In 1967 Trader Joe’s started as a convenience store that quickly migrated to a more courageous food and beverage store. Joe Coulumbe was the founder who expanded his store into over twenty stores throughout California in just ten years. He named the store Trader Joe’s to evoke images of the South Seas. Employees dressed in silly Hawaiian shirts and still do to this day! Today there are over four hundred and fifty Trader Joe’s all across the United States. Coulumbe sold the business in 1978 to the Albrecht family but still remained the CEO until 1988. The Albrecht family was a German family who also owned Aldi. After Coulumbe retired in 1988 John Shields, whose background included retail and also provided the operational know-how to expand the business, became the CEO until 2001 where Dane Bane than took over. Dane Bane is still the CEO of Trader Joe’s today.
Trader Joe’s offers products that are very distinct and not commonly found in traditional supermarkets. Cheese, wine, frozen items, and ethnic foods are just a few examples of what you can find in these stores. Trader Joe’s emphasizes their low prices and high-quality food. They also focus on constantly changing products to stimulate customers’ interests. This is done to also help the company financially. The company will take the bottom ten percent of items that were sold and take them off the shelf to make room for new products that they think will increase profits. As Matt Sloan, vice president for merchandising for Trader Joe’s, stated: “The bottom 10% is always being rotated out. It’s painful but necessary because it ensures that we always have new products for our customers to get interested in” (New York Times, 2006). This adds to Trader Joe’s niche market by being unique. Trader Joe’s commitment to its customers is like no other, “Our Product Guarantee: We tried it! We liked it! If you don’t, bring it back for a full refund, no questions asked.” ( 7 ) They pledge dedication to the customers through friendly and committed employees who have a culture that supports loyalty and customer service through personal encounters.
Trader Joe’s growth is fully self-financed. The organization has no debt and remains free of involvement from any unions. They completely cut out the middleman and buy directly from vendors, who are normally just small producers that are located all over the world. (12)The company seeks out products by traveling to different restaurants, farmers’ markets, and supermarkets all over to find out which products would be most appealing to their customers. Trader Joe’s also has very limited advertising. You will not find a television commercial, a radio commercial, or ads in the newspaper. They want their brand to be spread by conversation and promotion from the customers. This saves a lot of money that would be used for marketing and is yet another reason why they are able to offer competitive pricing.
In order for a new Trader Joe’s to find a new location for a store, there are three key factors that must be accounted for. These include; the density of population, the education level of the consumer, and distribution efficiencies. It is believed that the higher educated areas are more likely to travel more and also be more inclined to seek out unique products. This is the key reason on why Trader Joe’s expanded into the east coast.
The leader that is going to be analyzed is Dane Bane, the CEO of Trader Joe’s since 2001. He has been with the company since 1998. Before being promoted to CEO he was the president of Trader Joe’s West. Bane matches private label with quality so that the company is not being lost in big manufacturers. Dane Bane has declined numerous requests from several people and has never participated in any articles on its business operation. Although he has not participated in articles on the business operation he does give a very detailed Trader Joe’s Company Values Guide. This guide describes values to live by, values that make decisions, prioritizing and focusing on behavior based on these values, and lastly evaluating performances based on these values. Bane emphasizes that these are vitally important that everyone within the company, no matter what your position is, understand and demonstrates the values included in the Values Guide. This shows a lot about Dan Banes’ outlook on Trader Joe’s. Bane wants to make sure that every employee from the bottom of the company all the way to the top has the same customer values and this a quality that every leader should have.
Dane Bane has seven values that he strives on within the company that includes integrity, a product-driven environment, produce a wow customer experience, no bureaucracy, Kaizen, not elaborating on a budget, and lastly is treating the store like a brand. These seven values go hand-in-hand with the three leadership practices that describe Dane Bane. A leadership practice is a combination of leadership responsibility, the performance of the responsibility, and its unique value to the organization. The first leadership responsibility of CEO Dane Bane is to provide an “authentic leadership” to Trader Joe’s. Authentic leadership is leadership by individuals who know and understand themselves, who espouse and act consistent with higher-order ethical values, and who empower and inspire others with their openness and authenticity. ( book) Bane focuses on creating a WOW customer experience every day. This exemplifies that he is an authentic leader. He is committed to making sure his staff gives the customers a shopping experience that is rewarding, eventful and fun. He also recognizes that in order to be an authentic leader that inspires others you must have two levels of customer experiences. The first is internal experiences that the customer finds. This shows how the shopper feels about themselves. Bane makes sure that his staff is committed to treating customers as if they were honored guests in their home. This sets Trader Joe’s apart from other retailers. The second customer experience is external. This represents the visual or behavioral experiences a customer has. Being an authentic leader you must have a connected relationship. This can come from the staff engaging with customers and making sure that the customers feel connected and not a complete disconnect.
