Inside the secret world of Trader Joe's

http://money.cnn.com/2010/08/20/news/companies/inside_trader_joes.fortune/index.htm

by jakarta • 16 years ago

135 50 16 years ago

money.cnn.com

speek• 16 years ago

Trader Joe's and GE are two of my favorite companies mostly because of their amazing depth of vertical integration. They've got this stuff down to an art form.

splat• 16 years ago

GE really is an incredible "behind-the-scenes" sort of company. When you first think of GE, you probably think something along the lines of "Oh yeah, don't they make light bulbs or something?" But the more you look into them, the more you realize just how big and diversified that company is. Taking a look at http://en.wikipedia.org/wiki/List_of_assets_owned_by_General... is a good starting point, and then start clicking on the links therein and you'll probably find that GE is behind a lot of products and involved in a lot of industries that you'd never have guessed.

rdtsc2• 16 years ago

I was surprised to learn that GE owns NBC, Telemundo, and Universal Pictures.

parallax7d2• 16 years ago

I'm not sure vertical integration is something to be inspired by. In fact, it tends to create a variety of conflicts of interests, and anti competitive environments. Both effects are generally bad for competition and consumer choice.

314159265• 16 years ago

The vicinity of Trader Joe's is actually a significant consideration whenever I relocate.

rtyuioiujhygf2• 16 years ago

As a european grad student at Caltech - I can say that the pasadena Trader Joe's bread and cheese is the only thing that allowed me to survive American (or at least LA) cuisine.

Anjin• 16 years ago

Uhhhhhh, I'm guessing that you were eating cheap. There's no reason that you'd have to "survive" LA cuisine unless you actually didn't spend money on it and just went to McDonalds. There are amazing restaurants in LA. Lots.

mturmon• 16 years ago

So you did not go to Europane on Colorado near Mentor for baked goods?

onewland• 16 years ago

You created an account an hour ago and this is your first comment? I hate to get too meta, but this seems pretty astroturf-y.

ben1040• 16 years ago

The Trader Joes return policy is pretty amazing. For the first 5 years I shoped there I never even thought to bring something back, but then once a few years back I felt the need to give it a test -- and honestly I couldn't believe they'd even accept a label off a microwave dish and my word that it tasted awful.

The manager was cheerful about it, and told me I wasn't the first person to bring back that particular item. Then he reeled me in:

"I'll gladly get you a refund; did you have any other shopping to do today? I can have the checker credit your order."

"Oh... I suppose I do."

I returned an item that cost less than $2, and then ended up buying a week's worth of groceries at $50.

Zappos may be the only other company I can think of that has the kind of return policy that increases revenue in the long run.

portman2• 16 years ago

Amazing timing - I returned my first ever item to Trader Joe's today, and the experience was memorable.

My wife bought blackberries this morning. Tonight, after dinner, we realized they were moldy. I went to exchange them at about 8:30 pm, just before closing. The store was out of blackberries, though. I called home to ask if there was anything else I should get.

"Olive oil" was the answer. So I walk up to the counter, ready to do an exchange, and the cashier looked at the $8 bottle of Olive Oil, the $3 carton of moldy blackberries, and said:

"Yeah those are about even. Have a good night." He then shooed me out the door without even ringing anything up on the computer.

That kind of autonomy is not what you expect from ANY retail establishment, let alone a grocery store.

dieterrams• 16 years ago

It was my last day there.

qq66• 16 years ago

I once bought a package of smoked salmon at Trader Joe's. It was gross, so I took it back, and the guy asked me to try a different brand instead. I said "OK," and it was gross again. I went back very apologetic just asking for a refund, and he asked me to try a third type. I refused entirely, until he MADE me take the third type of smoked salmon. That third type was really good and I've probably bought $200 worth of it since that day.

dantheman• 16 years ago

REI has the best return policy of all - you can return any item at any time for any reason.

klous• 16 years ago

* If you are a co-op member. 1 time $20 fee.

benmathes• 16 years ago

Backcountry.com has the same policy, plus a healthy network of amateur experts documenting products and writing reviews.

Fry's : Best Buy; backcountry.com : REI

schultzor• 16 years ago

Target used to have an incredibly generous return policy as well, no receipt was no problem, and they'd take back things like dead plants that had no chance of being resold. Store credit is a helluva drug at stores with a wide array of goods.

HeyLaughingBoy• 16 years ago

Even when you don't buy anything immediately, this kind of policy definitely helps hold on to customers.

