This is a shocker? To whom? Did you guys really think that TJ had the capability to manufacture everything from vitamins to dog food, and that they grew all of their own produce? It's called generics, people! It's a house brand! What is the big deal?
I think their approach is that the supply chain from manufacturer to retail is much shorter-there is no wholesaler in the mix. So the food is cheaper and fresher. I fail to see a downside for the consumer.
It's no secret that TJs sells private label items made by other companies. They happen to have a high quality standard to match the more reasonable price point. Unlike most shops doing this and placing them alongside brand names, they'll only carry limited varieties of an item. If you want a taste of this on a more budget level, check out ALDI. Yes, the place where you have to pay 25c deposit to use a shopping cart. They're about the most fantastic low end supermarket ever. No frills, mostly private label, and unbeatable prices. Same great satisfaction guarantee as TJs. I miss their $1.69 monster box of Frosted Mini Wheats dearly. And guess what - ALDI owns TJs.
This is idiotic. The packaging is usually an obvious tip-off of what product the TJ brand is a twin of - I'm pretty sure they do that on purpose.
Glad to hear they are a tough customer on quality control - thx jfultz.
Simple: Regular Distribution is manufacturer (x% margin)->distributor (30% margin)->Retailer (30-40%Margin). Trader Joes has huge volumes so it goes like this Manufacturer (lower margin than usual)-> Trader Joes. They cut out 30-50% of the margin. Hopefully that helps understand why they contract manufacture.
BREAKING NEWS - Ralph's, Von's, Costco, Safeway all found to be using third parties to produce store brand name items!!!
/sigh
@heidia: No apology necessary. Not such a big deal. Just expressing my confusion and displeasure with all the daggers thrown at TJ's recently.
@Susquehanna - I didn't mean to make TJ sound unethical--sorry if my comment left that impression. TJ is just known to be tough negotiators with manufacturers on price and quality.
I'm confused. Why is this scandalous? Are there people out there who think that stores actually manufacturer and/or package the products they sell under their own label? Seriously? Wow. I honestly thought that everyone (literally) knew that "private label" products were produced by the same companies who make the name-brand stuff. Maybe I'm misunderstanding the issue that makes this so scandalous?
The real problem with TJs is their MO of getting customers hooked on a brand-name product, then reinventing it as a private label product. That wouldn't be so bad, except the price usually does not go down after private labeling (as one might expect), while the product size usually does decrease, so you actually end up paying more per unit than you did when it was name-brand. Also, they like to reformulate, often resulting in a version inferior to the one you got hooked on in the first place.
This is no secret. Working with manufacturers enables the company to get better prices and sometimes bigger packages. It also allows TJs to have companies produce products to their standards (ex: no chemical preservatives or artificial colors). And yes, of course no middleman/wholesaler.
As a former employee of one of those contract manufacturers, I saw first hand how Trader Joe's worked. They bought one cheese spread from us with their brand name in addition to one product with one of our own brands. Their approach was to buy a bunch of product at once in cartons with a large number of units to keep costs down.
And if anyone is worried that this somehow compromises their quality, I have this story. The product we made for them was without preservative (potassium sorbate) but we also made versions of the same product for others that included preservatives. Try as we might to keep their product separate, one batch had some trivial carryover of the preservative at a level that was below an effective level but was detected by their quality team. As they should have, they rejected that load but they went the step further of ending our contract because of that one slip.
They were a tough customer when it came to anything quality related.
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