"Fresh & Easy"? Tesco stales on U.S. Market, will close stores. Or, will Trader Joe's acquire them?

About five years ago, Tesco, the U.K.'s largest grocery chain, started opening Fresh & Easy stores in California. When the first stores were opened, the chain most grocery-industry observers compared it to was, in fact, Trader Joe's.

It was sure not a Trader Joe's-style success with customers. After an investment of over $2 billion, and after opening nearly 200 outlets in California, Arizona, and Nevada, it now seems as if Tesco is poised to sell off the chain or -- if it fails to find a buyer -- just shut it down.

The Fresh & Easy concept has not, obviously, attracted the business or generated the profit Tesco hoped for. That said, it's developed a few fans, and at least a few commentators have wondered out loud whether Trader Joe's is interested in buying it up.

I have no way of knowing whether Trader Joe's is seriously considering a bid for Fresh & Easy -- the famously secretive TJ's management (maybe I should call them the 'Admirals' in Monrovia, in keeping with the 'crew member', 'Captain' nautical theme) isn't talking.

What's interesting to me is, now that Tesco's stale on Fresh & Easy, people in the business are saying, "Of course it failed. The 10,000 square foot stores were too small; Americans are used to shopping in huge supermarkets. The idiosyncratic mix of own-brand products included many unfamiliar items customers here had never seen before. And there were basic, staple items that the store didn't carry at all, so a harried suburban mom could not just run into one store and do all her shopping."

All of those criticisms could, in fact, be leveled at Trader Joe's, but those problems have certainly not hurt Trader Joe's. In fact, Trader Joe's customers would often cite the small store footprint and unique Trader Joe's-brand items as strengths, not weaknesses.

While it's definitely true that the Fresh & Easy product mix and concept should probably be tweaked by any company that buys it up -- that's if any company buys it up -- I have to wonder how the chain would have fared if it had adopted one more Trader Joe's trait... friendly, decently paid and treated staff who are empowered to do whatever it takes to make a customer's day.

Berthold Albrecht, Trader Joe's heir, dead at 58

Just two years after the long time owner of Trader Joe's, Theo Albrecht Sr. died, his son and heir Berthold Albrecht has also kicked the bucket. Bertie was a comparatively young 58.

In the obsessively private spirit of Berthold's dad, his family placed a full-page death notice in the Handelsblatt (Germany) newspaper, but neglected to mention either the date, place, or cause of death. The wording of the notice, describing him as "a fighter to the end" suggests that Berthold had been sick for a while.

Two years ago, Berthold inherited half of Trader Joe's, along with the far larger Aldi Nord holdings in Europe when his father died. He was the chairman of the Berthold family trust that controlled Aldi Nord and its Trader Joe's subsidiary here in the U.S. He did not, however, play an active role in the companies' management. His older brother Theo Jr. continues to do so, and retail industry watchers in Germany feel that Bertie's death will have little immediate impact.

Theo Sr.'s death can have no impact at all on Aldi stores here in the U.S., as they are owned by Aldi Sud, the half of the Aldi empire that is still controlled by Theo Sr.'s 92 year-old brother Karl.

According to the Bloomberg 'Billionaires Index' -- yes, there are enough billionaires, it seems, to warrant a sort of Field Guide -- Bertie's fortune was estimated at $10.7 billion. There's no word on how much of that was contributed by sales of Two Buck Chuck.

Busted! Another Trader Joe's supplier outed in food recall

Clearly, they don't maintain the highest stanadars of copy editing. Maybe not of cleanliness, either.

There's more hysteria over listeria, as about 5,000 pounds of Trader Joe's Butter Chicken has been recalled after reports it was contaminated by listeria, a bacteria commonly associated with run of the mill food-poisoning symptoms like nausea and diarrhea. While listeria is rarely harmful to healthy adults, it is extremely dangerous during pregnancy.

The recall was actually initiated by Canadian authorities, since the butter chicken supplier is Aliya Foods of Sherwood Park, Alberta. Aliya Foods sells to Trader Joe's (of course) and supplies other private label Indian foods, as well as selling under its own 'Chef Bombay' brand.

Ex-TJ's CEO spills, if not 'the beans' at least a bean or two

Doug Rauch was an early Trader Joe's employee, and served as the company's CEO from 1993-2008. He recently addressed the Western Growers' Association annual meeting in Scottsdale AZ, and spoke about the keys to Trader Joe's success.

Rauch didn't do too much to pull back the company's famous veil of secrecy, but he did present a brief history of the company highlighting the decisions management made that, in his view, turned it from "a 7-Eleven with a great wine department" in the mid-70s into the cult brand it is today.

The points he identified were...

• Buying direct from the source, instead of through wholesalers
• Reducing the number of SKUs (products) from 6,000 to 1,300 (the stores have since increased the number of SKUs to about 2,500 right now in peak season
• Remaining focused on customers. Rauch pointed out that many grocers earn more profit from fees charged to vendors than they do from sales to consumers

Rauch quoted my favorite saying, "culture eats strategy for lunch"and while he didn't come right out and make the central point of Build a Brand Like Trader Joe's, which is that the chain's real success comes from millions of pleasant personal interactions between customers and crew members, he did cite another of my favorite cultural brand examples, Southwest Airlines.

For more on Rauch's talk, visit The Produce News.

Retail retaliation: Walmart faces Black Friday strike

Before the Thanksgiving turkey leftovers have cooled, the official Christmas shopping frenzy will begin on 'Black Friday'.

This year, Walmart faces a potential disruption as many thousands of its workers are determined to protest their treatment there. I don't want to read too much into this particular 'strike' (it's not a real strike, Walmart's not unionized) but it's tempting to see this as, perhaps, the beginning of an uprising against the low wages that attend Walmart's low-price obsession.

Ironically, when I was researching Build a Brand Like Trader Joe's I came across ample evidence that suggests that Walmart's profit would actually increase if it paid its workers more. Trader Joe's is anti-union too, but it does pay Crew Members a living wage. Right now, offering starting salaries in the $11-12/hour range and easy access to a rudimentary health insurance program allows Trader Joe's to pick and choose the best retail employees. I'd be willing to bet that Trader Joe's per-square-foot sales and profit are at least as good as Walmart's.

