For those of you that have never heard of Trader Joes Grocery Store, it is a magical place where they have thrown away the paradigm of what a “grocery store” is. It is quality food, made without big name brands, for cheaper prices. It is such a great experience it is hard to explain.
But, in my opinion the real success of Trader Joe’s is due to the simple idea of a $2 bottle of wine.
My first impression of Trader Joe’s, long before I went to the store, was this wine. This $2 bottle, ($33 case) isn’t the fanciest wine you have ever had, but if you have ever been to a wedding or party in Atlanta you probably have had it, and enjoyed it.
This wine does more than just make money though, it is what gets most people in the door for the first time, and what keeps them coming back every week for their groceries.
They might be taking a beating on the profit margins of this one item in the store, but they make it back with customer loyalty.
In a world with expensive advertising, and with switching costs seemingly higher than ever, advertising doesn’t always have to be an expense. What can you sacrifice (margins on the wine), to get people to be a loyal customer, and more, a true fan.