The second leadership practice that Dan Blane occupies is being an “interactive leader”. An interactive leader is a leadership style characterized by values such as inclusion, collaboration, relationship building, and caring. ( BOOK ) Trader Joe’s has no bureaucracy and focuses on Kaizen, which is Banes’ fourth and sixth values. By having no bureaucracy this makes him a classic interactive leader. Bane demands that all staff support stores and deliver WOW products and customer experience to their customers. He has a few layers of management as possible and everyone is evaluated based on their contribution to the Company’s mission, not to just the group or departmental matters. Also, Bane shows his interactive leadership with Kaizen. Kaizen is a way of life and simply means that every member at Trader Joe’s is focused on achieving personal goals that contribute to increasing success of the business. He makes sure that he listens to the staff that has the daily contact and communication with customers. This shows that he is willing to collaborate with staff members that most CEO’s would have no interest in talking to.
The third and last leadership practice that Dane Bane possess is being a “strategic leader”. A strategic leader is one who carefully weighs available options and positions the company for growth by taking action. This leadership style is dynamic by nature and requires a high level of commitment and work involvement. ( 11 ) Bane focuses on intensive buying which is that it means traveling, quick decisions, and putting your money where your mouth is. Bane has buyers who travel the world which include but are not limited to Italy, Spain, France, and Germany to name a few. He believes that you cannot understand what is happening in the world without traveling it. This is a decision that could be pricey if you are not strategically planning where you’re going, what they offer, and what products your store needs. Bane will not take more than twenty-four hours to make a buying decision even if it’s as big as a million. He does not have buying committees and moves quickly to beat competitors. This shows Bane being a strategic leader by showing his high level of commitment and work involvement. If he is making a decision in twenty-four hours he is not resting those hours but instead working hard to make sure that this is a positive transaction. Lastly, he puts his money where his mouth is. Each week buyers taste over one hundred new products to make sure it passes the tasting panel before it can reach stores. Ninety percent of products fail the high standards of Trader Joes. This shows that he is carefully weighing his options before acting on a product which is also a characteristic of a strategic leader.
Relationship Between Leadership and Organizational Culture
Dane Banes values and beliefs shape the culture of the organization. His seven values that he strives on how his beliefs and values are shaping Trader Joe’s on a daily basis. His seven values that he strives on within the company that includes integrity, a product-driven environment, produce a wow customer experience, no bureaucracy, Kaizen, not elaborating on a budget, and lastly is treating the store like a brand.
Integrity is a way for Trader Joe’s to emphasize on an environment where you are treated the way you would like to be treated. With being a product-driven company, Bane has a total of seventy percent of the products in the store being private-labeled unique brands that you can’t buy in mainstream grocery stores. The third is producing a wow customer experience. This is done by publishing stories every week on a bulletin that is revolved around customers. Not having a bureaucracy is key to Dane. “If you come into our corporate office in Monrovia, we are all on one floor. I am the only one who seems to have an office, but it is really a conference room”(9). This is very important to show co-workers that you are just as important as everyone, including the CEO of the company. Dan also focuses on Kaizen, which is basically to every day trying to do a little better at something. When you have an outlook of trying to be better every day in your life it does flow into your work atmosphere. “For example, the CEO of Whole Foods was telling me one day how its teamwork had gotten its sales-per-person-hours (a measure all grocery stores use) up to 52. Well, ours is about 212, so what we do and how we do it really makes a difference.”(9) Each store has their own plan on budget plans that fit their specific needs. There is not one big plan for budgeting throughout all of the Trader Joe’s according to Dan. Lastly, the seventh value is treating the store like a brand. The brand is really important to the company and the customer to keep consistency in meeting and satisfying the customer’s needs. Trader Joe’s was compared to Nike and Krispy Crème which are huge brand names. These seven values that Dan Bane strives on trickles down into each and every Trader Joe’s. These values are what makes him the successful leader that he is today.
