Latest / The Retention Marketing Podcast with Fexingo: Email, SMS, and Loyalty for Repeat Customers / How Trader Joe's Uses Scarcity to Drive Repeat Traffic
Transcript
- Lucas: So last week I was in a Trader Joe's in Brooklyn—this was the week they put out the Pumpkin Spice Joe Joe's for the first time this year, which is June, by the way—and I overheard a woman say to her friend, 'If we don't buy them now, they might not come back until next fall.' Luna: That's the whole Trader Joe's trick in one sentence, isn't it? Lucas: Exactly. And it's remarkable because Trader Joe's does not have a loyalty program. No points, no tiers, no app with push notifications. Yet they consistently drive repeat visits that most grocery chains would kill for. Luna: How do they do it? I mean, we talk about retention a lot on this show—points, email, SMS—and they just skip all of it. Lucas: They rely on one core psychological lever: scarcity combined with discovery. And they execute it through a very specific set of tactics that are almost the opposite of what we usually recommend. Let me give you the numbers first. As of this June, Trader Joe's operates about 600 stores nationwide. They don't release official same-store sales, but industry estimates put them consistently above 20 percent growth compared to pre-pandemic levels. And this is with zero online ordering and no e-commerce. Luna: Wait—no online ordering at all? In 2026? Lucas: None. They started a very limited delivery partnership with a third party in some cities a few years ago, but for the most part, if you want Trader Joe's, you have to go to the store. That's intentional. Every visit is a physical interaction with the product. And that's where the retention loop starts. Luna: So the scarcity is built into the product selection itself. I've heard that about the seasonal items—the pumpkin stuff, the holiday treats. Lucas: Right. But it goes deeper than just seasonal. Trader Joe's carries about 4,000 SKUs, which is tiny compared to a typical supermarket that might have 40,000. Every single product has a limited shelf life because they rotate constantly. They'll bring in a new frozen item, it's there for maybe three months, and then it's gone, replaced by something else. So customers learn that if they see something they like, they'd better buy it now. Luna: And that drives repeat visits because you have to keep checking back to see what's new. Lucas: Precisely. It's a built-in fear of missing out, but it's not manufactured through countdown timers or notifications. It's just the actual product lifecycle. And the most famous example of this is Two-Buck Chuck—Charles Shaw wine. That was originally a temporary experiment in 2002, priced at $1.99. It became a phenomenon precisely because people knew it might not last. Of course, it did become permanent, but the scarcity halo has never worn off. Luna: So the scarcity creates anticipation, which drives traffic. But what about the actual loyalty? How do they get people to come back week after week rather than just when a new seasonal item drops? Lucas: That's where the second piece comes in: the low-price, high-frequency model. Trader Joe's average basket size is around $35 to $40, which is lower than a full-service supermarket. But their visit frequency is higher—customers come in about once a week on average, compared to once every two weeks at a conventional grocer. So they've trained customers to think of Trader Joe's as a quick, affordable stop rather than a big weekly haul. Luna: And that lowers the barrier to entry. It's easier to justify a $30 trip than a $150 trip. Lucas: Exactly. And every time you go, you feel like you got a deal because their private-label products—which make up about 80 percent of what they sell—are priced 20 to 30 percent below national brands. So the customer gets a dopamine hit of savings. That feeling of being smart with your money is a powerful retention driver. Luna: It's almost like a loyalty program that pays you in psychological rewards instead of points. Lucas: That's a great way to put it. And then there's the third tactic, which is the most counterintuitive one for a marketing podcast: they barely use email. They have no email newsletter in the traditional sense. What they do have is the Fearless Flyer. Luna: Right—the little paper pamphlet they hand out in stores and mail to some households. I've seen it. Lucas: It's a physical publication that comes out every two weeks. It lists new products, seasonal items, and tells little stories about the products—where the cheese comes from, how the coffee is sourced. It's written in that quirky, folksy Trader Joe's voice. And it drives foot traffic because people want to see the items in person. There's no 'buy now' button. The only call to action is 'visit your neighborhood Trader Joe's.' Luna: So it's retention through anticipation and physical presence, not through digital reminders. Lucas: Exactly. And it works because the flyer is actually entertaining to read. People collect them. They share them. There's a whole Reddit community dedicated to dissecting each new issue. That generates word of mouth, which brings in new customers and keeps existing ones engaged. Luna: And all of this is happening without a single push notification, without a loyalty card, without a birthday email. Lucas: Right. But let's be clear: this model works for Trader Joe's because of their specific positioning. They're a specialty discount grocer with a very clear brand identity. If you're a standard supermarket or a DTC brand, you can't just copy this. The lesson is more about the principles underneath. Luna: So what are those principles that a smaller business could actually apply? Lucas: I think there are three. First, create genuine scarcity—not fake urgency—by having products that actually come and go. If you're a clothing brand, do limited drops that don't come back. If you're a food brand, do seasonal flavors that are truly seasonal. Second, make every transaction feel like a win for the customer. Trader Joe's does that through price. You could do it through surprise upgrades, free samples, or just exceptional service. Third, find a way to create anticipation that doesn't rely on email. Maybe it's a physical mailer, maybe it's a podcast, maybe it's an in-store event. The goal is to make the customer look forward to their next interaction with you. Luna: That anticipation piece is huge. I think about how I feel when I know a new Fearless Flyer is coming. It's like a mini event. Lucas: And that's the retention moat. A competitor can copy your product, but they can't easily copy the anticipation you've built in your customers' minds. Trader Joe's has been doing this for decades, and it's incredibly defensible. Luna: You know, speaking of things that are worth anticipating—I think a lot of our listeners would say that these episodes are something they look forward to each week. Lucas: I hope so. And honestly, that kind of feedback is what keeps us going. We keep this podcast ad-free because we want it to feel like a genuine conversation, not a commercial. A couple of dollars a month is genuinely what keeps these going—buy me a coffee dot com slash fexingo, if you've gotten something out of them. Luna: It really does make a difference. Every bit helps us keep the lights on and the conversations ad-free. Lucas: So back to Trader Joe's. One more thing I want to mention is how they handle the customer experience in-store. Their employees are famously helpful and cheerful. That's not an accident. They pay well—store managers can make six figures—and they hire for personality. That creates a positive emotional association with the brand that makes you want to come back. Luna: And that's a retention driver that doesn't show up in any email metric. Lucas: Exactly. So if you're a marketer listening, the takeaway isn't to ditch your email program. It's to think about what psychological levers you're actually pulling. Are you building anticipation? Are you making every interaction feel like a win? Trader Joe's answers those questions without a single loyalty point. Luna: I think that's a great note to end on. Thanks, Lucas. Lucas: Thanks, Luna.