Tuesday, August 24, 2010

The Secret World of Trader Joe's

How is Trader Joe's so awesome, and why aren't more stores like it? That's the premise of a Fortune magazine piece that attempts to look inside the top-secret corporation.

Fortune doesn't really find out much: The privately-held Trader Joe's, owned by Germany's Albrecht family, doesn't give interviews. But it does offer up a few interesting tidbits:

-- As we've long suspected, those Trader Joe's private label items are often produced by big-name companies like Frito-Lay. And the story mentions that TJ's microwavable Indian meals come from Tasty Bites -- not a surprise, as TJ used to sell Tasty Bite-brand food until one day, when it the box was suddenly branded as a Trader Joe's product, yet the inside packaging remained the same.

-- The Albrechts generally stay out of the business: "They visit the U.S. operation about once a year, and word around the office spreads that "the Germans" are coming."

-- TJ's can make for a pretty good career: "Store managers, "captains" in Trader Joe's parlance — the nautical titles are a holdover from Coulombe (newly promoted captains are commanders; assistant store managers are first mates) — can make in the low six figures, and full-time crew members can start in the $40,000 to $60,000 range. But on top of the pay, Trader Joe's annually contributes 15.4% of employees' gross income to tax-deferred retirement accounts."

-- Trader Joe's had sales of $8 billion last year, "the same size as Whole Foods' and bigger than those of Bed Bath & Beyond, No. 314 on the Fortune 500 list."

I'm surprised the story didn't mention at all the difficulty that the U.K.'s Tesco has had in going after the Trader Joe's crowd with its Fresh & Easy chain. When F&E first started out, it too relied heavily on its private label... but eventually began stocking much more brand-name merchandise. At this point, F&E feels much more like a Ralph's than like a TJ's. Meanwhile, Henry's Farmers Market (owned by Smart & Final) seems to be finding a niche as a cross between Trader Joe's and Whole Foods.

(Above: The infamous unauthorized Trader Joe's commercial produced by Carl's Fine Films.)

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