Trader Joe's Five Forces

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Porter’s Five Forces Analysis
Threats of New Entrants – Moderate
Treats of new entrants for Trader Joe’s is moderate and the exit barriers are strong. The grocery store industry consists of multiple options for consumers and has many competitors seeking to gain customers. It is hard for any other company to enter the industry because of capital requirements. Since Trader Joe’s offer most private label products, it will be quite difficult for new entrants to compete with Trader Joe’s and be ahead. But still, there are some threats of new entrants because of some of their brand name and organic products.

Bargaining Power of Buyers – Moderate
Trader Joe’s bargaining power of buyers is moderate because their product differentiation is strong and carry high-quality products and they have so many …show more content…
Supplier power is always a threat to any supermarket because agriculture is such a small percentage, it limits the locations or business from where to purchase their products. Furthermore, some foods are only available seasonally and there are limits selection from who to purchase. They buy products from small-scale vendors like local farms. And they never carry a high volume of produce and still, there is the increasing demand for organic products.

Treats of Substitute Products – Medium
Trader Joe’s threats of substitutes are moderate because 80 percent or more products consists of private label item (Ager & Roberto, 2014). But still, there is still there is the presence of treat of substitutes because another supermarket like Walmart, Whole Foods, Dollar General which creates price competition and high level of switching costs. Substitutes create a ceiling price because customers switch to the substitute products if prices rise. To avoid some of these challenges of substitution Trader Joe’s should keep their products at low cost, specific brand items, and private brand labels products.

Rivalry Among Competitors –

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