Business

The thrill of the hunt

Many products at Trader Joe's carry its label and might not be found at other stores.
Many products at Trader Joe's carry its label and might not be found at other stores. MCT

Trader Joe's, the specialty grocery chain that seems to be eyeing Lexington, might not have the cheapest toilet paper or the most varieties of ketchup, but it hooks customers with mango butter, chocolate-covered pomegranate seeds and cilantro-and-jalapeño hummus.

These goodies aren't on most grocery lists, but they tempt shoppers into an impulse buy. At a time when families are being frugal and the Web makes discount-hunting easy, unexpected treasures are an increasingly important strategy for stores.

"It's the wow factor that's getting people to buy," Wall Street Strategies analyst Brian Sozzi says.

So shoppers might go into T.J. Maxx or a DSW shoe store looking for a bargain on something they need but end up splurging on irresistible finds.

Dollar Tree lures customers with rock-bottom prices on cleaning supplies, then tempts them with extras such as leather iPod cases.

Constantly cycling in fresh merchandise is critical as the Web makes it harder for stores to compete on price. Surprises also create suspense and encourage repeat visits.

TJX Cos., parent company of T.J. Maxx and other chains that sell designer goods at a discount, gained momentum during the recession, when frugality came into style. That growth is continuing after the recession. First-quarter revenue at Marshalls and T.J. Maxx stores open at least a year was up 4 percent from the same period last year.

The key is not only tracking down quality merchandise from vendors but getting it into the store quickly. To do this, T.J. Maxx and others have invested in sophisticated buying, planning and distribution systems.

The quick turnover creates a sense of urgency: If you don't buy it today, it probably won't be there tomorrow. When the economy tanked, TJX began cycling inventory through the store faster than ever, says Sherry Lang, vice president of investor relations.

By embracing the treasure hunt, dollar stores have been able to keep the middle-income shoppers they attracted during the recession. Dollar Tree CEO Bob Strasser told analysts the store has taken the opposite approach from Wal-Mart, expanding its assortment of "fun" discretionary products and adding more brand names. That means more surprises to tempt shoppers.

It's working. Dollar Tree's revenue at stores open at least a year was up 7.1 percent in the most recent quarter.

Trader Joe's is built almost entirely on the treasure hunt. The privately held company declined to comment on business operations but said 80 percent of its products are private-label foods you can't find anywhere else, such as Thai green curry simmer sauce and chili-spiced dried mango.

The chain has issued a legal notice stating it intends to file for a license to sell alcohol at a retail establishment in Lexington. A development plan for a nationwide grocer has been filed for the former Joe's Crab Shack property on Nicholasville Road.

Shopping at Trader Joe's is "almost a thrill-seeking experience" — very different from the major food chains, which mostly stock the same stuff, says Sherif Mityas, a partner at AT Kearney, a retail consulting firm.

Victoria LeBlanc Bors of Los Angeles doesn't even take a shopping list there anymore. She never leaves without extras, like a $10 gold and burgundy orchid. When she's preparing for guests, she cruises the store for interesting finger foods such as Greek spinach pies and chocolate-covered dried cherries.

Because prices are low, she says she doesn't feel guilty trying new things.

"I'm liable to carry just about anything out of that store," LeBlanc Bors says. "You buy things that you might not normally buy."

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