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.