Walmart won't kowtow to its workers' demands right away -- in fact, I expect they'll retaliate against anyone they perceive as fomenting this conflict. But I have the feeling that the American shopping public may be on the verge of an epiphany -- egged on by strike supporters like MoveOn.org and the 'occupy' movement. Will shoppers finally realize the impact that Walmart's relentless drive for low prices has had on American manufacturing jobs, middle class wages, and even popular taste?

If the shoppers take the workers' side, Walmart will have to change the way it does business. Trader Joe's is a great model.

Say it ain't so, Joe: SF Chronicle blasts Trader Joe's turkeys

Last Thanksgiving, when I worked at Trader Joe's in Kansas City while researching Build a Brand Like Trader Joe's, the arrival of the turkeys was a big deal. Trader Joe's only stocks turkeys for a short time leading up to Thanksgiving -- the chain doesn't even bring them back for Christmas. They're pre-brined, and sell for $1.99 a pound.

Trader Joe's price point -- less than half the price of pre-brined Diestel turkeys from Whole Foods, and more than 1/3 off even Costco's price for comparable birds -- is attention grabbing. But when the San Francisco Chronicle roasted a variety of pre-brined turkeys for a comparison test, they rated Trader Joe's lowest of the five they tried.

Trader Joe's All Natural Brined Young Turkey ($1.99 per pound at Trader Joe's)If the frozen Target turkey exceeded our low expectations, then the Trader Joe's turkey left us almost universally disappointed.This turkey, enhanced with an 8 percent salt solution, was by far our least favorite - or, as one staffer put it, "bleh.""No flavor," "bland" and "cheap tasting," this turkey "needs big-time gravy," said other judges.Yet even gravy wouldn't help its texture, which was alternately described as "dry," "tough," "sinewy," "spongy," "waxy" and "rubbery."

To be fair, none of the Chronicle's birds got particularly high marks, but it's certainly possible that in an effort to bring the price in so far below even Costco's benchmark, quality's been sacrificed.

Even Whole Foods' bird was damned with faint praise. Comparisons between such widely different price points are perhaps unfair, but while scanning the news the other day, I came across this Wall Street Journal report of an effort by Whole Foods to sharpen some of it's prices (and perhaps blunt the chain's critics, who've long dubbed it, 'Whole Paycheck'.)

Meanwhile, while Trader Joe's of course never releases financials, Whole Foods has been on a tear this year, opening stores, increasing same store sales, and posting profits 50% higher than last year. That might be hard to believe, after the election year we've just come through, in which we've been constantly reminded of high unemployment and the weak recovery from the recession, but the truth is that while the country as a whole is faring no better than the turkeys in the Chronicle's test kitchen, the people who are doing well enough to shop at Whole Foods are doing very well indeed.

Book review: Coffee, Lunch, Coffee

A few months back, I had (appropriately enough) lunch with Alana Muller, who was just putting the finishing touches on a book entitled Coffee, Lunch, Coffee. Last week, a copy of her book landed in my mailbox. Alana calls it, "A practical field guide for master networking".

The title of Alana Muller's book refers to the single-minded way she went about building her own personal network. Her goal was to have three meetings a day; for coffee in the morning, lunch, then coffee again.

Ever the networker, Alana had arranged to meet me through a mutual friend, who knew that I'd recently written Build a Brand Like Trader Joe's. That friend thought I might have advice for a new author navigating the shifting waters of the publishing industry. She turned out to be gorgeous, smart, ambitious, and well-organized. (That goes a long way towards explaining why when she's not hawking her book, she's the President of the highly regarded Kaufmann FasTrac entrepreneurial training program, but that when I'm not hawking my books, I'm a shiftless advertising copywriter who takes his dogs on long walks during business hours.)

Before she headed the FasTrac program, she was a fast-rising young executive at Sprint. But the writing was on the wall at a company that had rarely been profitable and it was time for a change. The challenge: She'd spent her career in one company, and had few connections outside it. She turned building her personal network into her job. As you'd expect from an MBA grad, she embarked on her networking plan with due diligence, and documented every step.

Coffee, Lunch, Coffee is full of practical advice for anyone who is building a network of personal connections, whether their goal is to find their next career destination, as Alana's was, or whether they're individual entrepreneurs whose network is the first line of prospects. The advice is fine grained, and ranging from the very specific (never send out a LinkedIn invitation to connect using the default text, always write a personal note) to the nearly esoteric (how to breathe; yes, it makes a difference.)

Alana's organized hundreds of tips into a practical workbook full of simple exercises that will take socially inept types (e.g., me) through the steps required to build their own networks. Like my advice on building a brand like Trader Joe's, it's simple stuff -- though not necessarily easy, there's hard work involved and it takes perseverance and discipline. Coffee, Lunch, Coffee readers don't have to go it alone, however. They can download a spreadsheet to keep track of their progress, and refer to Alana's Coffee, Lunch, Coffee blog for ongoing advice. The book concludes with Alana's email address.

If you want to build your network of personal connections (or improve the one you have) this book's highly recommended. Signed and inscribed copies are available directly from the author for $20 here. The price includes free shipping.

Whole Foods' "Ad of the Day" highlights differences with TJ's

I see that a few days ago, ADWEEK highlighted a cool animated TV spot for Whole Foods as its 'Ad of the Day'. That's a feather in the cap for Olson, the Minneapolis ad agency that handles Whole Foods advertising in the Midwest. (It's a mystery to me why Whole Foods would pay to produce this ad and not run it across the country, but that's a post for another day.)


Olson deserves extra credit for selling Whole Foods on an ad in which the cook/narrator spoils their main dish at Thanksgiving. (In another spot, the dog eats the turkey.) By writing these scenarios, Olson immediately put Whole Foods in a completely different space than any other grocer. All of the rest of them are emphasizing just how perfect their food always is, and promising that their customers will be the hostess with the mostest. But Olson didn't just differentiate Whole Foods, the agency also turned the ad into a subtle message about relationships, and not food. That's a great choice for Whole Foods, which has long been derided as 'Whole Paycheck'. The subtle message here is, "It's not what the food is worth, it's what your friends and family are worth."

Olson's spots for Whole Foods encourage customers to get into the kitchen and cook -- an activity that fewer and fewer Americans take time to do, in an age when more than half of all meals are prepared outside the home. The spots reassure Americans unfamiliar with their own kitchens by telling them that their friends and family will appreciate their efforts, whether the results are worthy of a Michelin star or not. Olson and Whole Foods also know that getting people back into the kitchen is the best way to make them appreciate quality ingredients. That, in turn, is another good way to inure the grocer against consumer pushback over premium prices.

