Ask Dan Bane about the future of Trader Joe’s and he’ll measure its potential in captains and mates.
“We’re targeting to open 30 to 35 stores a year in the 48 states,” the CEO of the independent grocery chain said. “The only thing that holds us back is having the right number of captains and mates. We won’t open a store just because we can. We want to open a store that’s run by the right kind of people doing the right kinds of things.”
And so was dispensed another morsel of wisdom in Trader Joe’s recent five-part podcast, “Inside Trader Joe’s.” It’s the latest example of a retailer using podcasts to give customers a look behind the magic curtain (Walmart too has a podcast, called “Outside the Box”).
It’s also clever marketing, providing enough intrigue to entice consumers to visit the chain for a first (or 50th) time. Here are 15 insights from the series, ranging from how Trader Joe’s gets its food to the CEO’s other day job.
1: The crew really does travel far, far away for products.
Trader Joe’s does not wait for suppliers to provide lists of potential products. It sends its own buyers into the field, and far afield, to see what they can find. Lori Latta, vice president of product innovation, locates people in chosen countries to expose her to interesting traditional foods, like mango and sticky rice spring rolls. Francophiles take note: During the podcast, she was in France at the world’s largest madeleine factory.
2: Bananas are 19 cents because a day can make a difference.
Trader Joe’s didn’t always sell its bananas at 19 cents apiece. It used to sell them by weight, prepackaged in clusters of four or five, until Bane observed a shopper eyeing the packages but not taking one. He asked her why and she told him, “Sonny, I may not live to that fourth banana.” They’ve been 19 cents since.
3: One of its best sellers was a rush job.
Mandarin Orange Chicken, one of Trader Joe’s best-selling items, is the product of a popular California chef. The team was so excited to introduce it that they ran a front-page story in the company’s Fearless Flyer newsletter. Thing was, the packaging wasn’t done. So they hurriedly bagged the entrees in plastic and slapped stickers on them. An associate said it looked like a “Ziplock bag of leftovers.” But it worked. Mandarin Orange Chicken rated as the favorite in nine Trader Joe’s Customer Choice Awards.
4: It operates on Japanese ideology.
Kaizen is the Japanese business philosophy of aiming for continuous improvement in working practices and efficiency. At Trader Joe’s, it means everybody in the company owes everybody else a better job, every day. That’s its performance measure — not budgeting. “We just expect our stores to do a little bit better every year,” Bane said. “They create their own targets. And it’s really paid off some big dividends for us.”
5: Food tastings are “Darwinian,” and potentially brown-bagged.
The tasting kitchen, where all Trader Joe’s products are tested, is a no-nonsense environment of fluorescent lights and white countertops, shrouded in secrecy. “We want the products that succeed to go through this ultra-Darwinian exercise, to say that they could stand up even to that harshest light of critical evaluation,” an associate explained. It also is ultra-confidential. When a reporter was cleared to visit, all tasters had to wear paper bags over their heads.
6: It use to sell sandwiches by the inch, not yard.
Back in the early days, Trader Joe’s sold a lot of wine and lots of sandwiches, which were made in the stores at a deli counter. But rather than half or whole, small or large, it sold its sandwiches by the inch. Associates don’t know if anyone ever asked for an inch-long ham on rye, but if a foreigner had, they’d have had to convert it to centimeters.
7: It’s had a trio of CEOs.
In its roughly 50 years of operations, Trader Joe’s has been guided by just three CEOs. Founder Joe Coulombe led the company for the first 30 years. When he retired in 1988, John Shields took over and expanded the company to 150 from 19 stores, and well outside its home of Pasadena, California. In 2001, Dan Bane took the helm and has overseen the expansion to roughly 475 locations.
8: It owes its success (in part) to granola.
In the beginning, the store was not a success. Some employees took turns wearing a gorilla suit to nab shopper attention. Then, in 1972, Trader Joe’s introduced its first private-label product: granola. (This was California in the early ’70s.) After the granola, they never looked back. Private label now accounts for 80% of all Trader Joe’s products.
9: It was into coconut oil before you were into coconut oil.
Years ago, the Trader Joe’s team got fired up about selling coconut oil. Problem was, no one was fired up to buy it. It took a long time to sell all the product and the lesson stung. After a few years passed, customers began asking for coconut oil. Each time the idea was brought to the tasting kitchen, the panel rejected it. But customers persisted, and it became a hit.
10: Customers don’t cotton to all new products (oh deer!).
Trader Joe’s gave coconut oil a second chance, but not deer soup. Its cream of venison, inspired by fare from the northernmost region of Finland, was a flop — even the fancy gold container failed to persuade shoppers. Another miss was cottonseed butter, an idea inspired by a peanut crop failure that led to a peanut butter shortage, which led to Trader Joe’s big cottonseed butter fail.
11: Sampling is its most expensive marketing.
Rather than a cube of cheese in a cup, Trader Joe’s serves samples of fully prepared dishes that its shoppers can duplicate at home. You might find corned beef brisket on pumpernickel with mustard, cabbage and Swiss cheese. Sampling is its biggest marketing expense, but it’s designed to generate return visits by inspiring shoppers to buy several ingredients.
12: There’s nada data.
All Trader Joe’s knows about its shoppers is what they tell its employees, personally — it does not have access to data. For example, the team surprised one 93-year-old regular with a birthday cake at the register. Another regular, particular about the ripeness of her bananas for baking, called one employee every day for updates on how the bananas were looking.
13: The CEO still bags, and thinks about his future every day.
Bane is not above bagging groceries at the store, which is what an unsuspecting shopper found him doing one day. She asked his age and he told her he was 65. When she then asked if he aspired to be anything greater, he said, “No, ma’am.” He carried her bags to the car and declined her tip, but he did take her advice: He looks in the mirror every day and thinks of what he might become.
14: It could have been the next 7-Eleven.
Trader Joe’s roots can be traced to a small chain of Los Angeles convenience stores called Pronto Markets, which Coulombe took over in 1958. After 10 years of selling everything from pantyhose to ammunition, Coulombe decided to give his customers something different. He opened the first Trader Joe’s in Pasadena, California, in 1967. It’s still operating, and has the same parking lot.
15: They know about the parking lots.
Trader Joe’s knows the lots are small, but in many cases the only way to shoehorn a store into a neighborhood is to compromise. Many buildings are retrofitted and the small lots came with them. In some cities, the allotted number of parking spaces is based on the square footage of the store, not customer counts, and that doesn’t always match up.
But it hasn’t kept shoppers away. At Trader Joe’s, the captains and mates, the birthday parties and the orange chicken, are proving to be enough reason to circle the lot. The podcast may now be another.