Grocery chain Trader Joe’s has opened up a legal can of whup ass on its self-professed “best customer,” Pirate Joe’s.
Vancouver, British Columbia shopkeeperMichael Hallatt, claims to have spent more than $350,000 at Trader Joe’s in the past two years. Trader Joe’s would like him to stop shopping there. What gives?
Hallatt, makes frequent drives across the border to shop the U.S. stores, then resells popular Trader Joe’s branded products in his own store, cannily called Pirate Joe’s.
Various commentators are at a loss to explain why Trader Joe’s would cut off its best customer. But isn’t it obvious? Trader Joe’s always had the option of opening a store in Vancouver. Because it never did, it must be that it would not be profitable. Now the joint profits between Trader Joe’s and Pirate Joe’s cannot be higher than the profit that Trader Joe’s would have earned if it opened its own store. At worst Trader Joe’s could just replicate what Pirate Joe’s is doing, but probably it could do it more efficiently. So Trader Joe’s which earns only a share of the joint TJ/PJ profit must be less profitable than it would be if it opened its own store in Vancouver which it has already calculated to be unprofitable.
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September 29, 2013 at 11:25 pm
SG
PJ’s doesn’t have to operate at the same scale and maintain the same brand face as TJ’s would if it were open in Vancouver. Imagine the guy were operating from the back of his van and serving a niche market of diehard TJ’s fans. To serve them TJ’s would have to open a full-fledged store which wouldn’t be worth it unless they thought there was a much larger demand for TJ’s products. They would also have to carry some minimal line-up of goods while PJ’s can cherry-pick the most desired ones.
September 30, 2013 at 7:37 am
E
The profit calculation that would’ve stopped TJ’s from opening a Vancouver store includes a fixed cost of opening a store. It’s plausible that, absent said fixed cost—which is now sunk by PJ’s—running a proxy store out of Vancouver is profitable. Given TJ’s actions, I guess not.
September 30, 2013 at 8:24 am
Jared
Also, a Trader Joe’s in Vancouver would not be able to mark up the prices to the extent that Pirate Joe is doing, since Pirate Joe is running a bootleg operation catered only towards TJ diehards. It’s not obvious to me at all why they would keep him from buying their products, except for the fact that they feel like they’re getting ripped off.
September 30, 2013 at 10:44 am
RW Force
Why haven’t they opened a TJ’s in Vancouver? It might be profitable, but I had a conversation with a store manager on the topic of “Why don’t they open a store in xxxx?” The answer was that they need to build out their distribution centers first. A move into Canada would be based on province-wide considerations, not a single store.
July 7, 2015 at 11:37 am
ask
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