Although Trader Joe's is a pretty unique grocery concept, Whole Foods is the chain most often compared to it. You'll be able to freeze a turkey in hell the day you ever see Trader Joe's running TV commercials, but I think Olson's spots for Whole Foods highlight another key difference between the two chains.

While it's true that Trader Joe's brings in turkeys before Thanksgiving, the store is not really in the business of selling ingredients, it's in the business of selling prepared foods. For much of its history, Trader Joe's didn't sell produce at all. Then, when customers insisted on it, the chain tried to sell all of its produce in plastic 'clamshell' packaging. That too was an idea rejected by customers, so that now when you walk into a Trader Joe's store, it looks as if produce is roughly as important to Trader Joe's as it is to other grocery stores.

But the truth is obvious to anyone who, as I have, has spent a few hundred hours working a Trader Joe's cash register. Nine customers in ten roll up with carts full of prepared foods, not ingredients. Those nine don't cook the food they buy at Trader Joe's, they just heat it and eat it.

Democrats: It’s not the medium, it’s the message Republicans: Forget changing what you say, change how you listen

Here it is, the morning after an epochal election -- at least it was epochal from a media perspective -- and the future looks much the same as the recent past. If you believe the story that Mitt Romney hadn’t even drafted a concession speech, then the Republican party must be a little shocked.

Will Aldi apply some of what it's learned from Trader Joe's in the German market?

I read that Aldi, which has long been a dominant grocery retailer in its native Germany, now finds that German shoppers are gravitating to shops that offer a slightly more upscale environment and merchandise mix. So it seems that Aldi Nord (the company that operates Aldi stores in Northern Germany and which also owns Trader Joe's) may seek to apply a little Trader Joe's magic to its austere brand.

Small, dark, and cheap. Those have historically been the traits of Aldi stores. A shop like this one is what comes to mind when most Germans think of Aldi. They also think, "Those guys save me lots of money." Until now, that's been good enough, but it seems German shoppers now crave nicer shopping experiences.

Both Aldi Nord and Aldi Sud (the parent company of the U.S. Aldi stores) have had success exporting Aldi's small/deep-discount/house-brand formula to foreign markets. But at home, the two Aldi chains which (taken together) were the single largest player in the grocery category in Germany, have fallen behind rivals with bit less of an East-bloc vibe.

Now, Aldi stores are starting to stock a few more name-brand products, like Coke and baby foods (where customers have particularly strong brand preferences.) Some stores have in-store bakeries. Although Aldi is ever-secretive, the word is that Aldi Nord plans to spend about $350M on renovations to its 2,500 or so stores over the next couple of years. Aldi Sud has similar plans.

New Aldi stores will probably look more like this snazzy UK one.

Aldi Nord already sells a few Trader Joe's products in its German stores. It remains to be seen whether the company will tap Trader Joe's expertise to revitalize its own brand. The stores are similar in some ways; both have fewer SKUs than most supermarkets, although Aldi has far fewer even than Trader Joe's.

The big difference is that Aldi stores have made a science of operating with the bare minimum staff. Fast-selling products are displayed right on the pallets, just as they came off the truck. By contrast, Trader Joe's stores have more staff per square foot than most grocery stores, in order to maximize contact between the brand and its customers.

How many cues will Aldi Nord take from its successful American kid?

Will Trader Joe's pay $350,000 for a can of tuna?

  After 'the (mezzo-)soprano' will Trader Joe's sleep with the fishes?

The reliably sensational New York Post reports that an 82 year-old grandmother is suing Trader Joe's because a can of tuna fell off a shelf and whacked her on the bridge of the nose. Her claim is that two Crew Members at her local shore (on Manhattan's Upper West Side) callously ignored her, then eventually handed her some wipes and a band-aid.

The pain of her nose wound and (claimed) headaches will, presumably, be assuaged by the $350,000 that she's suing them for.

Good luck with that.

This story, which the hilarious blogger 'The Gothamist' has dubbed "the single most Upper West Side lawsuit in history", would probably never have happened if the Crew Members in question had responded in a more sympathetic fashion. Oh well, I guess good help is hard to find, eh? 

I was glad to find this post on The Gothamist, because it linked back to another hilarious post with the denouement of famous 'Pad Thai' incident. That story goes back to the early days of Trader Joe's in NYC. Shortly after the chain opened its New York flagship store,  a prominent physician and an opera star got into a slapping match over a package of frozen Pad Thai. That was widely cited as an example of the frenzy that Trader Joe's triggered among Manhattanites who were already spoiled with food choices. (And, one might presume, just spoiled, period.)

I never realized that the case had actually gone all the way to trial.

Opera singer Marcela Caprario was typecast in the press as a diva who slapped...

...physician and rent-a-pundit Dr. Cathleen London. She's seen here in a frame capture from a Fox News interview in which she refuted Fox' ridiculous claim that most U.S. physicians would take early retirement if Obamacare was passed. Her position on this issue suggests she's at least sometimes a voice of reason although...

...New York judge ShawnDya Simpson (a character who appears to have sprung straight from the imaginations of the writers of the  '80s sit-com Night Court) ruled that Caprario had acted in self-defense.

If Trader Joe's did advertise, it could create a couple of great spots out of all this. Who nose where to find great tuna? Pad Thai worth fighting for...

Trader Joe's subject of misguided YouTube campaign

Consumers Union, the non-profit owners of the respected Consumer Reports brand, has ramped up its efforts to make Trader Joe's a flagship retailer, and break the addiction to large-scale 'preventive' use of antibiotics on U.S. industrial scale farms. 

 Working under the NotInMyFood.org umbrella, activists staged a media event last week at Trader Joe's first NYC store. That event is now the subject of this YouTube video:

   

The video's well-done, for what it's worth. But elsewhere on the NotInMyFood.org site, the Consumers Union folks mistakenly characterize Trader Joe's when they write, "We are calling on Trader Joe’s, a leader in environmentally conscious food sourcing, to help end a meat production practice that is a serious danger to public health."

I mean this in the nicest way, because anyone who's read "Build a Brand Like Trader Joe's" knows that, overall, I admire the company. But Trader Joe's has definitely not been a leader in environmentally conscious food sourcing.

