Trader Joe's offers food, produce -- and mystery
Executives keep a tight lid on the secret to successfully selling grocery staples to the masses.
Sat, Aug 28 2010 at 4:14 PM
Trader Joe's is a world of ready-made artichoke dip, organic four cheese pizzas, and prices on wine that cannot be beat. Employees dress in Hawaiian shirts and happily blow up balloons for your eager children. But beyond awesome prices and great customer service, little is known about the grocery chain. And this is no mistake — management of the super store is “obsessively secret.” Fortune magazine takes a look at the culture and cash behind the mysterious, secretive world that is Trader Joe's.
Trader Joe's has 344 stores in 25 states and Washington, D.C., and the company made about $8 billion in sales last year. Half of its stores are in Southern California. The key to the company's success may be its deliberately scaled-down production. Their stores are relatively small and carry a much smaller selection of products than a traditional grocery store. For example, a Trader Joe's may carry only one kind of provolone cheese, while another grocery chain may carry five. And 80 percent of the company's products carry the Trader Joe's name. Because of greater turnover on a smaller number of items, Trader Joe's can get big discounts in large quantities.
But don’t expect a current employee to crow about this achievement. Fortune was unable to obtain an interview with CEO Dan Bane despite repeated requests. Vendors must sign a standard agreement that states they will not publicize their relationships with Trader Joe's in any manner. Former executives claim this is because the company wants to keep a veil of secrecy on who makes its products and for how much. Suppliers also don’t want other companies to know that they often make the same products for Trader Joe's for less money.
The company is owned by the famously secretive Albrecht family of Germany. Grocery mogul Theo Albrecht purchased the company in 1979 from Pasadena grocer Joe Coulombe. Coulombe started the company in 1967, naming it Trader Joe's to evoke the South Seas. Albrecht purchased the company for an undisclosed price, keeping Coulombe on for another decade. The Albrecht family still owns the chain through a trust and maintains a low profile in the business.
As Trader Joe's continues to expand all over the country, the company wants to retain its appealing small business vibe. Mark Mallinger is a Pepperdine University professor who has done research for the company. As he told Fortune, “They see themselves as a national chain of neighborhood specialty grocery stores. It means you want to create an image of mom and pop as you grow." If the store retains this image, there's no telling how big it will become.
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