About 12 years ago my friend and I were shopping at a local Middle Eastern grocery/restaurant (Holy Land in North Minneapolis for those local) and she happened to mention to the owner in passing that the halvah we bought a week ago had a funny taste. He immediately jumped on it "oh, we had some trouble with the refrigerator last weekend. Here, let me give you some more for free!" That was a complete surprise and to this day if I'm in the area, it's the first place I think of to stop and get a bite to eat at.

I've found over the years that most places have such mediocre service that anyone who rises just a bit above the mean sticks in my mind and I tend to patronize their business from that point on.

siculars• 16 years ago

A Trader Joe's is opening in the on 72nd and Columbus in Manhattan that. It's already causing the local groceries to change their game and they haven't even opened yet.

jswinghammer• 16 years ago

I love Trader Joe's. They have an excellent supply of fancier foods and a pretty good selection of pantry items at good prices. I feel as though I get the same level of quality from them without paying for it like I do at Whole Foods.

I love the New Zealand Cheddar they sell there. I have no idea why but it's my favorite cheese. My two year old daughter can't get enough of it either so maybe it's genetic.

TheEzEzz• 16 years ago

My understanding is New Zealand cows are grass fed. Makes a difference, I think. (Irish cows too. Try the Kerrygold Dubliner cheese at TJs. Try the Kerrygold butter too. Now that's butter!)

ryanricard• 16 years ago

Wow, I've been a regular Trader Joe's shopper ever since one opened up down the street about a year ago. Frankly, I was always a bit worried that between the price and the quality there was a "too good to be true" angle that I was missing. But from this article, it seems like they rely on:

* Buying good food

* Distributing it efficiently

* Paying their employees well.

I don't really care how "quirky cool" they are or are not, that's pretty sweet.

pwim• 16 years ago

Perhaps the most relevant point:

A closer look at its selection of items underscores the brilliance of Coulombe's limited-selection, high-turnover model. Take peanut butter. Trader Joe's sells 10 varieties. That might sound like a lot, but most supermarkets sell about 40 SKUs. For simplicity's sake, say both a typical supermarket and a Trader Joe's sell 40 jars a week. Trader Joe's would sell an average of four of each type, while the supermarket might sell only one. With the greater turnover on a smaller number of items, Trader Joe's can buy large quantities and secure deep discounts. And it makes the whole business -- from stocking shelves to checking out customers -- much simpler.

barrkel2• 16 years ago

I see the opposite side of that here in London. All the main supermarkets - Tescos, Asda, Morrisons, etc. - have very little in the way of product choice. Living in east London, I have to go well out of my way to find a different branch of Sainsburys or Waitrose to get certain products.

For example, "McCains Simply Gorgeous Chunky Chips", a variety of oven chips in beef dripping, is vanishingly rare; there's a Sainsburys in Bethnal Green which sells them, but that's going well into the city.

Similarly, for The Berry Company juices - things like açaí, blueberry, goji berry - I have to go to Waitrose in Canary Wharf. Other Waitrose outlets are hit and miss, with patchy coverage of the line; and there's virtually no chance of finding the products elsewhere.

I was amused to find once I went to a Tescos Extra that they largely just had twice the space on the shelf for the same number of SKUs.

parallax7d2• 16 years ago

From what I've read, Brits don't have the insane supermarkets we do here in the states.

daveambrose• 16 years ago

My GF and I have done a lot of shopping at the Chelsea store from the article. Funny the author pointed out "random Manhattan strangers" as I noticed this yesterday when we did our week shopping.

I think the Chelsea store opened a few weeks back, as someone from our office stumbled upon it and brought back peanut butter filled pretzels nuggets - which were awesome. Needless to say, once I heard they opened a TJ in the area, I had to stop by and experience it.

The Chelsea store is so much more open with high ceilings compared to the Union Square location. If you live in NYC, I recommend shopping in this location.

anigbrowl• 16 years ago

FYI, the rather reclusive owner of the company, Theo Albrecht, died quite recently. It may surprise you to know he was one of the world's richest men.

TJs has the lowest number of different products in it stores of any major supermarket, plays employees significantly above the industry average ($40-60k; managers can earn 6 figures), gets a far greater $/sq foot return than competitors, and does over $8 billion a year in sales. And pretty much everyone likes them.

