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How Trader Joe's Sells Twice As Much As Whole Foods

<span style="font-size: 15px; line-height: 1.5em;"><img src="http://static4.businessinsider.com/image/537276bbeab8ea62308af171-886-583/screen-shot-2014-05-13-at-3.46.25-pm.png" border="0" alt="chili lime chicken burger trader joe's">Trader Joe's sells twice as much per square foot as Whole Foods. </span>

Trader Joe's sells a whopping $1,734 per square foot, <span>according to a recent report by the real estate </span>investment firm JLL<span>. </span><span style="line-height: 1.5em;">In comparison, Whole Foods sells $930 per square foot. </span><span style="line-height: 1.5em;">Trader Joe's also has an aggressive expansion plan and will open 38 stores in the next year, according to the report. </span>

For years, Whole Foods Market was the dominant name in organic groceries. <span style="line-height: 1.5em;">But the company has recently faced </span>declining sales<span style="line-height: 1.5em;"> as more companies offer organic food. </span>

Consumer perception of Trader Joe's is significantly higher than Whole Foods Market, according to a recent YouGov BrandIndex study. <span style="line-height: 1.5em;">Here are a few reasons Trader Joe's is thriving. </span>

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Trader Joe's is cheap. A bag of quinoa is $9.99 at Whole Foods, but $4.99 at Trader Joe's. Meanwhile, gluten-free cheese pizza is $7.49 at Whole Foods vs. $4.99 at Trader Joe's, according to dcist.com. Consumers view Trader Joe's as high-quality but inexpensive.

Meanwhile, Whole Foods is seen as being too expensive. The grocer even earned the nickname "Whole Paycheck." Whole Foods responded by lowering some prices; however, a recent JPMorgan analyst note says the company isn't doing enough to market bargains. This means customers most likely don't realize that Whole Foods is getting cheaper.

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Private-label products. Eighty percent of Trader Joe's products are in-house, meaning that customers can't get them anywhere else and the grocer can sell them at lower prices. The creativity of the in-house products is also important. Some of the most popular products include Chili-Lime Chicken Burgers, Cookie Butter (a cookie-flavored nut butter), and corn and chili salsa.

While Whole Foods has private-label products, it tends to veer more toward basic. The company also sells a wider variety of organic and healthy brands. As Wal-Mart and other grocers begin to stock these products, consumers have less of an incentive to go to Whole Foods.

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Trader Joe's knows its audience. Trader Joe's is focused on product innovation and selling groceries and wine at a cheap price. Because customers know they can get high-quality stuff at a low price, they pack Trader Joe's stores.

Whole Foods has had a harder time differentiating. The company's response to all the competition isn't encouraging, according to a recent Bloomberg Intelligence report.

"<span style="line-height: 1.5em;">New initiatives at the retailer, including online ordering and broadening the produce assortment to include more non-organic items, may push Whole Foods from unique to mainstream as it seeks a broader customer base to defend against direct competitors such as Sprouts grocers such as Kroger," according to Bloomberg. </span>

<span style="line-height: 1.5em;">To stand out, Whole Foods needs to differentiate its products. </span>

<span style="line-height: 1.5em;">Still, the grocery store is better-positioned than traditional supermarkets. </span>

<span style="line-height: 1.5em;">According to the report by JLL, "fresh format" stores including Whole Foods are taking market share from traditional grocers. </span>

<b>See Also:</b>

<ul><li>Lululemon Leggings Are The Hottest Item In Teen Retail</li><li>Whole Foods Is Slowly Killing Traditional Supermarkets </li><li>Here's The Story Behind Wayfair, The Oddly Named $3 Billion Home Goods Retailer That Just Went Public</li></ul>

SEE ALSO: The Most Popular Items At Trader Joe's

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