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Should Whole Foods Buy Trader Joe's?

There's no excuse for this shocking reality: Safeway ( SWY ) has a pretty solid shopping app -- one you carry with you and use throughout the store -- Whole Foods does not.

Whole Foods Should Buy Trader Joe's

If you live in a place without a Whole Foods or Trader Joe's, you want one, the other or both. If you live in a place that has both you probably shop at both. I go in waves, but, ultimately, I split time almost evenly between the two stores.

Trader Joe's has more than 350 stores. Highly concentrated in California, but scattered across the nation and still growing fast. Trader Joe's continues to saturate new markets. For instance, my parents, who live in Western New York, will have one nearby when the chain opens in Amherst, a suburb of Buffalo.

Whole Foods needs to do like Starbucks and take Trader Joe's out.

On the surface, it looks like overkill, but not if Whole Foods handles it strategically.

Trader Joe's stores tend to be much smaller than Whole Foods Markets. In the last couple of years, as Whole Foods has focused more on its "generic" Everyday 365 line, the two have converged on price. While Whole Foods still sells items at a considerable premium to Trader Joe's, it's no longer Whole Paycheck. You can still drop absurd amounts of money on cheese and salami, but you have more choices than ever before a various price points.

If I'm Whole Foods, I turn a handful of Trader Joe's stores into one-stop-shops for Everyday 365 products and Trader Joe's-branded items. Make it the Whole Foods Market corner store concept with a small produce section and an expanded beer section.

Morph another handful of Trader Joe's into full-fledged Whole Foods stores. And maybe experiment with a concept or two at a couple others.
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