VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

BA123IU – PRINCIPLES OF MANAGEMENT - GROUP 05

GROUP ASSIGNMENT REPORT
CASE STUDY 1 – TRADE JOE
SEMESTER 241

Title: "Trader Joe’s: Keeping a Cool Edge"

LECTURER: PHƯỚC VÂN HẠNH

STUDENT IMPLEMENTATION – GROUP 1

Student’s ID Student’s Name
BABASY23043 Lê Đức Khải
BABAWE23073 Nguyễn Phương Nam
BABAIU23212 Huỳnh Hoàng Phúc
BABASY23042 Nguyễn Hồng Phúc
BABASY23039 Nguyễn Sĩ Trường Phát

HO CHI MINH CITY – 25/10/2024

 I. Introduction: History & Development of Trader Joe’s

Trader Joe's, originally founded by Joe Coulombe in 1958 as a chain of convenience

stores called Pronto Markets, has evolved significantly over the years. In an effort to
stand out in a competitive retail market, Coulombe revamped the stores, and in 1967,
opened the first Trader Joe's in Pasadena, California. The concept focused on offering
affordable, high-quality, and often unique products, creating a "food adventure" for
shoppers. With its quirky, nautical-themed decor, friendly staff, and a unique selection of
products from around the world, Trader Joe’s quickly became known for providing
exceptional value.

In 1979, the company was sold to the Albrecht family, owners of the Aldi grocery chain,
further driving its growth and success. Despite this change in ownership, Trader Joe's
maintained its signature blend of exclusivity and affordability. Today, Trader Joe’s
possesses over 365 stores expanded across the United States and has annual sales of
approximately $9 billion. After introducing the history and development of Trader Joe’s,
this following report will explore deeply about different aspects associated with their
business strategies and management process.

II. Discussion Questions:

Question 1: How does Trader Joe’s demonstrate the importance of the

management process - planning, organizing, leading, and controlling?
Trader Joe's shows off the importance of planning through the way that they serve
customers and set prices for their products. They not only strive to offer the highest
quality product for customers but also make their product suit any dietary requirement,
which satisfies several typical consumer demands. Employees and managers create
friendly and intimate customer service through acts such as dressing in conceptual
shirts, welcoming customers with smiles, handing out stickers to children or being ready
to refund any customer's dissatisfaction. By limiting its stock and selling high-quality
products at lower prices than competitors such as Whole Foods and Bristol Farms,
Trader Joe's made greater advantages to appeal to their customers.

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Besides that, they define the value of organizing by looking for tasty or unusual food
around the world, contracting directly with manufacturers, labeling each product with
catchy brands, and maintaining a small stock, which requires each product to fight for its
position on the shelf.

Trader Joe's also possesses great leadership skills, which is described by the way they
encourage their employees to taste and learn about the products, that's why they can
engage customers to share what they have experienced. Employees are trained by
customer-oriented employees policy, they are also responsible, knowledgeable, and
friendly to work at Trader Joe's. Its employees earn more than their counterparts at
other chain grocers ( Ex: In California, Trader Joe's employees earn almost 20% more
than workers at supermarkets such as Albertsons or Safe Way,...). Moreover, they
support their employees with starting benefits including medical, dental, and vision
insurance; company-paid retirement; paid vacation and a 10% employee discount.

Finally, after these above processes, controlling plays a vital role and accurately
measures how they operate. They control the operating sales through a " one in, one
out " policy, which means the items that sell poorly or whose costs rise would be
replaced with new ones in order to avoid rising costs. This policy is largely affected by
feedback from customers. If customers don't like something about the product, it will go
out. In contrast, discontinued products will be on the shelf if customers are vocal
enough, thus, creating a closer distance between customers and Trader Joe's.

Question 2: What risks does international ownership and global events pose for
Trader Joe’s?
Trader Joe’s, owned by the German company Aldi, faces several key risks due to
international ownership and global events, which threaten its performance effectiveness
and efficiency. One major risk involves global supply chain disruptions. As Trader Joe’s
sources products globally, it remains vulnerable to rising fuel costs, tariffs, and political
instability. These factors could lead to delays in product availability or increased costs,

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forcing the company to either raise prices or absorb additional expenses, both of which
would undermine profitability. Maintaining competitively priced products is crucial to
Trader Joe’s market position, and any disruption may weaken this advantage. Another
significant challenge stems from cultural differences in management between Aldi’s
German ownership and Trader Joe’s U.S. operations. Diverging management styles,
business practices, and expectations may cause inefficiencies or slow responses to
market demands. For example, while the U.S. market often requires rapid decision-
making to stay competitive, operational differences might delay the alignment of
corporate strategies, reducing overall effectiveness. Additionally, currency fluctuations
pose a substantial risk to Trader Joe’s international operations. Since many products
are imported, fluctuations between the U.S. dollar and foreign currencies, particularly
the euro, could drive up the cost of these goods. When exchange rates shift
unfavorably, Trader Joe’s risks higher import costs, shrinking profit margins, or raising
prices, potentially affecting sales.

Global supply chain issues, management differences, and currency volatility represent
significant risks to Trader Joe’s operational efficiency and cost control. If not effectively
managed, these factors could disrupt the company's ability to remain competitive in the
U.S. market.

