PRIVATE LABEL: Trader Joe's

ROBERT VOSBURGH

When a store is about 85% private label, it's natural for everyone to envy its own-brand cachet, yearn for its profit margins and fear its nearby presence. Trader Joe's evokes all those responses — and more.

The 300-store chain is notorious for being secretive, so analysts and observers have become the most reliable sources of information. Most think that sales per square foot hover around $1,500 — more than twice that of conventional supermarkets. The total SKU count, centered on fast-turning, high-margin items, is generally estimated at 2,500 to 3,000, though the retailer will only admit to stocking “more than 800” private-label products.

Inside stores, which average about 10,000 square feet, shoppers find a South Seas-themed environment and a variety of own-brand products that reflect a global palette. While that might not be unique, what the retailer does better than anyone else is combine quality with a low price to create a rabidly loyal customer base.

Trader Joe's is aggressive with its private label, and should be. When customers worried earlier this year about the safety of food imported from China, Trader Joe's announced it would pull from its shelves garlic, frozen spinach and other single-ingredient items sourced from that country.

Trader Joe's business philosophy helped get it named to the 2008 list of the World's Most Ethical Companies by Ethi-sphere Magazine.

“Having great products at very reasonable prices is one [reason],” said Robert Leffel, associate director of The Ethisphere Institute, publisher of the magazine. “We were also impressed with their determination not to carry any products with artificial colors, flavors, MSG or added trans fats.”