The owner of Adohr Farms had been asking Joe to carry his dairy products in Pronto stores. After a fateful lunch one day, Adohr gave Joe a loan and purchased 51 percent of Pronto from Rexall. And Joe was able to stock Adohr Farms dairy products in the stores. Joe got wind that the variety store he visited in Texas was coming to California.
They had a huge marketing budget, and Joe thought they were going to put him out of business. That weekend he sees a movie about some old trading ships. They were famous for the mai tai, and he wanted one. They were later called the middle-class. These people had a deeper sense of what they wanted to eat. They healthier things, and Joe listened.
He is responsible for starting the foodie culture we enjoy today. He changed the foundation for this culture. At that time, the dairy industry regulated cheese in the U. The change boded poorly for Trader Joe's liquor segment. Indeed, since the Depression the state had effectively subsidized the sale of milk and liquor by markets. Many smaller convenience stores, in fact, had come to rely on milk and liquor sales, even to the point of advertising other items below cost just to get customers in their shops.
Deregulation quashed that practice, and many mom-and-pop stores failed. As the giant supermarkets flexed their muscles in the newly deregulated grocery industry, Trader Joe's quickly adapted to the new environment. Coulombe rejected traditional convenience store inventory and began to market Trader Joe's as an upscale, but value-oriented, seller of trendy, hard-to-find beers and wines. The strategy was a success and Trader Joe's maintained its profitability. Trader Joe's continued to sell its inexpensive, unique wines and imported cheeses and coffees as it had since the early s.
But Coulombe gradually began expanding the chain's inventory to include a wide array of singular nuts, pastas, fish, vegetables, and prepared snacks and meals. The company retained Coulombe as CEO. During the early and mids Coulombe continued to perfect Trader Joe's inventory and market position and to slowly grow the California chain.
He gradually moved away from the intense environmental rhetoric in the Fearless Flyer , for example, and evolved with his core market. That meant positioning the Trader Joe's stores to appeal to the emerging upwardly mobile, or "Yuppie" crowd, which was exhibiting increasingly sophisticated shopping patterns.
Unique beers and wines remained a major attraction, but Coulombe also began bringing in more perishables and unique dry food items. The Fearless Flyer continued to be a primary marketing tool, but it was toned down and used to provide entertaining and useful information such as health tips and new store items. Importantly, Coulombe bolstered the attraction of his inventory by keeping a sharp focus on value and targeting the well educated, but less-than-affluent consumer. Wines and other alcoholic beverages were often displayed in cases and most stores had only a few rows of shelving.
And while the average store size increased during the s and s, the average Trader Joe's store was still only about 6, square feet by the late s--about half the size of the typical Los Angeles supermarket.
Although his strategy of maintaining a continually changing inventory may have seemed like an expensive and daunting proposition to larger markets and superstores, Coulombe managed to keep prices low.
Trader Joe's efficiency was partly the result of its cash policy; the company paid cash for all purchases and funded growth internally as well as through the deep-pocketed Albrecht family. Innovative, low-cost advertising was a major money saver as well. Trader Joe's cost-saving private label comprised about 80 percent of the company's product offering. Also minimizing expenses was the company's unusual purchasing program.
The store's own branded items--fresh salsa and unique pastas, for example--were supplied by a constantly changing set of small, independent contractors. The foods they supplied were often discontinued items that Trader Joe's bought at a discount. Those contractors and other suppliers were found by Trader Joe's own buying team, which traveled throughout America and Europe in search of interesting items and bargains.
The result of Coulombe's innovative inventory and pricing strategy was huge profit margins. Furthermore, because its stores were usually located on non-prime real estate, the company's fixed overhead was relatively low. By the late s the nearly year-old Coulombe had built Trader Joe's into a chain of 30 outlets, most of which were in the Los Angeles and San Diego regions.
In , Coulombe selected year-old John V. Shields to succeed him at the helm. Following a short transition period, Coulombe stepped aside and the Albrecht family welcomed Shields as the new chief. Shields had known Coulombe for about 40 years when he joined Trader Joe's. The two had met in as fraternity brothers at Stanford University and had kept in touch over the years; Coulombe had always been impressed by Shields' retail sense.
Shields' first exposure to retailing occurred at Stanford, where he worked as a salesperson at a men's clothing store. After college he accepted a job with R. Macy in New York and set a goal of becoming senior vice-president by the age of He began by turning around the women's department, converting it from a money loser into one of the store's most profitable departments.
Following similar feats, he was promoted to senior vice-president before he was In he took a job at Mervyn's and helped that retail chain grow from 38 stores to within nine years. His next move was to Trader Joe's. Joe's vision was to create a laid-back atmosphere "for overeducated and underpaid people, for all the classical musicians, museum curators, journalists," he told The Los Angeles Times in The founder passed away in at the age of According to the store's website , the first store was called Pronto Markets and was a convenience store.
After running a chain of Pronto Markets for 10 years, Joe switched up the business model, and with it, the name. If you've shopped at TJ's before, you may or may not have noticed the nautical theme.
This is because Joe was reading White Shadows in the South Seas at the time and was inspired to make the people at the store like " traders on the high seas. Paired with that nautical theme is the bright tropical Hawaiian shirts worn by the employees. Although Joe stayed on as chief executive officer until , the founder sold his stake in Trader Joe's in to German grocery retailer, Theo Albrecht.
The company remains in the Albrecht family ownership to this day. Next time you're checking out at Trader Joe's, take a glance around for the plastic lobster—it's there. There's been one in every Trader Joe's store since It's just another element pulled from Joe's nautical inspiration, but it's also incredibly useful. Instead of using a PA system, the store uses the bell and a special code for various requests.
Before it became a hot-button political issue, reusable bags were the norm at Trader Joe's. The company's "Save a Tree" canvas bag came out in and is still in stores today. One thing that the founder engrained into the company's ethos was delivering high-quality ingredients , which means non-GMO and organic produce.
The store strictly sells all bananas individually and for no more than 19 cents. As the story goes, Trader Joe's was trying to figure out how to price bananas by the bundle or individually when a Sun City employee noticed an old woman inspecting the fruit and ultimately putting it back. When he asked her why, she told him, "Sonny, I may not live to that fourth banana.
Almost everything you pick up off of the shelf at Trader Joe's is made under the Trader Joe's private label —from coffee creamer to coconut oil.
Operating this way helps keep the shelf price down. In , the company created sub brands for specialty food items. The company experimented with the idea of launching its own product line of granola —and no one's looked back since. How different are those Trader Joe's chips from your favorite brand name chip?
Not very. It turns out, some of the manufactures of Trader Joe's products are brand name companies. The grocer is able to deliver goods for less by simply cutting out the middle man and buying directly from manufacturers and growers , rather than the distributor.
Any tried and true Trader Joe's shopper can tell you that the shopping experience is unparalleled to any other store. But the reason for that? Smaller inventory. While the average supermarket keeps up to 50, items on the shelf , Trader Joe's only keeps 4, in stock.
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