4 March 2018
There are lots of reasons why customers love Trader Joe’s, who recently topped dunnhumby's Retail Perception Index (RPI) study. The RPI ranked US retailers according to which stores customers said were winning their hearts and wallets because they brilliantly deliver on retail basics, plus a little more.
And that ‘little more’ is stirring a stratospheric level of emotional loyalty for the Trader Joe’s brand which is, in turn, driving industry-leading sales per square foot.
So, what’s the secret? I see four elemental qualities of the TJ’s experience that all retailers really ought to be doing, but desperately few are delivering, and none better than the retail brand that customers most love:
Beautiful, Quality Cheapness
Customers find that Trader Joe's offers bargain-shop prices for gourmet goodies by having virtually no advertising budget, avoiding typical bad-habit back margin practices with vendors and silly promotions, and ruthlessly axing unpopular or low-selling products. TJ's sees itself as a “first stop shop”, therefore free not to carry everything and to reject high price volatility accordingly.
And it’s cheapness with quality. Over and above the obvious conversation about ingredients or composition of a product or service, let’s think about how stores give clues about quality (consciously or not) and about how customers might interpret the messages.
Here are 5 things that customers experience in store that can shape their perceptions of quality and that Trader Joe’s are winning on:
1. Product packaging, display and presentation
2. Variety / Range
3. Staff visibility and knowledge
4. Return policy. Best practice = no questions asked, return for any reason, and TJ’s are famous for this.
5. Theatre / Romance
Love thy Customer
It appears that some retailers really hate their customers. Really. Consider how difficult it is for shoppers to navigate a large store to find the items they need, to choose between 45,000+ SKUs, to dodge floor stacks and other impediments, and to wait in long checkout queues. Retailers and brands are asking customers to digest quite a lot: in any given month in any given store, any typical customer sees, on average:
It is little wonder that customers are distracted and confused by all this stimulus.
Trader Joe’s, on the other hand:
They act as customer-obsessed about their brand and about keeping it very simple, and strive to avoid complication at all costs so customers get the best value. In short, Trader Joe’s demonstrate loyalty TO their customer on many levels, and customers respond by giving more of their custom in return.
Clearly customers’ motivations go way beyond just price: convenience and speed, product quality, excitement by being thrifty, discovering new deals and finding special surprises are all important, and Trader Joe’s are answering customer needs in those regards as well.
Trader Joe’s empower their ‘crew members’ and insist that they be amazingly friendly. As one customer writes:
Trader Joe’s obviously schools its employees and management to be the exception to the rule that grocery stores are staffed by workers who punch a time card, push a broom, and don't want to be bothered with pesky shoppers asking questions and wanting things. TJ's staffers wear comfy clothes, they smile like drunken birthday clowns [emphasis mine], and they're full of product knowledge and shopping suggestions for any and everything in the store -- from bath salts to fingerling potatoes. They are friendly, helpful and accommodating, and seem as sunny as a bucket of sunflowers. Perhaps they are only pretending to care about their customers' every whim and fancy, but they do it so convincingly that you kinda wish you could shop there for used cars and home appliances, too. (Jenn Wohletz, in Westword magazine, Feb 2012)
Human, Clever and Quirky
Trader Joe’s connect with their shoppers on a human and people level, and that’s why they win hearts as well as wallets. They are offbeat and unusual, and demonstrate a sense of humor about themselves (as seen in some of the brands mentioned above, with the famous “Two Buck Chuck” wine offers and in the Hawaiian shirts worn by crew members).
For customers, TJ’s create excitement and a sense of discovery without intimidation. It’s surprising, delightful, energetic, and fun.
Can’t buy me love?
Many undifferentiated mainstream retailers are delivering minimal value to their shoppers, because they’ve lost the customer plot, according to the RPI study. Very few retailers are standing out above the crowd.
In this age of “differentiate or die”, I passionately believe that the only answer to being agile at retail - and indeed to survival - is to follow the customer, to understand the consumer better than any of the competition, and to deliver on brilliant retail basics, everyday. Everyday.
More importantly, I believe, is to create relationships and experiences that are deeply human. In our age of AI and machine learning, it is critical that we always apply HI – human intelligence – with profound empathy about people.
That’s what Trader Joe’s do well, and why customers are showing them love.
This is the third in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.