As creators and sellers of products and services, we are driven to perfect our craft. We promote the value of our products, and the depth of our expertise. Those things are important. But by also focusing on experiences, we can unlock new opportunities for differentiation, stickiness, and success. Over the next few posts, we’ll explore stories of businesses that have earned success by embracing, showcasing, and amplifying great experiences.
If I were to ask you what grocery chain generates the most revenue per square foot of grocery space, what would you say? You might guess Whole Foods because of their reputation for high prices. Or you might think of Walmart because of their reputation for high volume and low prices. According to Progress Grocer, Walmart generated about $600 in revenue per square foot of grocery space in 2012. Wholefoods did about twice that, at $1,200. So higher prices are the secret, right? Right?
Actually, the business I’m thinking of has a reputation for low prices—about 26% lower than Whole Foods, according to Deutsche Bank analysts. They generated about $2,000 per square foot of store in 2012, outperforming competitors by a wide margin. They don’t do any conventional television advertising or social media. They don’t do coupons. There’s no loyalty card. And nothing is ever on sale.
Instead, they exclusively hire friendly extroverts, compensate them well, and fill the store with them. They dress the employees in Hawaiian shirts and decorate the whole store to look and feel like a South Seas getaway. Those employees are referred to as “Captains,” “Mates,” “Merchants,” and “Crew.” The Marketing Director is called the “Director of Words & Phrases & Clauses,” which may be reflected in the collection of quirky private-label product names that add to the entertainment and create a cohesive brand statement throughout the store. When an employee spots a need to improve customer experience, they alert the team to action with their own flavor of Morse code performed on a real, physical, and prominently placed bell. For instance, one toll indicates the need to open an additional register.
On paper, Trader Joe’s sounds more like an amusement park than a grocery store. And maybe that’s the point.
In FY17, Trader Joe’s 470 stores generated $13.3 billion in sales. That’s about $28 million per store! Source: Super Market News.
Trader Joe’s has built a hugely successful business due, in large part, to a focus on creating a unique, memorable, and fun experience for their customers. They don’t just have customers who come there because they need to pick up their products. They have fans who come there because they look forward to the experience. Especially If you are a brick and mortar store adapting to compete with the rise of e-commerce, become a student of the Trader Joe’s approach.
Are
you creating unique and exciting experiences for your customers? Do your
prospective customers know about those experiences? In our next installment,
we’ll explore a business that leveraged high-quality photography to showcase
and amplify great experiences to fantastic success.
For more about Trader Joe’s, check out Michael A. Roberto and David Ager’s HBS case study and Stephen J. Dubner’s wonderful Freakonomics Podcast which recently asked the question: Should America be run by … Trader Joe’s?
NEXT UP: