Cost Leadership in Regard to Trader

Question:-

Analyze the concept of Cost Leadership in regard to Trader Joe’s company and the issue present in the Concept in Action

Answer:-

 It was initially founded as Pronto Markets in 1958. The founder of Trader Joe’s Joe Coulombe opened the first store of the organization in 1967 in Pasadena, California. The headquarter of Trader Joe’s is in Monrovia, California, US. The organization offers amazing food and drink products with very fine quality. Trader Joe’s is known for its quality product. The potential customer of the company can find more than 4000 items and all items within the organization are sustainable (Ebster & Khalil, 2014). A traditional grocery store offers more than 16000 items but Trader Joe’s has limited items to sell. The key products of the company are private label staple foods, specialty products, as well as organic foods. The annual revenue of the company is $13 billion. There are more than 500 retail stores operating in the country.

Trader Joe’s is facing very tough competition in the market and its key competitors are Walmart, Whole Foods Market, Fairway Market, Meijer, and Nature Box. All key competitors have a significant presence in the market (Sakyi, 2019). Hence, it is important for Trader Joe's to gain a competitive advantage to outdo its key competitors. The organization has taken various steps to reduce the overall organizational cost in order to enjoy the benefits of cost leadership such as Just-in-Time. The company also purchases products directly from manufacturers. It helps the organization to reduce the cost of a third party. Apart from this, Trader Joe's is strongly focused on sustainability that is a very effective step towards competitive advantage but it has also led the organization to reduce the number of items being sold by the company. The company is selling only around 4000 items whereas its competitors have more than 50,000 items to sell. Trader Joe's has positioned the company as a Neighbourhood grocery store. On the other hand, the organization is constantly changing the item mix and reducing the number of items available in the store (Barry, 2017). It may create a negative image of the organization in the market because it cannot provide all items needed by households.

Resolving the issue

Trader Joe’s needs to resolve the identified issue in order to further improve the performance of the organization. On the one hand, the strategy of the organization towards sustainability will help the organization to improve its performance by attracting those customers who prefer the sustainable product. On the other hand, it will reduce the number of items being offered by the organization to its potential customer. This is the major concern of the organization because it will affect the performance of the organization. Hence, the organization needs to find a more sustainable way to increase the number of items on its shelves (Maamoun, 2020). Increasing the number of items will help the organization to strengthen its positioning statement and position in the market.

Recommendation

The following recommendations should be followed by the organization to resolve the issue and enhance its performance.

The organization has limited items to offer to its potential customer that could affect the performance of the organization. Hence, the organization should focus on increasing the number of items to offer to its potential customers. It should serve as a one-stop-shop for its customers so that the customer does not feel the need to visit another store to purchase products (Gielens, 2018). The organization also needs to deliver the value that it promises to customers. For example, it positions itself as the neighborhood grocery store and hence the organization should make its customers feel that the organization really serves as a neighborhood grocery store. Apart from this, the focus of the organization should also be on