Sneaky Ways Trader Joe’s Gets You To Spend Money

Narrator: Okay, so imagine
yourself at the grocery store. You’re hungry but you don’t
really feel like cooking. I guess pasta’s pretty easy. Suddenly you’re faced with this. So many choices. You go for the classic tomato basil? How ’bout creamy alfredo? But what exactly is the
difference between these two or these three? Wait. Why is this so hard? Trader Joe’s is the surfy,
laid back grocery chain known for its cheap prices
and floral-print-clad staff. Data science professionals
have ranked it number one in customer preference
for two years running. The brand has held off on going high tech. They keep it simple with no online store, no loyalty programs, and no sales. When you break it down to square footage, Trader Joe’s is actually selling more than double its
competitors like Whole Foods. But how much money you
spend at Trader Joe’s ultimately comes down to
what you are choosing to buy. But what about Trader Joe’s
makes it so easy to choose? Barry Schwartz: I spent, I’ve spent the last 25 years studying how people make decisions. Narrator: That’s Barry Schwartz, a psychologist, a professor, and a Trader Joe’s enthusiast himself. Schwartz: I think Trader
Joe’s is the best example of how the world should be constructed. Narrator: Whoa, take it easy there Barry. Barry coined the term
the paradox of choice and quite literally wrote the book on it and it basically describes how you would think that the more– Schwartz: Choice we have,
the better off we are. That turns out empirically not to be true. When you give people too many options, they get paralyzed instead of liberated. Narrator: The store has always focused on a unique selection of products rather than a large amount of them. I wanted to find out if there
was choice-limiting going on at Trader Joe’s. So I went to my local
market to count some things. I counted 144 pasta sauces, 44 olive oils, and 172 cereals. That’s a lot of choices. So then I went to Trader Joe’s. And they had an approachable
14 pasta sauces to choose from. Same goes for olive oils,
canned beans, and cereals. At Trader Joe’s, there’s
simply less to choose from. So then I asked Barry if
he thought Trader Joe’s perhaps had inklings of the
paradox of choice in mind when designing their shopping experience. Schwartz: I think it’s
completely inadvertence. Narrator: Well then what
exactly would explain why Trader Joe’s practices a scaled down approach to shopping? Schwartz: Probably did it as
a way of controlling costs. Managing inventory, you know,
simplifying the supply chain. And somebody thought that if you offered other kinds of value,
people would be willing to forgo options. You can’t have everything
but anything we’ve got is worth having and we
make your life simpler. Narrator: In fact, when you look at Trader Joe’s humble beginnings, the original Joe, Joe Coulombe, founded the business on
quality over quantity. Trader Joe’s made $13.3 billion in 2017 a number that’s likely going up. The core of any business
is the customer service which Trader Joe’s excels at. The employees, or crewmembers
as they’re called, are all extremely attentive and helpful. In short, they’re there
to make your life easier. This ideology is embodied
in their food as well specifically their frozen food. And Americans have always
had a certain affection for a heat-and-serve mentality. Frozen dinners are easy,
fast, and little mess. However, about half the time,
the frozen section aisle remains pretty empty. According to Phil Lempert,
a supermarket analyst, this is due to the frosty
barrier of the freezer section. Opening that icy cold door likely means you’ve already committed
to purchasing something which doesn’t tend to lead
to much product discovery. Compare that to Trader
Joe’s open freezer bins and you can start to see the difference. There’s no glass door and
the low level of freezers bring shoppers physically
closer to the products. It allows the freedom to
check out the packaging more leisurely and without
the blast of cold air. So tons of effort being put
forward to get customers to the product, the products themselves
have to be good, right? Trader Joe’s products
are marketed as healthy and the products aren’t
the same old things we usually see in grocery stores. No Lay’s, no Heinz and
it’s mostly Trader Joe’s own private label. They buy straight from the supplier which ultimately cuts costs
and leads to cheaper products on the shelves. The products themselves
are colorful, quirky, and have a consistent branding. To find out a little bit
more about the effects of good branding, I called Denise Lee Yohn who is a– Denise Lee Yohn: A speaker,
writer, and consultant on brand building and brand leadership. and brand leadership. Narrator: She’s done her
homework when it comes to Trader Joe’s. And I wanted to know more about what goes into the packaging design. Yohn: Okay, so it’s
usually kind of hand drawn or it’s not looking like it’s
computer generated, right? There are usually caricatures and then there’s some descriptive copy. And all of that I think helps the person, the shopper, kind of see how this product
fits into their need. There’s an element of discovery, like finding a new product
you didn’t know existing. Narrator: In an interview, the former head of packaging design at Trader Joe’s said that the hand drawn aesthetic invokes feelings of the human
touch and artisanal quality. It can be easy to opt for takeout when thinking about stepping
into the grocery store after a long day. But the subtle combination
of tactics employed by Trader Joe’s makes shopping a legitimately enjoyable experience. It gets you excited about
something uniquely human, cooking and eating your food.

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