In fact, Trader Joe's is not a vertically integrated company. All of the products sold under the Trader Joe's brand are outsourced. And since many of Trader Joe's suppliers are in the food preparation business, not the food-growing business, even those suppliers have no easy way of knowing whether or not livestock operators are abusing antibiotics.

Trader Joe's also has a famously lean head-office staff. Buyers simply don't have the time or manpower to police two layers deep into the supply chain. The company could insist that suppliers assure it that they, in turn, are sourcing meats that aren't loaded with antibiotics. But even that measure would be meaningless unless it was policed. And I can guarantee you that it will be a long, long time before Trader Joe's spends a cent on lab testing.

As I've noted in the past, Trader Joe's incredibly strong cultural brand makes it a lightning rod for this kind of protest. It's unlikely to work, and I doubt that it's causing its famously insular CEO Dan Bane any lost sleep.

Yet another TJ's supplier outed

Trader Joe's draws a famous veil of secrecy over its suppliers -- an obsession that, in turn, has made identifying the suppliers of Trader Joe's products a bit of a parlor game amongst grocery nerds.

Now that the Center for Disease Control and the FDA have widened the recall of nut butters contaminated with Salmonella -- the recall was, at first, associated only with Valencia Creamy Salted Peanut Butter made with Sea Salt -- the CDC has unwittingly outed another Trader Joe's supplier.

The company is Sunland Inc., which is based in New Mexico. Sunland also supplies nut butters sold under dozens of other brand names, including Archer Farms, Earth Balance, Fresh & Easy, Heinen's, Joseph's, Natural Value, Naturally More, Open Nature, Peanut Power Butter, Serious Food, Snaclite Power, Sprouts Farmers Market, Sprout's, Sunland and Dogsbutter. 

Two additional Trader Joe's products are also included in the expanded recall - Trader Joe's Valencia Peanut Butter with Roasted Flaxseeds and Trader Joe's Almond Butter with Roasted Flaxseeds.

PissedConsumer.com

I have a Facebook friend who called my attention to a web site called PissedConsumer.com this morning. His post wasn't about Trader Joe's. It concerned the art supply store Michaels, and the link was to the first of many pages of bitter complaints by Michael's customers and employees (along with a few tepid defenses of the chain.)

Out of curiosity, I typed 'Trader Joe's' into the site's search field, and saw that there were pages and pages of complaints that cited Trader Joe's, too. What was the difference? As I started to read the comments, it was clear that the vast majority of the complaints were about other stores and brands, and cited Trader Joe's as an example of doing things right.

This is a typical example:

If I eat more than a couple of handfuls of Fritos or Lays potato chips, I get sick to my stomach. I contacted the company, but they didn't follow up with what I must assume they thought was a personal problem. I found a nice solution however. Trader Joe's sells a product called, "Organic Corn Chip dippers". They are very much like Fritos, don't make me sick and are cheaper. I highly recommend them for Frito lovers who are affected in a similar way or who are looking for a healthier, possibly organic snack food with a great taste and texture.

The comments on PissedConsumer are another example of the incredible strength of the Trader Joe's brand. As an insider, I continue to be fascinated by the disjunction between the quality, value (and 'values' in the larger sense) that Trader Joe's delivers in its products, and the strength of its brand/devotion of its fans. The fact that the majority of references to Trader Joe's on the PissedConsumer web site are comments like, "From now on I'll go to Trader Joe's" or "This would never happen at Trader Joe's" just underline the reasons other brands would be well advised to 'Build a Brand Like Trader Joe's.'

Trader Joe's doesn't try to be all things to all people, but they do strive to keep the customers they do have, happy. Companies, like Michaels, that don't mind alienating existing customers have obviously never done the math on customer acquisition. It costs a lot more get a new customer than it does to keep an existing customer satisfied. And with web sites like PissedConsumer now in the marcom mix, irritated customers are more corrosive than ever.

Red state/Blue state Walmart/Trader Joe's

I caught an interesting blog post on the Denver Westworld site, in which they note that Boulder actively campaigned for a Trader Joe's store which has just been announced to general delight in the People's Republic of Boulder. (They were slightly miffed that Trader Joe's can only open one store in Colorado that sells wine, and that one outlet will be in Denver.)

By contrast, there's a grassroots movement in Boulder to prevent Walmart from opening a store there. Patricia Calhoun, who reported this dichotomy, cites this as an example of Colorado's 'swing state' mentality, characterizing Trader Joe's shoppers as the blue state/coastal/lefty-liberal Coloradans, and the Walmart shoppers as the red state conservatives.

One reason Trader Joe's brand is so strong is that the company has managed to draft a corps of fanatical evangelists, while remaining almost completely opaque at the management level, and with next to no transparency as regards political or quasi-political issues like GMOs in food, farmworker's rights, and sustainability. So what are "Joe's" own political views?

It's hard to tell. According to the Center for Responsive Politics' site OpenSecrets.org, Trader Joe's spent $20k to lobby Congress in 2002, but I don't know what they were lobbying for.

Trader Joe's also donated about $15k between 2004-'12, with most of that money going to Democratic candidates and causes, suggesting that Calhoun's characterization of Trader Joe's as leaning 'blue' is correct. It's interesting to note, however, that the average amount Trader Joe's donated to Republican congressional candidates has increased in recent years, and now nearly matches the amount donated to Democratic Party congressional candidates.

Statistics are not yet available for the current political season. I'll try to remember to check back in a few months, and tell you how Trader Joe's 'voted' with its donations during this Presidential election.

Joe Coulombe and Henry Ford shared this philosophy

Judging from their choices of work attire, Henry Ford and Joe Coulombe
probably would not have agreed on much, but they both
came to the conclusion that better-paid workers resulted in higher profits for owners.

The web site BusinessInsider.com could hardly be confused for a lily-livered liberal propagandist. One of its stories recently blamed Bill Clinton for the current U.S. economic malaise. But a recent post there caught my eye. It was on the subject of the way, in 1914, that Henry Ford doubled his workers' wages.

Ford's move is often characterized as triggering the rise of the American middle class. In that Business Insider post, Ed. in Chief and BI CEO Henry Blodget argued that Ford's move was in no way philanthropic, and that the oft-repeated view that he just wanted his own workers to be able to afford the cars they assembled is an oversimplification. Ford really wanted to retain skilled workers, and cut recruitment and training costs. As a side-effect of raising those wages, however, Ford forced other manufacturers to compete for the best workers, and created a large class of consumers with disposable income.

