Trader Joe’s is a super popular grocery store in the U.S. that’s famous for its cheap wine, extensive cheese selection, and tasty frozen foods. Today we’re serving up a taste of the strategies founder Joe Coulombe used to build his iconic business. Or you can skip the line and check out the full summary in our Instaread on Becoming Trader Joe.
Ruthless Efficiency
The laid-back environment of Trader Joe’s belies the store’s focus on its efficient use of shelf space. It chose which products it would carry based on dollar value of sales. It did not aim for a complete assortment of certain products, so Trader Joe’s didn’t have staples like salt, flour, or sugar unless they could have an excellent price on them. For example, they once tried selling whole wheat flour, but it had low value per cubic inch. The space the flour took up in the store wasn’t worth it.
Joe also avoided sales and one-time promotions on the theory that customers should not be trained to wait for sales. And the store never bought more of a product if the first batch did not sell. Actually, it still discontinues low-selling items (even cult favorites) to this day. RIP chocolate hummus!
Employee Relations
From its early days, Trader Joe’s was known for offering good benefits and a fair wage. (In grocery retail, the labor expense is relatively small, which is why Joe could get away with high compensation policies.) Good pay meant that employee turnover was low, performance was high, and stealing was rare.
Joe also created a “Leave Bank” system, which combined sick leave and vacation leave. This way, employees would come to work even when sick to preserve their vacation hours.
About the Author
Joe Coulombe, the founder of Trader Joe’s, studied at Stanford University and earned a master’s degree in business administration. He worked at multiple grocery store chains before founding his own in 1967. He died in 2020 at age eighty-nine.
Read our full summary of Becoming Trader Joe. . .
