Trader Joe's Competitive Advantage

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1. The U.S supermarket industry is a mature, low profit margin industry, with intense competition among competitors over capturing market share. The industry is being polarized into highly diversified premium and discount ends of the market by intense rivalry. Strategies of big-box discounters such as Walmart and Target, has resulted in growth of their market share, while their strategies on grocery sale as a means of driving traffic to their stores have resulted in a 51% decline of grocery sales in supermarkets. Additionally, premium players such as Whole Foods who offer high end products have been successful in creating a loyal high-end customer base. Understanding customer behavior, and pricing strategies of competitors have become important variables in determining the success of the industry. To better analyze the…show more content…
There are a few potential threats to Trader Joe’s competitive advantage. The speed with which they plan to grow could be a potential source of threat to their business model. The faster they plan to grow on a national level, the more they may risk losing their charm and entrepreneurial spirit. After all, it is the uniqueness of their business model that gives them an edge over other competitors in the market. Growing bureaucracy as a result of developing new procedures and processes may prevent the growth of that culture among employees. Another potential threat to their competitive advantage might be increasing wage expenses due to different economic factors in future. With their long-standing reputation in paying medium wages relative to the community, this increased expense may decrease their profit. The increasing threat of competition and polarization of the market by high-end premium retailers and big-box discounters such as Wal-Mart is another threat to the future of their competitive advantage. With intense competition, superior products may be sold at lower prices, shrinking market share for Trader Joe’s in the long

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