Blodget explains that by doing that, Ford made himself and other entrepreneurs richer; eventually all that money -- and more because the economy was growing -- came back to them. He argues that what America needs again is for capitalists to loosen the purse-strings on their large corporate profits, and pay workers more.

But Trader Joe's experience actually goes to show that the benefits of paying employees a little bit more aren't just indirect. Employers don't have to wait for increased wages to flow back through the economy -- at least, not in the retail environment.

In "Build a Brand Like Trader Joe's" I cite research and my own direct observation to prove that retail stores that have higher staff:customer ratios and pay better-than-average retail salaries have higher sales-per-foot and profitability than stores that attempt to control costs by minimizing staffing expenses. Two reasons this is especially relevant right now are, retail sales account for a very large percentage of U.S. economic activity -- far more than in other countries. And, most of the jobs the U.S. economy is adding right now are low-level 'service' jobs in sectors like retail.

Canada's marketing industry notices "Build a Brand Like Trader Joe's"

Back when I lived in Canada and worked in Canadian ad agencies, 'Marketing' magazine was read by everyone in the business. That's why I'm pumped that Marketing is reviewing "Build a Brand Like Trader Joe's" in the issue that comes out on Sept. 19.

In the meantime, the Marketing web site has a little feature they call 'What Trader Joe's Knows'. They asked me to provide my ten commandments of building a great cultural brand. Since I always try to over-deliver, I threw in one bonus commandment. If you want to read them, go here.

Costco's CEO: Trader Joe's is a model retailer

Costco's CEO Jim Sinegal is no stranger to alpha-beating retail. Yet when the investment site Motley Fool caught up with him in this video, he admitted to owning only two stocks: Costco and Warren Buffett's company Berkshire Hathaway.



What's interesting, though, is that when he was pressed to describe what he'd look for in a retail sector investment, he cited a privately held company, Trader Joe's! Sinegal's not the first investor who's wished he could buy a stake in the Albrecht family trust's cash cow, but there's no Trader Joe's IPO in the foreseeable future.

"I would look for the types of qualities that you see in a Trader Joe’s," Sinegal said. "That you’ve got a niche, that you’ve got quality products, you’ve got a quality organization, everything about that seems to suggest quality, including the people that they hire in their stores, and so it’s pretty easy to get turned on by a business like that."

As the author of "Build a Brand Like Trader Joe's", I'd add that it's a real bonus when the company sustains its most valuable asset -- its own brand -- on the strength of corporate culture, spending only a fraction of it's rivals' budget on advertising.

Research confirms the obvious: Millennials love Trader Joe's

Consumer research gurus Onesixtyfourth, and their research arm CultureQ (hey, with names like that they have to be cool, if not prescient) recently surveyed the brand preferences of 'millennials' -- consumers born after 1981, who came of age after 2000. According to their survey, Trader Joe's has brand strength similar to Apple and Nike -- companies that spend exponentially larger amounts on brand advertising.

Interestingly, even though Trader Joe's is about a decade older than the Apple or Nike brands and has remained truer to its original concept than either Apple or Nike (both of which have radically evolved over their history) the millennials feel that Trader Joe's caters specifically to them. Readers of Build a Brand Like Trader Joe's will know that I make the case that the specific way Trader Joe's built its brand is noteworthy not just because the company eschewed brand advertising, but also because Trader Joe's brand building techniques are evergreen.

 “Looking at the Q2 data of our CultureQ research, it’s interesting that Trader Joe’s has cultivated an eclectic, cult-like following among millennials, particularly those that we have identified as trend setters and early adopters,” said Anne Bahr Thompson, founding partner of New York-based Onesixtyfourth. 'Cult'. That's a word that keeps coming up, isn't it?

Don't mess with Texas (parking lot traffic)

Trader Joe's recently opened in Fort Worth, and the Star-Telegram newspaper reports that the flood of new customers has angered tenants at the Stonegate Crossing Shopping Center next door. Now, a busy parking lot is to be expected at any Trader Joe's Grand Opening -- and in fact after the Grand Opening at my store (#720, Kansas City) the other merchants at Ward Parkway Shopping Mall were thrilled by the added Trader Joe's traffic.

But Trader Joe's has definitely messed with Texans' parking priorities in Fort Worth. As the Star-Telegram reports...

Roger Chieffalo, a Fort Worth real estate broker who has worked with Stonegate, is convinced that the German-owned chain knew it had insufficient parking before it opened. And judging from visits to Trader Joe's stores in other cities, Chieffalo believes it's a corporatewide strategy to get by with scant parking at the expense of neighboring retailers.

"Anybody who knows anything about this business realized they didn't have enough spaces," he told us. "How did they get a permit to open with the amount of parking they had?"

That disgruntled real estate broker is right to assume that Trader Joe's chronically insufficient parking provisions have touched a nerve with even devoted Trader Joe's fans. Cartoonist Mimi Pond has pondered the existence of a medical condition she's dubbed TJPLMS -- Trader Joe's Parking Lot Moron Syndrome.

A popular Los Angeles blog posted Google Earth images of "The five worst Trader Joe's parking lots in L.A." And a Sacramento Blogger admitted that Trader Joe's parking lot frustrations almost made her "lose her shit". Percussionist Martin Diller even composed a pretty cool jazz piece inspired by (and titled) Trader Joe's Parking Lot.
I have to admit that when I lived in California, I avoided my local (Encinitas) Trader Joe's parking lot on weekends or during weekday afternoon peaks from 5-6 pm.

Now, that Texan real estate broker seems genuinely pissed at Trader Joe's. But the thing that interests me about most of these customers' parking lot gripes is that they're basically conveying a sense of "Yeah isn't it terrible, but it's what we all have to put up with to shop here." Most people wouldn't stand for this at any other grocery store. That really gets to one of the key points in "Build a Brand Like Trader Joe's" which is that customers who genuinely like your brand -- who think of your brand as one of their friends -- will cut you a tremendous amount of slack.

One reason people love Trader Joe's is, they don't do this

The other day, I went into a Price Chopper grocery store. I got to the cashier (I chose the 'express lane' because I only had a few items) and she asked me, "Do you have a Price Chopper card?"

