Monday, September 3, 2012

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.

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