III. Problem Solving:

1. Problem: At the age of 22 and newly graduated from college, Hazel has just
accepted a job with Trader Joe’s as a shift leader. She’ll be supervising 4 team
members who fill part-time jobs in the produce section. Given Trader Joe’s
casual and nontraditional work environment, what should she do and what
should she avoid doing in the first few days of work to establish herself as a
skillful manager of this team?

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 2. Solution:

First of all, it is notable that Hazel has been hired as a shift leader to supervise four
team members, even though Trader Joe’s traditionally promotes leaders from within the
company. Given that she is a recent college graduate with no prior management
experience, this may pose some initial challenges. However, by being mindful of Trader
Joe’s core values and leadership expectations, Hazel can still become the effective
leader she aims to be. One of the key areas Hazel should focus on is building a strong,
collaborative relationship with her team members. Trader Joe’s emphasizes equality
among all employees, meaning there is no room for hierarchical divisions between
leaders and staff. Hazel should ensure that her leadership style reflects this value by
involving her team in setting performance objectives and making decisions together.
This will help cultivate an environment where every team member feels valued and
heard. Since Trader Joe’s operates with limited product selection, Hazel’s role as a
leader will require her to equip her team with excellent product knowledge to maximize
the effectiveness of their customer interactions. She should encourage her team to
become familiar with the unique, high-quality products that Trader Joe’s offers, helping
them guide customers through the store’s curated offerings. By facilitating product
training and ongoing education, Hazel can ensure that the team is confident in
recommending products and addressing customer inquiries despite the limited range of
stock. Additionally, low advertising is a critical component of Trader Joe’s business
model. As advertising is minimal, customer service becomes the primary driver of brand
loyalty and promotion. Hazel should emphasize this to her team and encourage them to
actively engage with customers, provide personalized recommendations, and foster
word-of-mouth marketing. This level of interaction is essential for Trader Joe’s success,
and Hazel must lead by example in making every customer experience a memorable
one.

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IV. Further Research:

In comparison to other competitors, Trader Joe’s has illustrated some prominent

strengths and weaknesses that can determine their position in the market. Trader Joe’s
commitment to customer satisfaction is one of its strongest qualities as a grocery store.
By maintaining a limited selection of products, Trader Joe’s is able to quickly respond to
customer feedback, replacing unpopular items with new ones that better suit customer
preferences. This can only be achieved through close relationships between employees
and customers. When employees take the time to engage with customers and
understand their needs, customers are more likely to share their feedback openly. As a
result, Trader Joe’s can continuously improve its product offerings. Additionally, their
strategy of keeping small stores with limited inventory plays a key role in their success.
According to Schwartz, B. (July 2004), Trader Joe’s sells twice as much per square foot
compared to other supermarkets by restricting its inventory to around 4,000 niche
products. This helps customers avoid decision fatigue, making their shopping
experience more enjoyable.

Similarly, Trader Joe’s values its employees just as highly as Wegmans does. As Che,
J. (April 2015) noted, Wegmans’ CEO, Danny Wegman, attributed the company's
success in maintaining product freshness and quality to its employees, saying, “results
like these are only possible because of our people and because we are paying attention
to the things that matter most to our customers.” Like Wegmans, Trader Joe’s promotes
from within and offers competitive benefits to its staff. By recognizing the talents and
abilities of their workers, Trader Joe’s creates a positive work environment that
motivates employees to perform at their best, which in turn enhances customer
satisfaction.

Despite these strengths, Trader Joe’s faces some internal challenges. One notable
weakness is its ownership structure. As Kowitt (August 2013) pointed out, the company
is owned by the Albrecht family in Germany, who have limited involvement in U.S.
operations, visiting only once a year. While Trader Joe’s has managed to thrive under

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this ownership, the lack of direct oversight could present challenges as the market
becomes more competitive.

Additionally, Trader Joe’s minimal investment in digital marketing and online presence
could be a significant vulnerability in the digital age. Unlike competitors such as Whole
Foods, which has embraced both online and offline sales, Trader Joe’s relies heavily on
word-of-mouth advertising and has a relatively weak website. While this strategy allows
the company to keep costs low and offer more affordable prices, it may become a
disadvantage as consumers increasingly shift toward online shopping. The company’s
reliance on external manufacturers for its products, combined with limited advertising,
could leave it exposed to challenges such as economic recessions or global disruptions
like pandemics. Without a stronger digital presence, Trader Joe’s may struggle to
compete in an increasingly digital retail environment, where brand visibility and online
engagement are crucial for success.

References:
1. Che, J. (2015, April). The secret to Wegmans' success: It's all about the
employees. Forbes.
2. Daly, J. (2017). How Aldi’s Albrecht family became one of the richest in Europe
by keeping a low profile. Forbes.
3. Griffin, R. W. (Year). Case Study 1: Trader Joe’s – Keeping a Cool Edge. In
Principles of Management (12th ed., pp. C-2 to C-3). Cengage Learning.
4. Kowitt, B. (2013, August 23). Inside the secret world of Trader Joe’s. Fortune.
5. Miller, C. (2021). Trader Joe’s history: The evolution of an iconic grocery chain.
Business Insider.
6. Schwartz, B. (2004). The paradox of choice: Why more is less. Harper Perennial.
7. Trader Joe’s Company history. (n.d.). Trader Joe's Official Website.

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