These card scams drive me crazy. They might have worked for retailers when they were a new idea. I guess the first grocery store in any market that instituted a card might have actually got some 'loyalty' as a result. But nowadays virtually every store seems to do it, and most shoppers have responded by filling their wallets and purses with dozens of cards. As soon as everyone has every card, the cards stop encouraging loyalty; they just clutter up our lives and invade our privacy, as retailers keep track of our every purchase.

The cards are disingenuous in other ways, too. The big price on store shelves is always the 'card' price, so the poor sap that shops without a card actually sees a low price and pays a high one. And I am sure I'm not the only person who's infuriated by the idiotic "You saved twelve dollars and 88 cents," claim as I'm handed my receipt. Why not price a gallon of milk at $400,000, or $3.82 with a card, and tell me I saved $399,996.18? That would be really impressive.

One of the ways Trader Joe's has built up its loyal customer base (and, by the way, Trader Joe's is an order of magnitude more profitable than Price Chopper as a result) is by not insulting its customers' intelligence by offering them a 'rewards card'.

Normally, I try to avoid stores that operate this scam. But if I have to shop at one, this is what I do: When they ask me if I've got a card, I tell them no, but I'd like to get one. I carefully fill out the form using a made-up name and address, heedless of anyone waiting in line to use that cash register. Then I get a new card and my 'discount'. Then, as I'm leaving the store, I throw the card away.

Yes, I make them give me a new card every time I shop there.

So Price Chopper gave me my 88 cents off, and slowed throughput at their cash registers, and paid for the card, and will scan and store the fictitious customer data I provide. Call it passive resistance to this infuriating marketing scam. It's the equivalent of using the self-addressed envelope that comes with a credit card solicitation to return the solicitation materials to the sender.

Tofutti Brands Inc, finds Trader Joe's a tough cookie

Tofutti Brands recently reported a 17% decrease in net sales, and admitted that "Sales in both the thirteen and twenty-six week periods continued to be impacted by the decision of Trader Joe's, formerly the company's largest customer, to discontinue stocking branded goods in mid-2011." 

The companies that supply Trader Joe's products are always sworn to secrecy, but it's safe to now assume that Tofutti Brands was a supplier of some of Trader Joe's soy-based non-dairy cheeses and/or desserts. 

Trader Joe's is a notoriously tough customer, with a reputation for hard bargaining to begin with, and a notable willingness to discontinue products when suppliers insist that costs must rise. That was almost certainly the case at Tofutti Brands, judging from this statement by Tofutti CEO David Mintz.
"During the first six months of 2012, our gross margin percentage improved due to the positive effect of price increases put into effect in the second quarter coupled with our ongoing program to eliminate marginally profitable products." I'll bet that Tofutti realized that Trader Joe's had negotiated prices which rendered its contract 'marginally profitable', but when Tofutti told TJ's prices had to rise, TJ simply dropped them as a supplier.

A supplier negotiating with almost any other grocer has some leverage by arguing that customers count on finding their products on the shelf, and that if they can't find them in one store, they'll go to a rival store to buy them. That doesn't work at Trader Joe's for two reasons: 

• Since almost everything's branded Trader Joe's, customers actually don't know what the comparable products are in other stores. 
• Trader Joe's is perfectly willing to discontinue even popular products, often over very small price increases. Joe knows that his relationship with his customers is so strong, that he can put some other product in that shelf space, and turn a similar profit. Joe's customers are so devoted, they'll put up with almost any product being discontinued.

Trader Joe's loves to be its suppliers' biggest customer -- and loves being a supplier's only customer even more. They have clout in with suppliers because they pay on time and they don't nickel-and-dime suppliers with slotting fees and marketing allowances. The risk to suppliers is, once Trader Joe's feels a supplier is depending on their business, they're merciless bargainers.

An observation about, then a lesson from, another great cultural brand

Last week, my wife bought a plane ticket on Southwest.com. The next morning, she had five receipts for flights purchased in her email inbox. When she called Southwest to find out what was up with that, she got a recorded message telling her that she could expect to be on hold for up to an hour.

Southwest has a callback service, so Mary didn't have to wait on the phone. In about an hour, a Southwest customer service agent called her and told her there'd been a bit of a computer problem last night, and that some people had over 100 flights booked, when they'd wanted just one.

What was interesting, to me, as I listened in on the conversation, was that Mary wasn't really pissed off at Southwest, despite the fact that they'd made a screw up that could have caused her some real problems. Since she booked the flight with a debit card, it could have cause us to be overdrawn. Other customers using credit cards could suddenly have found themselves unable to use their cards after going over their limits. And let's face it, the problem really highlighted a flaw in Southwest's system. I mean, if one person books 100 tickets, shouldn't that get red-flagged for review by a human being before the transaction is put through?

But Mary was pretty cheerful, chatting away with the equally cheerful Southwest customer service agent. That was proof of my thesis that when you build a great cultural brand around authenticity and friendliness, your customers will cut you a huge amount of slack when they experience your brand in a way that would normally be very disappointing. I can flat guarantee you that any other airline that made that mistake would not just be dealing with thousands of customers with a complaint, they'd be dealing with thousands of enraged customers, many of whom would avoid that airline in the future. Not so, with Southwest.

After Mary hung up, we realized that even if we weren't too hurt by the mistake, others probably were. People probably had overdraft charges, it could even affect credit ratings. So I wondered if Southwest had gone far enough in merely canceling excess bookings and crediting back charges.

"They really should do something for us," she said. "At least send us some vouchers for free drinks."

"Yes," I replied, "or give you free priority boarding on your next flight."

A few days later, Mary got an email from Southwest. The company admitted it had screwed up, and explained that customers who experienced any kind of financial penalty could submit claims and be fully reimbursed. And, it gave my wife a $150 voucher to be used against her next flight purchase.

One of Gardiner's Laws of Marketing reads: Nobody loves you as much as someone who just hated you. That rule means, really fixing a customer's problem doesn't just get you back to where you were in that customer relationship, it will actually improve your relationship.

That's right, you can strengthen your brand by disappointing your customer.

The two things Southwest could have done better were, 1.) instead of waiting a few days to send customers the email with the $150 voucher, it could have sent an interim email out saying, "Hey, we know we screwed up, and we promise you we're going to do right by you. Please give us a few days to figure out exactly what went wrong, which customers were involved, and how to make it up to you." And 2.) they could have explained what steps will be taken to ensure it doesn't happen again.

