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Should Trader Joe's expand their US store network? How can Trader…
Should Trader Joe's expand their US store network?
How can Trader Joe's profitably expand their store network in the United States while maintaining their outside image and internal culture?
Financial Situation
Financial Base
Equity
Debt & Interest
Cash Flow
Operational Base
Revenues
Number of stores
Number of clients per store
Share of wallet per customer
Costs
Number of stores
Per store cost
Asset Base
Assets
Liabilities
Environment
Regulatory / Legal
Market
Size
Growth
Margins
Customer Preferences / Product-Market-Fit
Trends
Demographics
Economics
Competition
Rivals
New entrants
Substitutes
Supplier Relations
Operational Situation
Sourcing / Supply
Commercial Operations
Marketing
Store Marketing
Print Marketing
Digital Marketing
Event Marketing
Image / Brand
Commercial Initiatives
Store Operations
Employees
Technology
Market Expansion Goals
New Business
Existing Target Group
Number of customers
Share of wallet
Number of items bought
Pricer per item
New Target Group(s)
Number of customers
Share of wallet
Number of items bought
Price per item
Synergies
Revenue Synergies
Similar Products
Commercial Synergies
Cost Synergies
Economies of Scale
Economies of Scope
Available Options
No store expansion
Increase number of customers per store
Increase share of wallet per existing store customer
Store expansion
United States
International
Implementation Plan
Roadmap
Responsibilities
Capability Building
Location Identification & Investment
The information from the case focuses on the following points, which the analysis should work with to start with:
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• Problem
○ US Store Expansion
○ Fear of losing image
○ Increased competition amongst employees
• Competition,
○ new market entries
○ Thin profit margins, thus cost competition
○ Different types of substitutes / new entrants
§ E-commerce (Amazon)
§ Supermarkets
§ Discount retailers (Walmart)
§ Warehouse clubs (CostCo)
§ Pharmacy chains (CVS)
• Store Operations
○ Number and size of stores per region and store growth
§ Old strip malls in suburban locations
§ Low-tech
§ 10-15k square foot in size
□ Supermarkets are usually 40-50k
□ Small SKUs (4k vs. 50k)
○ Highest sales per square foot
○ Higher ROI than competitors
• Products
○ 80% private label, secret partnerships
§ New products that are not in trend (10-15 per week with the same amount eliminated)
○ No fresh food, frozen
• Supply Chain
○ Direct purchase from suppliers
○ Limited variety, large quantities at low price
• Customers
○ Highly educated, health conscious, open-minded, rather wealthy, probably old and young
○ Hype around company, good word of mouth, Facebook campaigns to open stores, store camping pre-opening
○ Talk to each other in the stores
• Marketing
○ Do it yourself
○ Flyers
○ Occasional radio ads
○ No social media appearance
○ No loyalty program or coupons
○ Money back guarantee
• People
○ Staff well paid
○ Many artists, musicians, freelancers, bc of healthcare policy
○ 5% hiring of all applications
○ Extroverted staff that emphasizes with customers and has fun working creating a good customer experience
○ Strong values and culture