SWOT Analysis: Strengths of organization
A SWOT analysis includes a careful assessment of strengths, weaknesses, opportunities, and threats that affect organizational performance. Strengths are positive internal characteristics that the organization can exploit to achieve its strategic performance goals. Two strengths of Trader Joe’s are its unique products and customer loyalty. Trader Joe’s products vary from state to state.(12) The company tries to have its products that are fresh come as close to the store as possible. Also, laws and taxes may make it more convenient and price effective to buy closer. New products are also introduced every week. This means that if a product isn’t selling it will be gone as soon as it is sold off the shelf or until another product is there to replace it. Some other reasons why some products go away are that they are seasonal or if the cost gets too high. If costs are too high and isn’t a good deal to the customers that it will be taken out of the stores. Products are also unique to Trader Joe’s because eighty to ninety percent of products that are sold are store-brand. This helps keeps prices down and also the company to have more control of which products are sold and the quality. (12)
Customer loyalty is a strength that makes Trader Joe’s very competitive in the food market industry. Trader Joe’s isn’t just a store but it is its own brand. Trader Joe’s is an experience of sights, sounds, smells, and tastes that is different than any other grocery retailer in the U.S. ( 13 ) Customers’ love this “vibe” that Trader Joe’s gives off and it makes customers more loyal. “The grocery store secured the highest rating in the atmosphere and fast checkouts and clinched second on cleanliness, courteous staff, merchandise selection and accurate pricing. That’s just looking at the quantitative results. Trader Joe’s has also done a lot in terms of surpassing customer expectations and keeping them content.” ( 14 ) Trader Joe’s has a high customer loyalty because they also listen to their customers’ feedback. “The management believes in direct human interaction; between customers and the captain and crew members, as their Hawaiian shirt attired managers and employees are called.” (14 ) Trader Joe’s “grocery shopping should be fun, not another chore. So just relax and leave your worries at the door.” ( 14)
SWOT Analysis: Organizational Weaknesses
Weaknesses are internal characteristics that might inhibit or restrict the organization’s performance. Two weaknesses of Trader Joe’s are the lack of online advertising and the limited selection. Trader Joe’s does not engage in social media marketing and in fact, uses a limited amount of advertising. By using social media, it could strengthen and acknowledge the sense of community. There are thousands of customer-generated recipes on fan sites and blogs. Trader Joe’s could organize recipes, and boost shoppers to make purchases that they might not ever buy. Other brands are learning that if they let a little unpretentious personality come through in social media, they can create a sense of authenticity.
The limited selection that is at Trader Joe’s makes the store a place to buy certain items but it is not a one-stop shop. The company sells a limited product mix, which is about five percent of which an average supermarket sells. This will make some consumers stray away because in today’s day and age everyone’s time is a priority and they want one-stop shops. Also, products are not only limited in the sense of selection of products but are also limited to their shelf life. Products that aren’t in the top ninety percent of sales will most likely not be in the store next time you go. You cannot be guaranteed that your product will be in the store for long can be unappealing to consumers.
SWOT Analysis: Organizational Opportunities
Opportunities are characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals. Two opportunities are the growing demand for organic foods and the continued nationwide growth. “Consumers demand for organically produced goods continues to show double-digit growth, providing market incentives for U.S. farmers across a broad range of products.” ( 15 ) This is an opportunity that Trader Joe’s can take head-on. Trader Joe’s has a wide variety of organic products and could always expand to having even more to meet the needs of all customers. “Organic products are now available in nearly 20,000 natural food stores and nearly 3 out of 4 conventional grocery stores. Organic sales account for over 4 percent of total U.S. food sales, according to recent industry statistics.” ( 15 )
The continued nationwide growth is also an opportunity for Trader Joe’s. “The U.S. Census Bureau presents annual projections for the growth of the U.S. population up to the year 2060. By 2050, it is estimated that the American population will surpass 398 million citizens.”( 16 ) Trader Joe’s only has about four hundred and seventy stores today. With the rising population, this means that more stores can open in a variety of locations. “A lot goes into bringing a new Trader Joe’s store to a neighborhood,” said company spokeswoman Kenya Friend-Daniel. “Aside from the logistics, we want to be sure we have the right space and Crew Members who are engaged and passionate, not just about Trader Joe’s, food and earning the delight of our customers, but also in their lives outside of work. We continue to find the best of the best.”( 17 ) The greater the population the more employees will apply and the image and values of Trader Joe’s can be then passed down to them.