That would have got Southwest an A+ rating from me, but as it is they're a solid A- on their response. In summary, when great cultural brands disappoint their customers the keys turning disappointment into a brand- and relationship-building opportunity are transparency and authenticity. Brands should...

• admit they made a mistake
• apologize
• assure customers it won't happen again, take steps to ensure it won't, and explain those steps to their customers
• make amends, not just covering customers' out-of-pocket expenses, but respecting the time and trouble they caused their customers.

Two more Trader Joe's suppliers outed

Trader Joe's is famously secretive about its suppliers. It compels all of them to sign draconian non-disclosure agreements (even though many of them want to keep the secret themselves, because they sell similar products to other stores at higher prices!)

But in the last few days, two more suppliers have been outed, when they were named in a USDA food recall, because of fears of listeria contamination. It turns out that Trader Joe's Barbecue Chicken Salad is made by Huxtable Kitchens, in California. TJ's Mild Salsa, and Balela are both made by Simmering Soups, in Atlanta.

All these products are being recalled because of listeria found in onions shipped by Gill's Onions, which is a supplier to both Huxtable Kitchens and Simmering Soups.

On the bright side, Trader Joe's California Estate extra-virgin olive oil was one of only two brands rated 'excellent' in Consumer Reports' recent tests of 20+ brands. The other 'excellent' rating went to McEvoy Ranch (which, for all I know, is TJ's source!) California olive oils have really come on in recent years. After tasting an extra-virgin, organic olive oil at the Ojai farmer's market, my wife and I bought a gallon.

Trader Joe's = lightning rod

This morning my wife got a petition in her email, on the subject of overuse of antibiotics in meat. Once again, the petition singled out Trader Joe's -- not because Trader Joe's meat has more antibiotics than anyone else's, but because the petition's organizers recognize that Trader Joe's is a strong brand with a devoted following that probably skews liberal.

Trader Joe's is more and more often finding itself awkwardly shuffling its feet and looking down while it explains that even though many of its fans blur the distinction between 'all-natural' and 'organic', if it doesn't expressly say 'organic' it isn't. I once had a customer tell me that one reason she loved Trader Joe's was that all the meat was "raised cruelty-free". I wanted to say, "Uh, you realize all these animals were killed, right?"

The way to deflect criticism would be for a little transparency from the head office in Monrovia. Dan Bane could hold a press conference and openly discuss the issue. If they asked me to write his statement, I'd write this...


We understand consumers' concerns with the overuse of antibiotics. Trader Joe's sells lots of organic meat which is raised without antibiotics. Because it costs more to raise organic meat and maintain an organic certification, that meat, of course, sells for a higher price. The meat we sell that is not labeled 'organic' comes from the best sources we can find, at prices we think many of our customers demand. 
       We're often pressured by vocal advocacy groups. As a company however, we tend to listen to our customers. Our customers do get to tell us whether they want antibiotic-free meat, and they do so by choosing organic products. If more and more of them decide to buy organic, rest assured that a larger and larger percentage of our selection will be organic.

That approach, along with informative in-store signage and clear labeling, would make Trader Joe's a hero and source of public education on the issue. It would influence other stores and could shape large-scale farming practices. Everyone in the U.S. would be healthier if they ate less meat, of higher quality, and Trader Joe's could lead that charge. Sadly, the company's culture of secrecy virtually guarantees that won't happen.

When is a great brand a disadvantage?

I note that 'Occupy Monsanto' -- a loose knit ("non-hierarchical") group protesting the presence of Genetically-Modified Organisms in foods -- has targeted Trader Joe's stores across the U.S. this weekend.

This 'Occupy' spin-off made a mistake when it claimed that "We also know that TJ’s parent company, Aldi, uses GMO ingredients in their low-cost food products throughout America." There are two different Aldi companies, with separate ownership. The company that operates Aldi stores in the U.S. has no connection with Trader Joe's.

Trader Joe's shoppers shouldn't expect to encounter the hazmat suit-clad protesters, since I get the feeling there might be a few dozen protesters scattered across several hundred stores. Still, you might spot them in politically sensitive or active locations like the Bay Area or D.C.

Trader Joe's does claim "no genetically-modified ingredients" are found in any own-brand products. According to Occupy Monsanto, however, Trader Joe's hasn't provided proof to go with that assurance. Proof would come, presumably, with certification from an organization like CERT ID.

I'm not surprised that Trader Joe's management has stonewalled inquiries from Occupy Monsanto. I doubt Trader Joe's knowingly sources products from companies that use GMO ingredients, and imagine they ask suppliers for assurances that they eschew GMOs (so that TJ's customers don't chew them, ha ha.)

But I doubt that Trader Joe's knows whether or not its products contain GMO ingredients. Trader Joe's doesn't make any of the foods they sell. So picture the guy in Italy who makes pizzas by the million and ships them to Trader Joe's here in the U.S. That Italian pizza maker, in turn, buys corn meal that he sprinkles on the the crust. He buys that from a company that buys it from a mill; the mill buys it from a farmer. Is that farmer planting GMO seed?

Now that the genie is out of the GMO bottle, only expensive lab testing and ongoing vigilance can really assure shoppers that they're buying GMO-free. That's not Trader Joe's (penny pinching) style. But why should Occupy Monsanto pick on Trader Joe's, which is almost certainly not a worse-than-average offender?

Ironically, Trader Joe's strong brand and loyal customers make it a target. The mindless drones randomly shopping at Von's or Walmart probably don't care whether or not they're consuming GMOs, and certainly don't expect those stores to look out for their welfare; effectively, those chains are insulated against such bad press by their own -- and their customers' -- indifference. Occupy Monsanto hopes that Trader Joe's passionate, educated customers will care about the presence of GMOs and pressure the company to comply with transparency.

Trader Joe's head office could (but probably won't) take a strong (and expensive) stand on the issue. It doesn't have a history of being a leader on such issues; it only took steps to stop selling unsustainably harvested 'red list' fish after it was publicly and aggressively shamed by Greenpeace, an organization with a lot more clout than Occupy Monsanto. The chain's top management is never transparent anyway, so it's the victim of its unique combination of brand strength and secretiveness.

For more on Occupy Monsanto, go here.

