Trader Joe’s
5 Forces reflection: The five forces are: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products or services, and intensity of rivalry among existing competitors.
Why strong rivalry? B/c experience and product assortment are mostly undifferentiated.
- Where does differentiation come from: Price and incentives / he argues the differentiation comes from the stuff around the side of the store (bakery, butcher, pharmacy, etc.), so non packaged offerings competition.
Suppliers: Not all situations created equal. Depending on the prestige of the supplier and the power of the supermarket/big box store
Sales per square foot as a non obvious metric
- Competitive advantage should start w/ B or C, then you ask which of the two.
- Scarcity - it’s your favorite things they don’t have anymore. Baking in the bad parts of the experience
- “It’s all this experience that you can’t experience”
His typology of “aspects of TJs”
- Offerings
- Operations
- Purchasing / procurement
- HR
Where does a firm’s strategy aspects complement/create a strategy
- Find pairing of strategic complements
- Engaging employees + incentivization for employees to understand the product and recommend + b/c they have new SKUs + encourage more search and roaming in the store, so the shuffle is purposeful and necessary b/c they have new products
Niche’s are usually less prone to rivalry. And niche allows you to develop bespoke capabilities.
Enthusiasm comes w/ a tradeoff