Why Trader Joe’s Is All The Rage

trader joe's

In Denver, we have become accustomed to the Walmarts and King Soopers grocery stores that are abundant throughout the metro area. But a California player has entered the Colorado market in the last decade and people are thrilled. Even today, yet another location is opening up in downtown Denver, bringing the total number of Trader Joe’s stores in the Denver metro area to four. This Southern California chain is impressive in its own right because of the manner in which it sells its products. It does not directly, and cannot truly, compete with the likes of King Soopers and Wal-mart in Denver, but it offers an intriguing alternative to the routine. The entry into the market embodies just how lucrative the Denver commercial real estate market has become.

Trader Joe’s differs from its counterparts by stocking significantly less than other grocery chains. While typically a grocery store will stock 50,000 items, a Trader Joe’s will usually only stock 4,000. Less stocking means that their items can disappear quickly, but it also allows the company to operate profitably and therefore lower its prices compared to competitors. The appeal of a Trader Joe’s is that many of its products are sold at discounted rates that are simply unbeatable by other grocery stores. This is especially true of fruits and vegetables, where prices can be as low as half normal rates at competing grocery stores. This business model is reinforced by selling at least 80% of its items under its own Trader Joe’s label. Trader Joe’s accomplishes this by making a deal with local and international small-time vendors, requesting to sell their products with the Trader Joe’s label. Furthermore, they request that these vendors don’t publicize the relationship, to ensure that vendors aren’t capitalizing on the success of the Trader Joe’s brand. In return, Trader Joe’s sells their products directly, and allows for a direct supply and demand relationship that essentially skips the middle men. This business model allows Trader Joe’s to mark down their prices, and consumers are not about to complain.

There is a drawback to this model however. While profitable, it will never be able to keep up with the likes of Walmart and Kroger because it won’t maintain massive stockpiles of its items. Items frequently become discontinued at Trader Joe’s, or become replaced for future products. Until Trader Joe’s finds a way to stockpile considerably more items cheaply, it will not be able to truly compete with major grocery store chains. But for the time being, it’s a phenomenal alternative to major grocery stores every once and a while.

How To Use This Information

Successful businesses operate by introducing innovative business strategies that compel customers to purchase goods and services from them. Understanding how other businesses are innovating can help your own prosper, and Capital Realty Group understands this just as well as anybody. We innovate ourselves with our unique REAL-Ized Visions approach to commercial real estate in Denver. The tenets of this approach include a diverse portfolio of commercial real estate properties so that we can always find properties for any client’s desires and at the best rates possible. For more information on Capital Realty Group, visit our website, or call us at 303-573-0377.


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This post was written by Capital Realty