To determine what products to sell in his stores when he began his business a half-century ago, Joe Coulombe applied what he calls the Four Tests: “high value per cubic inch; high rate of consumption; easily handled; and something in which we could be outstanding in terms of price or assortment.” That’s how Trader Joe’s ended up selling bullets.

Granted, it was California in the 1960s, a time before gun-control laws took hold in the state. Following the assassination of Robert F. Kennedy, however, and a slew of regulations limiting the sale of ammunition, Coulombe decided to pull bullets from his shelves. Besides, there were other deals to be made—in wine, maple syrup, even Brie. The key was adaptability.

Actually, there are many keys to creating a thriving company, and Coulombe shares them all in “Becoming Trader Joe,” a memoir and how-to-succeed-in-business chronicle that appears posthumously. (Coulombe died last year at the age of 89.) Among other essentials: Be well informed (that is, read the fine print in leasing contracts); offer generous worker pay to reduce turnover (and deter unionization); and be wary of opening a store with access to a freeway. “Holdups are most common in stores which are closest to freeway on-ramps, because it’s easier to make a getaway.”

From 1967 to 1988, Coulombe ran Trader Joe’s, and ran it beautifully. Although he sold the company to the Albrecht family (of Aldi grocery-store fame) in 1979, it still bears the imprint of his original idea. “We went from leveraged to the gills in the early days to zero leverage by 1975,” he writes, adding that “we never lost money in a year, and each year was more profitable than the preceding year despite wild swings in the income tax rates.” Given such a record, any budding entrepreneur would do well to heed his advice, beginning with having a clarity of purpose.

“The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers,” Coulombe writes. “This is the most important mental construct I can impart to those of you who want to enter retailing.” Of course, it’s not that simple—he describes the complexity of interstate-commerce laws, the strictures of the Fair Labor Standards Act, the ordeals of tax audits, and troubles he had with the United Farm Workers: Having picketers claim that Trader Joe’s was selling goods “full of piss and pesticide” distracted from that important mental construct.

Naturally, the art of retailing is not just about what to sell but whom you are selling to. Coulombe says that he had no interest in the average joe, “the masses who willingly consumed Folger’s coffee, Best Foods Mayonnaise, Wonder Bread, Coca-Cola, etc.” His targeted demo, he says, was the overeducated and underpaid—in other words, customers with college degrees who preferred such refinements as whole-bean coffee and real maple syrup but could only afford them at a discount.

On that front, Coulombe delivered. He sought discontinuities in merchandise—extra-large eggs, for example, that a supplier was desperate to unload. He discovered loopholes. “Because Wisconsin had no native Brie industry in the 1950s, it had neglected to shut off imports of Brie: There were no restrictions,” he explains. Trader Joe’s became America’s biggest importer of Brie and, at one point, sold it for less than Velveeta. Even more astounding was how Coulombe and his team of buyers managed to procure Bordeaux wines like Lafite and Château d’Yquem at a discount. “Almost thirty years later, people come up to me to talk about how they bought Latour for $5.99.”

You won’t have such luck if you walk into a Trader Joe’s today, but the prices remain competitive, and the targeted demo is the same. As Coulombe puts it: “Trader Joe’s is not a store for kids or big families. One or two adults was just fine.” In the 1970s, these adults began to embrace the health-food movement. Coulombe went right along with them, stocking store shelves with vitamins, bran, carrot juice, dried fruits and nuts. Oddly, Coulombe never talks about rival Whole Foods Market in “Becoming Trader Joe” and only makes a passing reference to its owner, Amazon.

He does discuss store crime—from customers who write bad checks to vendors who steal and checkout clerks who merely pretend to scan items. The biggest lure to thievery turned out to be frozen shrimp. “It has a high value per cubic inch, and it is easy to fence; the thieves usually operate in teams.” Was there a lookout and an inside man? He doesn’t say.

It’s these little insights and anecdotes that make “Becoming Trader Joe” such an enjoyable read. When the first store opened in 1967, it was Polynesian-themed, complete with staff in Hawaiian shirts and Bermuda shorts. The name was a riff on Trader Vic’s tiki restaurants. Managers were called Captains, and stock clerks were Native Bearers. Today’s cultural-appropriation police would have had a field day. In fact, a petition was filed last summer demanding that the company remove its “racist” ethnic-food labels, such as Trader José’s and Trader Ming’s. It refused.

Sprinkled throughout the memoir are mentions of books that Coulombe found helpful to his mastery of retail, such as “The Mythical Man Month” by Frederick P. Brooks Jr., a book that emphasized ease of use and “conceptual integrity” in design. But he considers Barbara Tuchman’s chronicle of the first weeks of World War I, “The Guns of August,” to be the best book on management—and mismanagement. “The most basic conclusion I drew from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you will probably succeed.” We can only guess how Joe Coulombe would have managed the current pandemic, but it’s safe to say he would have been well-informed, and, yes, ever ready to adapt.

Source: The Wall Street Journal, January, 2022
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