Two Grocery Stores, Two Lessons

Yesterday, I went to Trader Joe’s.

Trader Joe's is doing something rightUnfamiliar with it? It has small tropical-themed stores, good to high-quality products, unusual brands and lots of neat imported “foodie” products (hence the “Trader”). There are free samples and friendly, knowledgable people. A lot of products have natural or organic ingredients. And nothing is sale-priced, ever. It’s all priced fairly to begin with.

It does have a limited selection. It’s not one-stop shopping like Target or Walmart. But I actually have fun shopping at TJ’s.

Then, on to Safeway

Most Safeway stores are big and beautiful. Their people are nice. They carry fine products, with many choices. What’s not to like?

How about a complicated and overwrought pricing policy?

They run sale fliers twice a week. They have weekend specials. They have quantity deals. They have a smartphone app with personalized deals, if you spend enough time interacting with it. The register spits out coupons for stuff you just bought, which guarantees instant buyers’ remorse. It’s all very confusing.

I used to love Safeway. I still want to like it. But I always leave the store feeling like they’ve gamed me for every dime. I have to work to game them back.

Since Trader Joe’s came to town last fall, I’ve gone to Safeway less often. Once the country’s largest grocery chain, Safeway’s stock now trades near its 16-year low.

Like you, I’m always looking for the marketing lesson.

The obvious lesson would be, dump the neurotic pricing policy. But I think it goes much deeper.

Trader Joe’s has built a strong identity as a fun place to shop. A lot of elements make this possible. You get the feeling that at TJ headquarters, which must be in Tahiti or Kauai (I jest), enthusiastic foodies obsess over every product and policy to figure out whether it makes the customer feel rewarded in some way.

And Safeway? One clue is the lamest slogan in the world: “Ingredients for Life.” It sounds like a brand struggling for a position, crafted by people who would never be demeaned by fiddling with the annoying “Just For U” Safeway app to get 25¢ off a loaf of bread.

  • Lesson 1: Companies need to be different in some way, and better in some way: differentiate and elevate. This is true for most businesses, especially small businesses and B2B businesses. It’s a key foundation for inbound marketing.

Of course it’s not easy. Safeway was once number one. Then came Walmart. And Trader Joe’s. And Whole Foods. And Target. Stiff competition from companies that differentiate and elevate.

  • Lesson 2: Your old reliable formulas won’t work forever. Innovate, don’t stagnate

So what should Safeway, and others like it, do now?

Simplify pricing, for sure. But that’s just one element. They need a plan that goes beyond promotion. It seems to me they’re trying to be all things to all people. Does that ever work? 

What would you do to make people actually enjoy shopping at the Safeways (and Kroger and Albertsons) of the world? To be honest, it’s beyond me.

8 thoughts on “Two Grocery Stores, Two Lessons

  1. I keep meaning to go to a Trader Joe’s but somehow rarely venture into Atlanta for my shopping. Some things always cost less at WallyWorld, but I know I prefer to get groceries elsewhere. Competition plays a big factor; here Kroger and Publix step up their games w/ sales and coupons and service. Going not only against each other but the SuperMarts too, they’ve expanded offerings, built newer stores. Not always something I can pinpoint but it’s just .. there, and makes a difference. FWIW.
    Davina K. Brewer recently posted..Billy Mack, Social Media Rock Star

    • Davina, I also go to several markets but at this point TJs occupies the pole position. (That’s NASCAR speak!) You’re right, competition matters. At some point, TJs must have made a strategic decision to compete in areas it could win: great service, unusual products, and common-sense pricing.

      On the pricing thing, I’m very susceptible to big sales at Safeway, Kroger and others. But I appreciate the Trader Joe’s policy so much more. At Safeway, a container of Breyer’s ice cream can cost more than $6 one week, and be on sale for under $3 the next. It’s kind of insane, and at least to me, it feels insulting.
      barrett recently posted..Does It Really Matter What You, Or Anyone, Thinks Of Chick-fil-A?

  2. I love Trader Joe’s, too. I always get nuts and coffee there. In general, grocers (big box and specialty) should be concerned about prices right now. The cost elevation of items always being sent to customer is wrong.

    There are those who cannot afford basics in life, and now there are food prices and oil prices through the roof due to drought and fire and flood and feast and famine.

    Something is going to give; it’s coming. And, it will be painful.

    I digressed from your insightful piece; well written, too. Sorry about that!
    Jayme Soulati recently posted..Is PR Getting Short Shrift in Social Media?

    • Jayme, welcome back! I think what you wrote is quite relevant. With all the uncertainty out there, the fluctuation in prices is frightening and frustrating. Marketing gimmicks don’t reassure anyone. When I walk into Safeway, I feel like I have to watch my back to see where they’re trying to trick me. An item that cost $2.99 last week, now costs $2.89 on “sale,” meaning that next week the regular cost will be $3.49. It doesn’t do much for customer loyalty.

      Trader Joe’s has taken the opposite tack. They’re quite gimmick-free. One reason it’s a pleasure to shop there.

      Marty Neumeier wrote “Zag: The Number One Strategy of High-Performance Brands.” Basically, when your competition zigs, don’t follow them, go the other direction. TJs is a Zag to the supermarkets’ Zig.
      barrett recently posted..Musical Advice For Bloggers

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  4. The whole pricing thing, regardless of category, is a can of worms. Most recent example of that is the JCP fiasco (trading “sale” prices for “low, everyday” prices.). Had JCP managment bit the bullet and stuck to their guns, eventually I think they would have won the day, but corporate boards and shareholders are infamous of having the attention span of a gnat.

    Truth be told, customers HATE change way more than they say they do. Case in point: when we worked with Comcast, at some point in every focus group was a customer-initiated discussion of how much they hate the “non-transparent pricing” they see Comcast as offering, and would say they would prefer an honest, here’s-what-the-product-costs kind of approach. In reality whenever that was tested it bombed. The over-simplified lesson in case after case could be that you can’t take a discount away, no matter how “revenue neutral” it ends up being for the customer. So you get convoluted pricing schemes like Safeway’s.

  5. Mickey, it’s great to hear from someone who has seen this stuff close up and personal. Funny you use the Comcast example because I switched away from them earlier this year as my promotional rate gave way to a step-ladder of increases. That was change I really didn’t like.

    I picked out Safeway among others because they seem so committed to their convolution. Example, they have the new app, which means all the coupons automatically go straight to your account, right? No. It means you have to review all the coupons on the app, and manually transfer the ones you want into your account. I guess they figure you’ll spend time interacting, and therefore become more invested in the whole thing. To me it’s a pain in the rear.

    Now take our local grocery chain Rosauers, which (hi-fives to you!) is your new account. They have weekly sales, but there’s none of the club card stuff, and I don’t think they do the “buy any 10 of these” type of promotions. I prefer the Trader Joe’s model, but for a retailer that’s dependent on its distributors beyond their control, Rosauers does a great job of not irritating me. I like my local Rosauers a lot, and wrote about it several years back: So I’m especially glad you guys at Quisenberry landed that account.
    barrett recently posted..How To Avoid The “Solutions That Matter” Trap

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