Tuesday, November 27, 2012

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.

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