Online ordering is kind of a big thing these days, if you haven’t heard of it yet, and just about every supermarket chain in America offers curbside delivery and pickup. Except Trader Joe’s.
Online ordering is kind of a big thing these days, if you haven’t heard of it yet, and just about every supermarket chain in America offers curbside delivery and pickup.
Except Trader Joe’s.
The private company, which began in 1967 to attract counterculture shoppers overlooked by mainstream stores, shuns delivery because its brand identity is wrapped up in its distinctive food brands and nautical-themed stores. A company motto: “The store is our brand.”
E-commerce is a costly endeavor for businesses, and Trader Joe’s business model is ill-suited to delivery, retail experts say. But Trader Joe’s resilience makes it vulnerable to losing buyers who have grown accustomed to the convenience of online ordering, especially during the pandemic.
“Trader Joe’s is skeptical of change. They have something that works really well,” said Benjamin Lorr, author of “The Secret Life of Grocery Stores.” “The channel has been very slow to adapt from its core model and core competencies.”
Delivery is expensive for stores. Many supermarkets have outsourced logistics to third-party platforms like Instacart rather than hiring their own staff to handle orders. These platforms use a network of contractors to pick customer orders from store shelves and deliver them to their homes.
But Trader Joe’s stores are already overcrowded. Trader Joe’s presses a limited number of items from small stores, many of which are on city street corners. Extra people inside stores or cars in parking lots would make Trader Joe unbearable. Curbside collection would also be difficult to implement for these reasons.
Although Trader Joe’s may choose to build warehouses to meet grocery orders, it would be a huge investment for the company, which could force it to raise prices or cut wages.
“Creating an online shopping system for curbside pickup or delivery infrastructure – that’s a huge undertaking,” Trader Joe’s VP of Marketing Matt Sloan said in a podcast. business in 2020. “It’s something that takes months or years to plan, build and implement and it requires huge resources.
Trader Joe’s also introduces and discontinues products more frequently than many competitors. This strategy contributes to the treasure-hunting experience of browsing the store and drives impulse purchases from customers. But it is difficult to recreate this environment on a website.
Trader Joe’s offered New York delivery for many years, but ended the program in 2019 due to high costs and limited space.
“Instead of passing unsustainable cost increases onto our customers, removing delivery will allow us to continue to deliver exceptional values … and better utilize valuable space in our stores,” a spokesperson said. ‘era.
The company was caught off guard during the online shopping boom of 2020 and 2021, when many customers limited their visits inside stores to protect against Covid-19 and instead ordered from home.
At the height of the pandemic, 20-30% of grocers’ business moved online. By the end of 2020, online grocery purchases had reached 9-12% of the total market, a threefold increase from pre-pandemic levels, according to McKinsey.
E-commerce will continue to grow and will reach 14% to 18% or more of all grocery sales over the next three to five years, McKinsey predicts.
Trader Joe’s lack of online presence means it will miss out on that significant market share and put it behind rivals like Kroger and Amazon-owned Whole Foods, which have invested billions of dollars in their online ordering systems. .
In fact, even pharmacies and convenience stores like 7-Eleven have a delivery option these days. And Costco, Aldi and other discount grocers that have resisted moving online for years have succeeded.
“This seems like a potential missed opportunity on the sales side,” said Steve Bishop, co-founder of retail consultancy Brick Meets Click. “It’s a growing and increasingly important part of the business.”
™ & © 2022 Cable News Network, Inc., a Warner Bros. Company. Discovery. All rights reserved.