What Trader Joe's Can Teach Us About Understanding Consumers

By

There are fantastic resources available for professional development in the recruiting and TA space, like thought leadership articles, webinars, and data-rich surveys. But sometimes I find that the best lessons can come from another industry entirely. The goal is the same, whether you’re trying to market a job to a candidate, a B2B product to a user, or marinara sauce to a shopper: we’re all asking for time and attention from people so that they will consider what we have to say... or sell. 

One of my favorite podcasts, full of information I apply in my personal and professional life, is FreakonomicsThe episode I recap here is about Trader Joe’s unconventional success story, and it’s a master class in consumer behavior. 

TJ_Mid_S1-1

Freakonomics Radio: Should America Be Run by...Trader Joe’s?

Nerd alert: as a marketer, the supermarket industry has always fascinated me. With an enormous variety of products (the average grocery store can have 35,000 SKUs) and razor-thin profit margins, the competition is fierce. Small details mean big money, like keeping milk and eggs in the back of the store so you have to walk past all sorts of goodies before you pick up your essentials. It’s no accident that the junkiest breakfast cereal is at kid’s eye level. Even the cart size matters – bigger carts mean bigger sales.

TJ_Quote

But Trader Joe’s has been an unconventional success story, with much less square footage, no advertising, no online ordering, and no loyalty cards. And yet, they inspire fandom in their customers. They also make the most money per square foot of all supermarkets – and it’s not even close. How do they do it, and what lessons can we learn to apply to our own workplace?

  • Don’t try to appeal to everyone. Trader Joe’s knows its demographic. They appeal to educated, creative types, with its purposefully “writerly” vibe and sense of globetrotting adventure. Having a niche audience hasn’t held them back from making money, because this niche has cash! Trader Joe’s purposely plants itself in the richest zip codes, even more so than Whole Foods. Freeing themselves from mass appeal saves them overhead: they have fewer than 500 stores, and the average store is a fraction of the size of a traditional grocery store. Skim that cream, Trader Joe’s.
  • Understand the science of choice. Ever been at Trader Joe’s, standing in front of the sauces, trying to decide which marinara sauce to buy? Of course you haven’t, because they only sell one kind. Same with toothpaste, and most of the other items in stock. Rather than paralyze the consumer and crowd the shelves with infinite options, Trader Joe’s curates their items to take the stress of decision-making out of the shopping experience. This smaller choice set leads to action – in this case, walking to the front of the store and handing over money in exchange for food. Rule #1 of sales: Don’t make it hard for the customer to give you money. Trader Joe’s gets this.
  • Cultivate fandom. Trader Joe’s doesn’t just have customers – it has fans. The store has won evangelists by turning a chore into something fun. They’ve focused on aesthetics, including thoughtful package design, murals by local artists, and cheerful colors. If you’ve been to a Trader Joe’s, you may have noticed some unusually friendly employees. Trader Joe’s specifically hires for the type of person who will thoughtfully engage with customers – and they have a lot of them on shift at any given time. Customers leave the store feeling like their time and needs have been valued, plus they have delicious, colorful novelties to bring home with them.
TJ_Mid_S2-1

As you can see, consumers at the grocery store aren't that different than job candidates searching for a new opportunity. We hear all the time about the need to treat candidates like consumers in today’s tight labor market. This means standing out from your competition, making the process as frictionless as possible, and developing evangelists who love your brand. Who knew marinara sauce could teach us so much? 

Key takeaway: Think like your consumer.

Bonus! Turns out, Trader Joe’s also likes podcasts. They host their own, with topics like “Why Is Everyone So Nice?” and “Cheese, Cheese, and More Cheese.” Yes please!

Topics: Talent Acquisition

Updated February 5, 2020