new york
CNN Business
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Online ordering is a big thing these days, in case you haven’t heard, and almost every supermarket chain in America offers delivery and curbside pickup.
Except for Trader Joe’s.
In the year The privately held company, which began in 1967, refused to appeal to counterculture consumers ignored by department stores because its brand identity was packaged with its specialty food brands and nautical-themed stores. One company motto: “The store is our brand.
E-commerce is a costly endeavor for companies, and the Trader Joe’s business model is not well-suited to delivery, retail experts say. But Trader Joe’s opposition leaves it vulnerable to losing shoppers accustomed to online ordering, especially during the pandemic.
“Trader Joe is skeptical of change. According to Benjamin Lorre, author of “The Secret Life of the Grocery Store,” they have something that works perfectly. “The chain is too slow to adapt to its core model and core competencies.”
Shipping is expensive for stores. Many supermarkets have outsourced logistics to third-party platforms such as Instacart. These platforms use a network of contract workers to pick customers’ orders from store shelves and deliver them to their homes.
But Trader Joe’s stores are already crowded. Trader Joe’s squeezes a limited number of items into smaller stores, many on city streets. More people or cars in stores can make Trader Joe’s in parking lots unbearable. For these reasons, curbside lifting will also be difficult.
Even if Trader Joe’s chooses to build warehouses to fulfill merchandise orders, that would be a big investment for the company, which could force it to raise prices or lower payments.
“Creating the infrastructure for curbside pickup or delivery of an online shopping system is a big undertaking,” Matt Sloan, vice president of marketing at Trader Joe’s, said on a company podcast in 2020. It’s something that takes months or years to plan, build and execute. Implementation requires enormous resources.
Trader Joe’s introduces and discontinues products more frequently than many of its competitors. This strategy contributes to a store-browsing experience and motivates customers to make impulse purchases. But recreating this environment on a website is difficult.
Trader Joe’s offered delivery in New York City for several years, but ended the program in 2019 due to high costs and limited space.
“Instead of incurring an unsustainable cost to our customers, eliminating shipping allows us to continue to offer superior value … and to make better use of valuable space in our stores,” a spokesperson said at the time.
In the year During the boom in online shopping in 2020 and 2021, the company was caught flat-footed as many customers limited their visits to stores to prevent Covid-19 and instead placed orders at home.
At the height of the pandemic, 20% to 30% of grocers’ business shifted online. In the year By the end of 2020, online grocery shopping will hit 9 percent to 12 percent of the market — a threefold increase from pre-pandemic levels, McKinsey said.
E-commerce will continue to grow and will reach 14% to 18% or more of retail sales in the next three to five years, McKinsey projects.
Trader Joe’s lack of an online presence means it misses out on this huge market segment and puts them behind competitors like Kroger (KR) and Amazon (AMZN)-owned (Amazon).
In fact, even pharmacies and convenience stores like 7-Eleven have delivery options today. And Costco ( COST ), Aldi and other discount grocers that have resisted moving online have come to him.
“It seems like a missed opportunity on the retail side,” said Steve Pope, founder of retail consulting firm Brick Meets Click. It is a growing and growing part of the business.
