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Secrets of Success

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With a plethora of unique business concepts already out in the world, it takes a highly creative strategic plan and innovative ideas for a company to set itself apart from its competition. It used to be thought that consumers value a large variety of choice, but two of the most successful companies in their own industries, Trader Joe’s and In-N-Out Burger, seem to have gone back to the enduring adage, “less is more.” Of course, this in no way means lower quality, rather it refers to less choice, and it is a concept that has catapulted both to the top. Their “California cool” edge and casual culture probably have a lot to do with all the hype as well.

California-based Trader Joe’s, which brings in around $13 billion annually, is one of the most highly desired grocery retailers, and for good reason. Straying from the massively-sized stores of its predecessors, Trader Joe’s chooses locations that have a small-company feel and products that are unlike most in your typical grocery outlets. The stores give off a quirky, relaxed atmosphere, and as you enter, you are immediately surrounded by employees decked-out in Hawaiian garb and colorful décor. They have a liberal return policy and upbeat staff, so customers always feel welcome. It caters more to a well-educated and well-traveled audience as its products draw from international influences, so Trader Joe’s has also developed a knack for finding the ideal neighborhoods to place itself.

Its business tactic is to keep its stores scaled down, but with top quality goods. While typical grocery giants may stock up to 50,000 SKUs throughout the store, Trader Joe’s only has about 4,000, less than 10% of its competitors. Though it may seem counterintuitive, Trader Joe’s has found that consumers like choice but on a limited basis. For example, Grocery Store A might shelf 50 SKUs of a product, which Trader Joe’s only keeps 4 SKUs of, and each sells 40 items of that product. While Store A may sell 1-2 of each SKU, TJ’s is able to sell 10 of each SKU. The strategy is enormously advantageous to TJ’s who can buy in bulk and keep prices down for its customers.

With trusted products, TJ’s customers know that they will be getting great products for their money. TJ’s organic produce, gourmet snacks, and eccentric flavors attract a cult following, but as the company continues to expand, the question becomes, will Trader Joe’s be able to mesh its large-company endeavors with its small-company vibe?

Another California food giant, which embraces a similar business strategy as Trader Joe’s, is In-N-Out Burger. Basically, their menu offers Hamburgers, French Fries, and Shakes, quite unlike the nearby McDonald’s, which offers wraps, sandwiches, burgers, salads, pie, burritos, etc. In fact, both In-N-Out Burger and McDonald’s opened in southern California in 1948, but In-N-Out has continued to remain privately-held. They vow to never go public in order to preserve its culture and stay loyal to its fans.

If you want to add some spice to your meal, you can order “Animal Style” off of In-N-Out’s famous Secret Menu. It is not a well-kept secret anymore, but it is definitely a unique concept that contributed to word-of-mouth advertising for the company. A quality product with fresh food and great customer service are what makes In-N-Out the small mega-successful company it is.

The real secret that has catapulted Trader Joe’s and In-N-Out Burger to the top of their industries, points toward simplification. By focusing on niche market audiences and providing the quality goods they desire, these two companies have nailed down their business strategies. They have never relied on fancy advertisements or overwhelmed their customers with unnecessary complexities, which allows them to concentrate on what really matters in a service-oriented industry: connecting with the people they serve and selling food that actually tastes good. What both companies teach us is that by defining a unique business model and sticking to who you are, your business will be well on its way to having that competitive edge in an already tough market.

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