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Trader Joe’s beating up Whole Foods in sales per square foot

Trader Joe’s beating up Whole Foods in sales per square foot

Business Insider published an article earlier this week explaining why Trader Joe’s sells nearly twice as much per square foot than Whole Foods ($1,734 PSF compared to $930 PSF).

According to the story, “Trader Joe’s is cheap.” For instance, Trader Joe’s sells a bag of quinoa for $4.99, while Whole Foods sells it for $9.99. The story doesn’t specify whether or not the bags are the same size, but I think we’re supposed to assume they are. The story also doesn’t specify what quinoa is. Blogger.com’s spell check and I are unsure.

Anyway, the point is that consumers view Trader Joe’s as high-quality but inexpensive, and despite Whole Foods’ recent and ongoing efforts to lower some prices, analysts say they are not doing enough to market their bargains, so customers don’t realize Whole Foods is getting cheaper.

Regarding the sales per square foot numbers, here are some stats from the story:

Trader Joe’s – $1,723 PSF
Whole Foods – $937
Publix – $552
Kroger – $496
The Fresh Market – $490
Weis Markets – $335

It should be noted that Whole Foods announced in February that its stores generated an average of $983 in sales per square foot in 2013. And according to stats published by the Food Marketing Institute, the average sales PSF for supermarkets in the U.S. is $360 (based on a median total store size of 46,000 SF and median weekly sales per supermarket of $318,170).

Another reason for Trader Joe’s success, according to the article, is that 80% of Trader Joe’s products are in-house brands, so customers can’t buy them anywhere else. In addition, the product mix is pretty creative (Chili-Lime Chicken Burgers, Cookie Butter), while the mix at Whole Foods is basic in comparison.

Whole Foods has been considered the go-to place for organic and healthy foods in recent years, but lately the competition is catching up, including Walmart.

Lastly, the story included an interesting chart illustrating the projected growth in sales for various grocery formats. Fresh, limited assortment and dollar store formats are leading the way.

Fresh format – 92.2% growth in sales through 2018
Limited assortment – 38.4%
Dollar store – 31.2%
Supercenter – 22.9%
Wholesale – 19.0%
Convenience store – 12.7%
Drug store – 10.6%
Traditional supermarket – 3.6%