Lessons from Trader Joe’s

By May 9, 2011blog, most popular

I had the opportunity to spend some time with the former president, Doug Rauch, who helped build Trader Joe’s over the past 30 years.

A little background on Trader Joe’s first. They started as a private label wine seller because of a little loophole in California wine retailer laws that enabled them to resell good wine for really cheap prices. 70% of their revenue was wine. Then Doug came in to apply a similar private-label concept to food products. Then they created a great customer service model. And then they had the discipline to stick to their great formula… and voila, 30 years later they are one of the most admired grocers and companies in the country.
Ok, so what was so unique about Trader Joe’s? And why did it work in the face of big-box-stores-are-better and branded-products-are-king? One word – they made grocery shopping fun and easy. When most stores carry 40 types of peanut butter, TJ sells 10. 4,000 products vs. 50,000 products. 80% private label (lower prices). Less selection makes it easier. And then they have fun with the limited selection they have (example).
What else?…
+ Change 1/4 of the selection each year creates surprise and discovery (difficult to do when thousands of shoppers complain about their favorite products being discontinued)
+ Put managers in front of the store (instead of in back office) to create greater team leadership/engagement.
+ Have all employees do a little of everything (register, stocking, cleaning, etc) to create a more consistent experience overall. This is a theme I recognize in other great companies like Southwest Airlines.
+ Create fun, caring culture for employees (and they’ll do the same for customers)
What I love about TJ’s is that there’s nothing “me-too” about them. They took a unique approach in the face of what everyone else was doing. And people love them for it because it’s refreshing and fun.
4-minute video interview with Doug Rauch – love “a store of stories… that was the fun” and “context that transcends the content” and “a customer experience company that happens to sell food”
Good article in Fortune
Great interview in LA Times with Joe
I made two killer recipes out of a wonderful wonderful Trader Joe’s cookbook for Mother’s Day. This cookbook isn’t by Trader Joe’s, it’s by a customer who loves TJ’s so much she made a cookbook based off all the great quirky things you can buy there.
Hilarious video another customer made with his phone.
What can we do with our organizations that’ll inspire raving fans?

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