9:17am

Thu February 2, 2012
Business

Trader Joe’s Could Impact Already Crowded Organic Market in Boulder

The possible entrance of Trader Joe’s into Colorado’s grocery market has excited many fans of the natural-goods retailer.

KUNC’s Brian Larson spoke with Boulder County Business Report Publisher Chris Wood about what the future might hold for the company in Boulder.

Larson: Let’s start with some background for those who are not familiar with the company.

Wood: Trader Joe’s is a specialty grocer based in Monrovia, California, and has built a cult following as it has expanded to about 365 stores in more than 30 states. The company is a natural-foods grocer that offers a wide and culturally diverse product selection. It’s also quirky, with store employees wearing Hawaiian shirts. That’s because, as the company states on its website, they’re traders on the culinary seas, searching the world over for cool items to bring home to their customers. The strategy has definitely worked. Forbes magazine recently called the company a perfect example of how to gain a competitive advantage in a crowded marketplace.

Larson: A crowded marketplace is exactly what Trader Joe’s will find in Boulder. What impact would its entry have on the market? Boulder is certainly not a city that lacks natural and organic products.

Wood: Definitely not. In fact, Boulder has been described as the most-competitive natural-foods grocery market in the nation. The city already boasts several Whole Foods stores, as well as Sprouts, Sunflower Market, Natural Grocer by Vitamin Cottage and Alfalfa’s. You also have local stores such as Lucky’s Market, and large grocery chains such as Safeway and King Soopers boasts sizeable inventories of natural and organic products. So, while Trader Joe’s will be a formidable addition to the Boulder market, it’s not entering virgin territory.

Larson: Why then would the company want to open a location into such a competitive market?

Wood: I should point out that Trader Joe’s isn’t discussing its plans, but most analysts expect it to open three to five stores in the metro area, with Fort Collins being another possible location. As to why Trader Joe’s is entering the Boulder market now, I would guess that city’s status as the center of the natural-products industry has a lot to do with it. Not only does Boulder County boasts such companies as Celestial Seasonings, White Wave and Aurora Organic Dairy, but it also serves as the home of hundreds of natural and organic companies, many of which rely on the local natural-foods grocers to get their products in front of first a local, then a national audience. Boulder truly is the preeminent place in the country for that sector. So by going into Boulder, Trader Joe’s gets closer to that product pipeline.

Larson: But even so, Chris, too much of good thing could backfire, couldn’t it? Could the excitement that Trader Joe’s brings possibly force another natural grocer to close?

Wood: Time will tell, I guess. The city certainly has seen natural-foods retailers come and go before, mostly as local brands have been acquired over the years. But you can bet that all of the natural grocers now serving the market are doing some competitive analysis and will be planning to address the challenge that Trader Joe’s will present. In the end, what has been a higher-priced market might see some downward pressure on prices, and I would think that the existing stores will be seeking other ways to stand out in terms of products, services and marketing.

Larson: I’m still wondering why it has taken Trader Joe’s so long to enter the Colorado market and especially Boulder with all that the city has to offer.

Wood: One reason might be the state’s liquor laws. Trader Joe’s sells a lot of wine, and grocery stores in Colorado in general are not allowed to sell wine. It may also be that the company felt that Colorado’s highly competitive natural-grocer market would present more of a challenge and wanted to hold off while solidifying other parts of the country first. We’ll soon find out whether their strategy worked.

Larson: Chris Wood is the publisher of the Boulder County Business Report.

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