This Is the Deal with Trader Joe's

It's not flirting

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Episode 195: Trader Joe’s

A little grocery store with a big impact, and nothing to do with tiki.

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(Below is not exactly a transcript of the episode, more like a script that I used. It works as an article, enjoy!)

This Is the Deal with Trader Joe's

Hey everyone, I am Katherine Spiers, this is Smart Mouth. Welcome back! Thank you for being here, today we’ve got a solo episode! I had a hankering to talk about the grocery store called Trader Joe’s. I saw a tweet from someone called Sargent Ned. He said: “The culture is about to turn on Trader Joe’s ... I can feel it in my bones” 

There was one thing in 2020 where there was a change.org petition to change some of its packaging, specifically the labels like “Trader Jose’s” and “Trader Ming’s” that are on “ethnic” food. Trader Joe’s said that was in process, which is probably true. So it’s not really a cancelable offense. The company responded to the warning shot.

I have no idea if anything else or worse is going to surface. I’ll just state that upfront. I didn’t come across anything overtly evil when I was researching. Trader Joe’s is privately held, mostly by a bunch of German cousins, and maybe that’s a good thing. No stockholders to appease. Just fourth-generation wealthy people who are probably busy wakeboarding, is what I picture.

Anyway I had to read a lot of business and grocery industry publications for this one … and I loved it.

First order of business: I know a lot of TJs shoppers feel as though they are being flirted with when they’re at the check-out. And there are some rumors that flirting is an actual directive from corporate, but that’s not really true. Employees are just asked to be super friendly. For instance, have you noticed how much restocking is always going on there? That’s by design - they restock during open hours in order to increase employee-customer interaction. A marketing executive who took a job at TJ’s as a cashier (to try and find out its secrets) says that during orientation, 90% of the new hires raised their hands to be the first to introduce themselves. They’re hiring talkers.

This philosophy - pretty much any evident TJ’s philosophy - comes from its founder, Joe Coulombe. He got his start in the 1950s working for the pharmacy chain Rexall. He led research they were doing on opening convenience stores. He did open about six convenience stores for Rexall in Southern California. They were called Pronto Markets, and ultimately they were no match for 7-11. In the 1960s Rexall was going to just down the markets, but Joe decided to buy them and start Trader Joe’s, converting some of the Prontos over time. And a lot of what he did with the place was a reaction to 7-11. For instance, he paid full-time employees the “median California income,” and full benefits, because he did not enjoy the “quasi-serf environment of 7-11.”

Joe later claimed that the typical tenure at Trader Joe’s was 35 years. The company is pretty notorious for being, essentially, secretive, so stats like that are hard to confirm. 

But a market research firm based in New Zealand, called Coriolis Research, did a study around 2005 called “Understanding Trader Joe’s.” It’s an absolute wealth of information. There’s a link in the show notes, of course. 

Let’s talk about decor. There are so many articles out there that say that TJ’s has a “tiki theme” and it was chosen because 1967, when the first TJ’s opened, was the height of tiki’s popularity. That never sat right with me, because by 1967 tiki was absolutely on the downswing. (Sidebar: in doing this podcast I’ve realized how often outlets just repeat other outlets verbatim, clearly without looking into whatever it is they’re stating. That’s not the fault of journalists, it’s the fault of media executives with their post quotas and the low salaries they give writers and, you know, how they’ve eliminated the position of fact-checker. Or never even had one, if it’s a newer publication. Anyway don’t get mad at writers, get mad at conglomerates.) 

According to Joe Coulombe himself, he was inspired on a 1966 vacation to St. Barts. He was like, “this is a good vibe, I’ll copy it for my stores. Let’s get some bells and fishing nets.”

So, TJ’s is not tiki-themed, it’s just meant to feel like a vacation. 

The concept of “vacation” influenced the store inventory, too. He wanted party products, like booze and dips, cheese and crackers. 

Coloumbe read an article in Scientific American that said 60% of high school graduates were going to college, which was multitudes more than any time previous in US history. Coulombe also read a newspaper article that said the new jumbo jets being invented were going to reduce the price of international travel. He figured more people were going to go on big vacations. So he banked on, basically, not-rich people becoming more sophisticated in their tastes. 

In 1981 he said “This is a person who got a Fulbright scholarship, went to Europe for a couple of years and developed a taste for something other than Velveeta by way of cheese, something more than ordinary beer by way of alcoholic beverages and something other than Folgers by way of coffee.”

And in 1996: “Trader Joe's is not a gourmet operation. I hate the term. Trader Joe's was designed by me for people who are overeducated and underpaid. . . . The point of view of Trader Joe's is not, `What's weird and different?' but `What can you do to raise the level of living of schoolteachers?’” 

He liked to say that his customers were “the overeducated and the underpaid.”

I think TJ’s products used to be considered genuinely “exotic,” if you will. Like, you didn’t used to be able to get, say, frozen dumplings and naan at regular grocery stores. I personally remember finding out about tzatziki at Trader Joe’s.

In terms of profitability, though, the smartest thing he (or someone who worked for him) did was figure out a loophole in California fair-trade laws regarding alcohol. The state set minimum prices for liquor. Every grocery store made the same percentage on booze sales. But! The law did not apply to private label wine! So he convinced wineries to sell their wine to him with a Trader Joe’s label, which enabled him to set the prices on the wines way lower than anywhere else. As you can imagine, this went well for Trader Joe’s. The most notorious example of this is, of course, Two-Buck Chuck. (That was launched in 2002, long after Coulombe had retired.)

The Trader Joe’s newsletter, the Frequent Flyer, started in 1967. It focused on wine and was called Insider’s Report. 1979 was the year that Trader Joe’s debuted Trader Joe’s-branded products. A fact that surprised me is this: that same year, 1979, was when Coulombe sold the company to the Albrechts, the folks that own Aldi Nord. Aldi Nord and Aldi Sud are two different companies run by various Albrechts. I believe the US is the only country that has both chains represented, the form of Trader Joe’s and Aldis. They’ve been separate companies since the 1960s; the first family store had opened in 1913.

I found a US News & World Report article from 1997 that said this: “Trader Joe's won't supplant the neighborhood supermarket. There are no meat counters, very little produce, no pharmacy, few staples such as toilet paper or sugar, and no fresh fish.” 

Of course, Trader Joe’s now has most of those things, and plenty of people use TJ’s as their primary market. The parking lots are still a mystery.

Sources:

Coriolis Research 

LA Times 

CNN 

US News & World Report

Investor’s Business Daily

Small Business 

CNBC 

Reference for Business 

The tweet.


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This newsletter is edited by Katherine Spiers, host of the podcast Smart Mouth.

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