John Mackey, co-founder and co-CEO of Austin-based natural and organic food giant Whole Foods Market, once cited Trader Joe’s as a “vigorous” competitor. Now, Mackey and his Whole Foods colleagues in Austin will get an up-close look at that vigorous competition.
Ending years of speculation, Trader Joe’s said it will open its first local store in 2013 at the planned Seaholm mixed-use development in downtown Austin. Grocery industry analysts have said Austin could support several Trader Joe’s stores.
“Of all the nationally known retailers to land in Austin over the past decade, it’s safe to say Trader Joe’s is right up there in terms of the degree of enthusiasm in which they’re welcomed. There’s even an online petition requesting they open here. So, naturally, we’re thrilled their first Central Texas store will be at Seaholm,” said John Rosato, managing partner of Seaholm Power LLC, the company overseeing redevelopment of the old Seaholm Power Plant.
The former power plant sits on nearly 8 acres at Third and Cesar Chavez streets. That’s just a few blocks from Whole Foods’ flagship store, which is below the retailer’s world headquarters.
A 2010 report written by business students at MIT pointed out that Trader Joe’s and Whole Foods “have managed to take novel ideas and scale them across the nation. However, the method in which each chain has decided to bring products to consumers has varied widely.”
If consumer surveys are any indication, Whole Foods — which is adding two stores in Austin and relocating a third local store — could face some siphoning of its Central Texas shopper base.
In a recent survey by Consumer Reports magazine, California-based Trader Joe’s — known for its cheap wine, private-label products and cult-like devotion among shoppers – ranked second among 52 of the country’s major grocery store chains. Consumers gave Trader Joe’s high marks for high-quality meat and produce, a clean shopping environment, very good or exceptional prices, employee courtesy and checkout speed.
A recent survey by software company Satmetrix produced similar results. Trader Joe’s and another grocery chain, New York-based Wegmans, tied with a score of 73 percent in the grocery category — one of the highest grades of any sector in the consumer survey.
To be fair, Trader Joe’s score of 86 in the Consumer Reports survey was just five notches above the score of 81 for Whole Foods. By comparison, Texas-based grocery chain HEB earned a mark of 80 and Walmart garnered a 69.
The MIT report described Trader Joe’s as a “low-cost, yuppie-loved phenomenon” that has created “a truly unique customer experience offering high-quality gourmet food at low cost in a fun environment that keeps customers coming back for more.”
Founded in 1958, Trader Joe’s operates more than 360 stores in more than 30 states.
“Typically, grocery store shopping is a chore. The original founder, Joe Colombe, decided that going to the grocery store could be radically improved by offering an authentically enjoyable experience to the customer,” according to the MIT report. “Trader Joe’s makes grocery shopping fun by prefacing employee’s names with nautical titles… and wearing Aloha shirts. Product returns are welcome at all times, and the employees are actually helpful.”