Review: Becoming Trader Joe

This 2021 book by Joe Coulombe (with assistance from Patty Civalleri) tells how Coulombe transformed a few markets into the Trader Joe’s juggernaut that so many of us “overeducated, underpaid” folks adore.  These folks are now called Bobos.

Joe was going after exactly that demographic in the 1960s, because he wanted to avoid head-to-head competition with the big chains.

The book is sharp and witty — it reminded me of Alchemy, another book by a maverick who continually undermines the conventional wisdom.

I’m not going to give my typical list of quotations in this review. Instead I will summarize a bit:

  1. Anyone in retail management should read this book. Joe has a lot of experience in making the unconventional the norm, often for entirely wrong reasons.
  2. Joe decided to pay his staff very well, and then he had to find ways to generate enough cash to make payroll. Luckily, his well-paid employees made all of that possible.
  3. Trader Joes (TJs) started off as a liquor store with a huge range of booze. That was profitable when alcohol laws were so weird. Then he shifted (too far) into health foods. Finally, he “got it right” by emphasizing high volumes, own brands, and low prices. (“Retail” comes from retailler, French for “cutting into pieces.”)
  4. His low prices were often the result of taking on “weird” products and packaging sizes, but also by taking the entire harvest/production. He made those profitable by minimizing the number of SKUs (stock keeping units) and maximizing volume. They didn’t need to refrigerate products that were selling too fast to go bad!
  5. The “Fearless Flyer” newsletter had a lot of information and advice, and it helped TJs shift these weird products to customers. “Normal” supermarkets were wrapped up in discounting with coupons and depending on advertising subsidies from manufacturers. What a shit show.
  6. My favorite product (mentioned in the book) is Heisenberg’s Uncertain Blend of coffee, which bagged all the “beans that got away” at the big roasters. Customers never knew what they were getting, but they were paying half the price of “standard” beans 🙂
  7. My economist friends will appreciate (or run in fear) from Joe’s emphasis on surprises and discontinuities, as in “focus on discontinuities in supplies” to get deals… and rush customers to “buy it before it’s gone”!
  8.  Joe is a humble guy in this book. He admits mistakes when he doesn’t need to. That’s a good sign of respect for his employees. He’s also old school in terms of avoiding excess bureaucracy and political correctness. I am also ok with that.
  9. More on discontinuity: Because TJs got started in wine, they had to deal with different vintages from different manufacturers. Some were good, some were bad, but all were different. When TJs turned to foods, they were ready to sell “too large” eggs and other non-homogenous commodity products. Customers loved the hunt… and the low prices. (Joe is a huge fan of Grocery Outlet, another discontinuous retailer I love.)
  10. Joe has an excellent sense of real estate — for his shops and also his shoppers. Lots of excellent insights that delivered exceptional profitability.
  11. His ideas on “double entry retailing” (demand-side factors such as location and price need to balance supply-side factors such as employees and landlords) are really interesting as a means of stimulating creative thinking, i.e., if one side changes, the other has to compensate. How?
  12. Joe sold TJs to Aldi (Nord) in 1979 and stepped down in 1988. He did a lot of consulting and turn arounds before he really retired. He died in 2020 after what was a massively successful career (and what appears to be an equally happy personal life). RIP.

Great read. FIVE STARS.

Here are all my reviews.

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

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