Herr Albrecht is a pretty good role model if you ask me.

http://www.guardian.co.uk/business/2010/aug/05/theo-albrecht... http://online.wsj.com/article/SB1000142405274870489500457539...

d_c• 16 years ago

Here is some more information: http://www.spiegel.de/international/business/0,1518,708881,0... http://www.spiegel.de/international/business/0,1518,709937,0...

Aldi is feared in Germany by their suppliers. Once they pressured farmers to sell their milk at such low prices that the farmers went on strike and poured their milk onto the fields instead of selling it.

The working conditions seem to be average for a discounter. Meaning: Not very good but that is to be expected.

roel_v• 16 years ago

To be honest though, farmers in Europe go on strike and pour out their milk or throw out tomatoes every couple of months. They've been spoiled by economically insane price support and import tariff policies, and don't (maybe refuse to) face the economic reality that agriculture in Europe can't compete globally.

So yeah Aldi does put the squeeze on its suppliers (as it should), but the agricultural sector is not the best poster child for that.

rivo• 16 years ago

If you would like to know more about what made the Albrecht brothers' stores so successful, you should read Dieter Brandes's book. It think the English version is this one:

http://www.amazon.com/Bare-Essentials-ALDI-Way-Retailing/dp/...

sammyo• 16 years ago

Yikes, used for $500! Looks like a publishing model that is seriously being missed. I know a screenwriting book that sells for a couple hundred if it can be found. A lot of work to get the copyrights for a short publishing run but sure looks like it could be lucritive.

Cowboy_X• 16 years ago

This fan-made commercial says it all:http://www.youtube.com/watch?v=OdB7GDZY3Pk&feature=youtu...

And now it's stuck in your head! ding

illumin8• 16 years ago

Great commercial. I recognized almost every product there. TJ really does have a unique and eclectic mix of food. The thing I notice is that I can find 99% of all the items I need when grocery shopping there but I only end up spending $50-60 a week instead of $100 or more that the same items would cost at a Stop and Shop or Whole Foods.

The one thing they seem to be lacking is a meat and seafood department. All their meat is shipped in; it's not bad, but it can't compare to Whole Foods. My solution is to get everything at TJ, then stop by Whole Foods to buy a pound of fish and chicken. Best of both worlds...

amalcon• 16 years ago

This works extremely well for me also. The Cambridge Trader Joe's is extremely close to a whole foods.

YiddishPolice• 16 years ago

Trader Joe's, come to Colorado, you can make the long haul work, I promise.

matrix• 16 years ago

Hey, not before they come to Utah first!

Kidding aside, I used to live one block away from a Trader Joe's and am sort of over them now. It can be a frustrating place to shop when you just want 'regular stuff', rather than paying the markup for fancy varieties of things. It's very nice to have as a supplement to a normal grocery store though.

iamelgringo• 16 years ago

Trader Joe's is a boostrapper's dream: cheap, tasty and quick meals.

Their prepared foods and marinated meats are really pretty good. Their cheese and wine selections are quite good. I found a Petite Syrah I absolutely _love_ there for $3.99. We buy it by the case. Bread is consistently some of the better bread I've found outside of dedicated bakeries here in the US (our bread generally sucks). A glass of wine ($3.99 a bottle), a loaf of bread ($1.99 a baguette lasting a day or two), a bit of low fat goat's milk brie ($2.99 a round lasting several days), a bit of sliced salami ($2.99 a for 2 salami's lasting 4 meals), some dried almonds ($3.00 for a pack of 20 mini bags), and I have very tasty no-cook meals for a day or two.

If you're in Silicon Valley (or anywhere that has a Joe's), and trying to eat well on a budget visit Trader Joe's.

joe_the_user• 16 years ago

Trader Joe's is pretty clever.

I go there and there are about fives things I want and which are good deal. Then there are ten things I'd buy if I was in a hurry and are only a good deal if want I to pay premium for processed stuff. I get a good deal there but I suspect most customers throw down a lot of money for convenience that isn't cheap or healthy - but I suppose that's what they want.

zwieback• 16 years ago

It's a real tragedy when TJs discontinues one of your favorite items. Still mourning the loss of those flat New Zealand buiscuits filled with apricots and raisins. Also the pomegranate syrup is gone...

analyst74• 16 years ago

Among a generally critical-minded crowd like HNers, Trader Joe has not gotten a single bad comment.

I am impressed.

dang• 2 years ago

https://web.archive.org/web/20100825182626/http://money.cnn....

https://fortune.com/2010/08/23/inside-the-secret-world-of-tr...

Inside the secret world of Trader Joe's

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