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Name
Instructor
Course
Date
Traders Joe
1. How firms in the supermarket industry make money
Grocery sales form a major item that most supermarkets deal with. The sale of general
merchandise such as electronic items, apparel, household goods, hardware and toys
further expanded the range of products that supermarkets sell. Whole Foods Market
operates a large number of stores in which they sell perishable products such as bakery
products, fruits and vegetables. The company which has invested heavily in the sale of
organic and natural food products has risen to higher ranks in the United States.
Dollar general operates large number of small discount stores. The stores deal with the
sale of laundry detergents and other toiletries. The firm reported a total of 4.8% in its
annual growth in the year 2012.
2. Financial ratio analysis and how the results reflect different strategies pursued by the four
firms

Whole foods Kroger Safeway Supervalue
Debt ratio 0.303 0.831 0.755 0.998
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Gross profit margin 0.349 0.209 0.270 0.222
Return on asset 0.080 0.026 0.034 0.086

The debt ratio indicates the relationship between a firms debt and assets. A higher debt
ratio is an indication that the firm faces a higher risk of being faced out of the market
which is a likely case in the Supervalue store.
Gross profit margin indicates how much profit a firm can earn without including its
indirect costs. Wholefoods is likely to earn more profits and that is why it forms the
backbone of TJs proceeds.
Return on assets measures compares the firms assets and its income. A bigger ratio is
more desirable than a small one. Hence from the above stores, Wholefoods is at a more
advantageous position.
3. The key sources of Trader Joe's competitive advantage
Offering of products aimed at sophisticated and educated consumers. Such products
include sprouted wheat bread, whole-bean coffee and black rice which were not
originally offered by supermarkets. This group of consumers formed the backbone of the
companys customer base.
Private labeling of items under brand names such as Trader Ming, Trader Jose among
others which made the firms products to stand out from the rest made the company to
wine over its competitors.
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Product diversification which saw the firm take up new products such as the sale of
pantyhose and music albums that enabled it to attract another set of consumers is key
towards finding space in the competitive environment.
The company aims at reducing its employee turnover through better remunerations thus
gaining their trust and confidence. It further developed a new approach in advertisement
such as the publishing of customers newsletters to attract more customers. Maintaining
adequate stocks on goods that are more preferred by the customers is one of the key
reasons why the firm has been able to maintain as well as to attract new customers. The
competitive advantages are streamlined on seven core values of the firm which include
integrity that is evident it the manner in which the firm deals with its customers and
suppliers. The company is product driven in order to meet the needs of its customers. The
company treats its store as the brand in the sense that individual products are not regarded
as brands but that is attributed to the entire store. Zero tolerance to bureaucracy which
encourages openness in the operations of the company and by taking the products to the
people by ensuring that they can access the stores anytime at their own convenience.
4. What are the main threats to Trader Joe's competitive advantage? Is their advantage
sustainable?
Concerns have been raised over increasing cases of bureaucracy in the company as it seek
to expand by increasing the number of its stores thus making them more accessible to the
consumers. The implementation as well as the adoption of new processes and procedures
has resulted in many employees demanding advancement and compensation for the new
roles that they have to take in the company. This has posed a challenge as the firms
competitors are likely to take advantage of the situation and take up some of the loyal
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employees of the firm. A major threat to its competitive advantage is its growth which is
taking place so fast making the firm to lose track of its unique cultural attributes and if it
remains low the firm may risk losing its key talents. The firm is unable to locate rental
properties at reasonable prices in its target markets. The firm is likely to face stiff
competition from firms such as Tesco that is planning to set its base in areas that Traders
Joe has been dominant. This means that their competitive advantages are not sustainable
in the long run.
5. How would you modify Trader Joe's strategy moving forward?
Trader Joe need to invest further on the taste and preferences of its consumers through its
unique cultural blend that allows its customers to express as well as define what they
expect form the company. Maintaining their focus on the customers will enable the firm
to outdo its competitors even as it seeks to expand to newer territories. Increased product
differentiation will enable the firm to meet the needs of its different customers due to new
pricing strategies associated with it. The shopping experience created is innovative and
unique in its own respect which makes the firm to differentiate itself from its competitors.