get those items in certain stores.
Trader Joe’s also promises that its private-label products are made without artificial colors or preservatives, no MSG, or other scary ingredients. And the chain’s formula for success seems to be working. Estimated sales reached $9.5 billion in fiscal 2012, up about $1 billion from a year earlier. That’s a lot of Cookie Butter!