Chasing Trader Joe’s

Earlier this month, WGB reported that Trader Joe’s has recently opened or is slated to open 15 new stores. Since then, the Monrovia, Calif.-based grocer has announced plans for six more new stores around the country, including one in highly competitive Greensboro, N.C., which is already home to Earth Fare, The Fresh Market, Whole Foods Market, Sprouts and Aldi—all within minutes of the “coming soon” Trader Joe’s.

Does this spate of new store announcements signal an escalation of Trader Joe’s expansion plans in certain parts of the country?

“It seems to me they are very focused on the New York and D.C. areas, as well as the Los Angeles area,” said David Beitz, partner with Columbia, S.C.-based Beitz and Daigh Geographics Inc./Planned Grocery, a data and software development company focused on commercial real estate.

Trader Joe’s opened 20 new stores in 2017 and 11 new stores in 2018. “For 2019, we show seven new stores have opened this year, with 15 others under construction and 15 more in the proposed/planned state. If you assume that seven of those stores under construction open by the end of the year, then that’s 14 new stores in 2019,” said Beitz. “It often takes about 12 months for a new store to open once it’s announced.”

The number of proposed new stores is fewer than its main competitors—Sprouts and Whole Foods Market—with some 30 and 40 new stores, respectively, planned for 2019. And Trader Joe’s expanding its footprint is decidedly modest when compared to Dollar General, the nation’s fastest-growing grocery retailer with plans to open 975 stores in 2019.

“My thinking is that [Trader Joe’s] is expanding based on the same principles and strategy from 2017 and 2018,” said Beitz. “Timing of new stores is very tricky due to the unpredictable nature of real estate development. Many things can slow or kill deals for new stores.”

But given Trader Joe’s cultlike consumer following and well-publicized reports of real estate value escalation when a Trader Joe’s opens down the street, the grocer is one with which most developers are eager to clinch a deal.

“Trader Joe’s is a very desirable retailer to have so developers are chasing them, and they will get opportunities for new sites and vacant boxes, often before older traditional grocers will,” Beitz said. “Economics and demographics play a large part in whether a new store gets built. Even if you have the best demographics, sometimes the economics don’t work when you look at cost to build or renovate vs. the rent a developer or landlord requires.”