SWOT Analysis: Organizational Threats
Threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals. Two threats are the intense competition of other supermarkets and the lack of technology and online presence. Trader Joe’s does not sell their products on the website. The top supermarkets have online shopping available which goes with the threat of competition and also the lack of technology and online presence. Amazon acquired Whole Foods for thirteen billion dollars last year. “The first ripples were pretty obvious: Amazon immediately started lowering prices at Whole Foods, increasing pressure on rivals like Kroger to compete amid sliding share prices. Now Amazon is hinting at discounts for prime members, that pressure will only intensify.” ( 8 ) This also shows the threats both technologically and the intense competition for Trader Joe’s.
The leadership theory that best goes with Dane Bane is the Transformational Leadership Theory. “The Transformational Leadership Theory is a leader distinguished by a special ability to bring about innovation and change by creating an inspiring vision, shaping values, building relationships, and providing meaning for followers.” ( book) Transformational leaders are keen on making sure that their staff does not just believe in their leader but that they believe in their own success to create a better future for the organization. Transformational leaders are also able to recognize and most importantly understand others’ emotions.
“Transformational leadership refers to a leadership style in which the leader encourages his or her subordinates to achieve higher and higher levels of performance for the sake of the organization” ( source 1) Dane Bane encourages his employees to achieve levels of performance for the sake of the organization on a daily basis. Bane does this by making sure that every employee feels that they have a successful career with Trader Joe’s and that what they feel within the company matter.
“Transformational leaders also display individualized consideration by paying special attention to specific followers’ needs for personal growth and achievement, and trying to meet their needs and satisfy their expectations for future development” (source 2) At Trader Joes, Bane wants customers to feel like they are honorary guests at a home when entering the store. This is a specific detail that many would not care about how their customers felt but rather how much money they are making. This has gained the attention of a niche group of followers that is in no way a small amount. He also wants Trader Joe’s locations to be in areas that have highly educated residents living nearby. This also is a special detail that a truly transformational leader, like Bane, would analyze to promote growth for the company.
“Lussier and Achua (2012) defined transformational leadership as a process whereby a manager serves to change the status quo by identifying problems in the current system and providing a new vision of what the organization could be. (Source 3) Bane does this weekly by making sure the bottom ten percent of products sold are not going to return to stores once sold out or when another product can replace it. In order to identify the problem of a failing product could be discouraging to some leaders. Bane takes this as an opportunity for his buying team to explore more countries and places and find products that will soar off the shelf. This makes Dane Bane an exceptional transformational leader.
“Transformational leadership comprises four factors known as the four I’s: idealized influence (II), inspirational motivation (IM), intellectual stimulation (IS), and individualized consideration (IC).” (Source 3) Bane has weaknesses in compromising two of the four factors. Bane possesses great inspirational motivation and individual consideration. Idealized influence and intellectual stimulation are two weaknesses that Bane acquires. Bane is not embracing the change in technological advances and he also
“In addition, transformational leaders offer constructive and positive suggestions to employees, which can help improve followers’ positive feelings of being a member in an organization, and increase their identification with the organization.” (Source 2) Dane Bane is not up to date with technology. As a transformational leader Bane should help improve followers which can be done by using social media. Bane does not advertise or offer any products online other that his Frequent Flyer paper that comes out a few times a year. If Dane Bane opened up his outlook on social media, he could create a stronger company and back up his already strong leadership.
“Transformational leadership qualities are considered to be learned and developed behaviors.” ( Source 1) Dane Bane is not living up to his transformational leadership because he does not participate in any interviews or blogs pertaining personal information. This could be a developed behavior that could promote positive feedback for Trader Joe’s. In order to be a leader in every aspect you must be willing to learn new behaviors. Dane Bane is secretive and does not participate in any social outlets and that affects the image of Trader Joe’s.