Sailing the (air)waves in Chicago

It was cool to find myself in the studios of WBEZ, Chicago's legendary public radio station; it's the home of great shows like 'This American Life'.

Last Tuesday on 'The Afternoon Shift', Steve Edwards and I had a great chat about the way Trader Joe's built its incredible cultural brand.

Sailing the (air)waves in Salt Lake

Trader Joe's will open a (wine-less) store in Salt Lake in a few months, and I had fun chatting with Jennifer Napier-Pearce, who hosts the daily 'City Views' show on the local NPR affiliate. If you'd like to listen in, clicking on this radio will take you to KCPW's web site...

New York Times: Working in Apple Stores = letdown

Last Sunday's New York Times front page lead was a feature story about the majority of Apple's U.S. employees, who are employed in low-level customer service jobs in Apple Stores. The story, which the Times researched for several months, resonated with me both for the similarities between Apple and Trader Joe's (which readers of Build a Brand Like Trader Joe's will be familiar with) and some of the differences in the way employees are treated.

I particularly noted that Apple, like Trader Joe's, hires for personality and not product knowledge. As the Times put it, "the candidates of choice are affable and self-directed rather than tech-savvy. (The latter can be taught, is the theory, while the former is innate.)"

Bookshelf: The best advertising is ___ __ ____.

Trader Joe's knows that the best advertising is word of mouth. We all know what word of mouth means, but it's easy to assume that this kind of organic advertising just happens.

Click this image to go straight to Amazon and buy this book. 

Andy Sernowvitz' book, Word of Mouth Marketing doesn't take that for granted. In this book, Andy provides a structure you can use to really understand the situations that enable - and prompts that trigger - enthusiastic customer referrals. Then, he lays out dozens of practical techniques you can use to build buzz about you and your company.

As I read WoMM, I realized Andy could have used Trader Joe's to illustrate many (most) of the ways successful companies turn customers into fans (or even fanatics.) Like me, Andy wants your company to turn customer service into an ultimate sport. There were a number of times I thought, "Damn, I wish I'd thought of that when I was writing, Build a Brand Like Trader Joe's; I would have included it in my own book." No wonder his WoMM blog is found at: www.damniwish.com.

This morning as I was walking back from the farmer's market, it occurred to me that in the current efficiency-obsessed downsized and outsourced economic environment, word of mouth is more important than ever. In old corporate America, a small number of large corporations each employed lots of people. Big companies had big budgets, large-scale communications opportunities and, often, messages suited to mass media. Big companies had a few marketing specialists, but most employees had other responsibilities.

In new, outsourced America, millions of us are independent contractors. We don't have marketing departments; each of us is his or her own director of marketing. Nor do we have advertising budgets. That's why Andy Sernovitz' advice in World of Mouth Marketing is so relevant right now. This book is full of stuff you can do that won't cost you a cent, and will help you to build invaluable brand equity.

Talking the talk, walking the walk. TJ's called out on antibiotics in meat

Trader Joe's incredibly strong brand makes it a target for activists who believe that its customers are likely to share their political and environmental views. The question is, what are CEO Dan Bane's views?

Meat Without Drugs, a coalition supported by the Consumers Union, The Center for Science in the Public Interest and the Environmental Working Group is calling on Trader Joe's to become a leader in the fight against the insane overuse of antibiotics in the livestock industry. 


The coalition is asking Trader Joe's to sell meat raised with the minimal use of drugs. The standard they're calling for is not some idealistic, ultra-organic farming practice that's totally impractical. It's merely to limit the use of antibiotics to demonstrably sick animals, instead of preventively treating entire herds. The current practices have profound and short-sighted implications on human health.





Readers of Build a Brand Like Trader Joe's know that Trader Joe's is quick to point out that its products are nominally free of GMOs, preservatives, and artificial colorants. But, in spite of its open, friendly, 'organic/healthy' vibe, the chain has typically been a follower, not a leader, on issues like farm-workers' rights or sustainable fisheries.


I'll be pleasantly surprised if this campaign gets a quick, positive response from the faceless head office in Monrovia. [The TJ's head office is in Monrovia, California, not Monrovia, Liberia -- MG]

The good ship Trader Joe's, sailing the (air)waves

The local NPR affiliate here in Kansas City, KCUR, shot me an email yesterday saying, "We had a last-minute cancelation for our 11 a.m. show Up To Date. Can you come in and talk about your book for an hour?" I had a great chat with journalist/host Steve Kraske, which you can listen to by clicking the player below (or, if you want to listen on KCUR's own page, follow this link.)

 I was surprised when callers were more or less evenly split between rapturous fans of the brand and Kansas Citians who were left cold. The lesson in this is, if try to ensure that no one hates you, you'll also be ensuring that no one really loves you. One of the real examples of Trader Joe's genius is that the brand doesn't try to be all things to all people.

As I was leaving the station, Steve Kraske, producer Stephen Steigman, Mary and I chatted for a couple of minutes and it occurred to me that the closest Trader Joe's gets to what we in the ad business call 'brand advertising' is the radio ads the company runs in some markets.

Trader Joe's says that it carefully chooses radio stations that emphasize news, talk, classical and jazz music -- stations that appeal to customers with better-than-average educations. That made me wonder, why doesn't Trader Joe's sponsor NPR programs? NPR delivers that demographic/psychographic profile in spades.

If you're an NPR listener, and have heard local programming sponsored by Trader Joe's, please let me know when and where.

Dark matter and the matter of Trader Joe's advertising

I've been thinking about 'dark matter' a lot lately. Dark matter, for those of you in the, uh, dark, is undetectable, invisible stuff that so far exists only in theory. If it's undetectable, you may think, there's no reason to even think about it. But there is if you're an astronomer, because when you look out at the universe, the known laws of physics (mainly gravity, in this case) can't explain the rate at which the universe appears to be expanding.

To explain the current rate of expansion, the universe basically has to weigh far, far more than the weight of all the stuff in it that we can detect. So, for the observed universe to make sense to physicists and astronomers, they now all agree that most of the universe's mass is made up of something they're calling dark matter.

I'm not usually preoccupied with astrophysics, but lately I've taken a bit of heat for the subtitle of my book. A comment that I get a lot is, "But Trader Joe's does advertise! I get their flyers," or "I hear Trader Joe's radio ads," or "Isn't their web site a kind of ad?"

Yes, you're right. So am I. To learn why, click 'Read more' below.