Trader Joe's

About

Trader Joe's

Story

quirky mart
by Barry Silverstein
February 19, 2007

From a marketing perspective, grocery stores always seemed to be a sleepy, amorphous category without a lot of brand innovation.
And then along came Trader Joe's—less a grocery store and more a brand with a cult-like following.



The modest beginnings of Trader Joe's are the stuff retail legends are made of. According to Len Lewis' book, The Trader Joe's Adventure: Turning a Unique Approach to Business into a Retail and Cultural Phenomenon (Dearborn, 2005), in the 1950s, southern Californian Joe Coulombe told his business school professors at Stanford University about an idea he had for a food store. He wanted to open gourmet food shops and sell re-packaged items purchased in bulk at reasonable prices. His target audience would be what was later defined as "yuppies."

Supposedly, the professors were not particularly encouraging. (Incidentally, this same basic story is told about Fred Smith when he launched Federal Express. Business schools are not always the best brand incubators.)

Joe Coulombe was way ahead of his time, of course. He went ahead with his plan in 1958 and bought a few Pronto Markets, small convenience stores in Pasadena. Coulombe re-did the stores with a tropical theme to differentiate them from the local competition in the 1960s. In 1967, he changed the name to Trader Joe's in deference to a trader/adventurer he read about.

There are now 250 Trader Joe's stores in 20 states and growing. Supermarket News ranked Trader Joe's number 28 in a list of top North American food retailers, with an estimated US$ 4.5 billion in sales as of June 2005. Since 1979, the chain has been owned by a trust held by the Albrecht family, founders of the international grocery chain ALDI.

For the uninitiated, Trader Joe's is a quirky collection of smallish specialty stores that more closely resemble neighborhood corner markets than traditional grocery stores. They tend to set up in secondary locations—somewhat cramped retail spaces that would be unattractive to super-chains. With unusually friendly staff decked out in Hawaiian shirts, free food samples, handwritten signs, and private-label products you simply can't find anywhere else, Trader Joe's engenders the kind of customer loyalty any brand would envy.

The depth of Trader Joe's brand is impressive. It begins with the store itself. The size, layout, appearance, and inventory are very different from a typical grocery store. It is intimate and colorful. It has an unusually large selection of both organic and gourmet foods. And most of them—about eighty percent in fact—are Trader Joe's own brands.

Part of what you buy into when you shop Trader Joe's is these private label brands. They aren't special just because of the fun the retailer has knocking off the store moniker—"Trader Giotto's" (Italian foods), "Trader Jose's" (Mexican foods), and "Trader Darwin's" (nutritional supplements), to name a few. Rather, it's the eclectic variety. Trader Joe's packages, cans, and freezes products that run the gamut from prepared dishes to low-fat snacks to unique simmer sauces to flash-frozen fish from all over the world. Customers can't get enough of it.

When Trader Joe's introduced inexpensive wine under a label called Charles Shaw, it became affectionately known as "Two Buck Chuck." It reportedly was the fastest-growing wine label ever.

In a rare behind-the-scenes look in anticipation of the chain's first Manhattan location in March 2006, New York Times reporter Julia Moskin was allowed access to the Trader Joe's product selection process which, she wrote, involves "travel, research, argument, and experimentation." According to Moskin, about 15 Trader Joe's category leaders "perpetually travel the world visiting all kinds of food businesses—restaurants, farmers' markets, artisanal pasta makers, street stalls, and supermarkets—and then translate their finds to the stores." No product gets on the shelves, though, without passing the test of a tasting panel.

Once in the stores, if products don't sell, they are ruthlessly rotated out so new products can be continuously added. Yes, Trader Joe's really believes the customer is king (or queen). Because Trader Joe's cuts out the middleman, product prices tend to be exceptionally reasonable—if not downright cheap. And Trader Joe's is committed to a kind of social responsibility that is reminiscent of the Ben & Jerry's brand mantra.

These are a few of the key reasons customers are fanatically loyal to the Trader Joe's brand. They have been known to travel for hours to reach a store, stock up, and trek home. They don't just shop there, they go to be entertained and educated. Two customers have even started their own websites: www.traderjoesfan.com and www.trackingtraderjoes.com.

The Trader Joe's customer is hooked on "TJ Culture," described in an August 30, 2003, Seattle Post-Intelligencer article this way: "TJ Culture dips into the health-food movement; the gourmet food, wine, and booze craze; and the ever-popular discount ideal. But all in moderation.… TJ Culture creates a safe haven at the intersection of several groups known for their competitive testiness."

Trader Joe's achieves this brand love-in below the radar. It does no advertising. Its only promotion to speak of is a newsprint circular called "Trader Joe's Fearless Flyer" that's distributed in-store and mailed to each store's targeted geographic area. The Flyer describes some of TJ's featured products of the month in breezy, tongue-in-cheek copy accompanied by what looks like turn-of-the-century clip art.

Has anyone else in the US been able to replicate the special quality of the Trader Joe's brand? Not really. Some compare Trader Joe's to Whole Foods because of its strong focus on health foods and organics, or even to Costco because of its value-based house brand strategy. These chains have neither the intimacy nor personality of Trader Joe's, however. One occasionally runs across a smaller chain that has similar attributes. For example, Earth Fare, with 13 stores in North Carolina, South Carolina, Georgia, and Tennessee, has a smaller footprint than a mega-market, focuses on "healthy" and organic food, and offers many specialty items. Still, this chain just doesn't seem to have that same Trader Joe's magic.

Somehow, when Joe Coulombe conceptualized Trader Joe's, he created a retail brand that would attract and retain a loyal customer base—and better yet, turn them into raving fans. Forty years later, even amidst significant expansion, it seems that each individual Trader Joe's store can still connect with its customers—and make their shopping experience one they won't soon forget.


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Barry Silverstein, a 25-year advertising and marketing veteran, is co-author of The Breakaway Brand (McGraw Hill, 2005).