Trader Joe’s is an iconic American business. It’s cult-like. I know people who will drive far out of their way to visit these stores. They are so popular they are nearly on the level of a local tourist attraction!
Here is a typical comment from my friend Sunshine Woodyard:
I’m obsessed with Trader Joe’s, I picked where to buy a house based on proximity to one.
I need to back up here and mention that Trader Joe’s is a grocery store. Research consistently shows that people hate going to grocery stores. It’s ranked right above going to the dentist. So this is a truly legendary brand.
I was doing research to figure out how Trader Joe’s achieved this rare status. How did they completely break the mold and make people feel like they belong to a grocery store?
So I read the founder’s autobiography Becoming Trader Joe to figure this out. What was the grand vision and strategy that created this historic level of success and customer intimacy?
I found the answer. And oh my, was I disappointed.
But there’s a good lesson ahead …
The icon, the disappointment
Trader Joe’s is a grocery chain that breaks almost every traditional retail convention. It’s hard to describe, so I asked some of my Facebook friends what they liked about it:
- Vast quick-cook ethnic options. There are entire Pinterest pages and blogs devoted to monthly finds, weekly meal planning using TJ ingredients and more! (Shannah Hayley)
- The size of their store is small enough that I don’t get lost and quickly finding the dozen products that I just can’t live without (Heather Heumann)
- Makes me feel like I can cook and hostess like a superstar (Catherine Mangan)
- They get great deals and pass the savings to customers. (Phil Mershon)
- Seems like every employee loves their job. If you ask where an item is, they’ll take you right over to it even if it’s across the store. They’ll also offer you ideas for new recipes (Tim Washer)
- I love TJ’s because of the selection of fun and interesting products you won’t find in a typical grocery store (Laura Poe)
- There is a simplicity to the place that is differentiating. I also love the spirit of discovery of new foods. (Frank Eliason)
- They gave me free flowers when I was having a particularly hard day (Carla Taylor)
- Good employer – salaries, benefits, etc. (Anne Saulovich)
- They hide stuffed animals and when you find them, you get a lollipop. My kids always looked forward to going with me because they had something to do (Crystal Tosh)
- Lots of good frozen prepared foods for us single folks who don’t always want to go to a lot of trouble to cook just for ourselves (Lynn Thompson)
- Shopping there, I feel smarter, healthier, more adventurous, and worldly. (Charlie Wollborg)
- The prepared food isn’t full of trash chemicals and additives. It’s much closer to European food standards (Laura Pence Atencio)
… and I could go on. You get the idea that they have a lot going on here!
I expected to read this book and learn of an inspirational business vision from a remarkable founder. But that was not the case at all. I was disappointed on every page. Just about everything that created this successful company was an accident or luck …
- Founder Joe Coulombe made a decision to pay his employees high wages and benefits to avoid unionization.
- He originally operated a small chain of conventional stores. He was forced to innovate only because a national chain was going to wipe him out of business.
- A local farmer had too many eggs. So he approached Joe about dumping his inventory and selling it at a low price. This led to a long-term strategy of seeking low-cost, excess food inventories for his store as a unique selling proposition.
- Joe had the idea of offering unique, branded products when a cheesemaker noted that a waste material of the process was a whey-based butter. He could obtain the off-grade butter in bulk for very little money and brand it as a specialty product.
- He took advantage of a legal loophole and offered unique wine sales.
The strategy refrain that Joe repeats throughout the book is, “I made the right decisions for the wrong reasons.”
Perhaps the biggest stroke of luck was a changing world. The founder attributed the success of his quirky store to the GI Bill which enabled millions of veterans to get a college education and larger jets which dropped the cost of travel to Europe. Why? His products appealed to higher-educated people and consumers were becoming more adventurous in their diet due to foreign travel. His products and marketing took advantage of this demographic shift.
In the founder’s words “I found disruptions in the market and drove a truck right through them.”
And that is a great lesson for business success today, especially in a pandemic …
Cumulative Advantage at work
The weird success of Trader Joe’s is a perfect case study of how momentum works, as described by the research I highlighted in my book Cumulative Advantage.
A main idea in this book is that you don’t need a big college degree or a million dollars in the bank to create business momentum. Almost every successful business starts from something random, so success often stems from being aware of the opportunities being presented to you.
Like Joe. There was no strategy. He was driving his truck through opportunities as he met them.
In my book, I explain how:
- Nike started with an observation about making waffles at breakfast
- Zumba started when an aerobics instructor accidentally left his music at home
- Microsoft started because Bill Gates had access to early computer prototypes as a teenager
- Spanx started over frustration with underwear lines
- Twitter was on the brink of failure when an earthquake made it essential for communication
- My career took a new direction when I asked my boss if I could put an AOL subscription on my expense account, making me the first company employee with an internet account.
… and so on.
In fact, every successful person and business started through something random, a fact delightfully chronicled in the book The Click Moment by Frans Johansson.
While I was disappointed that my favorite grocery store stumbled into success through a continuous series of accidents, I should not have been surprised. Because that’s exactly how almost every great success occurs.
The lesson for you
A key idea in Trader Joe’s success is that momentum comes from the intersection between some initial advantage (it could be a skill, a resource, an idea, or even a bit of luck!) and some shift in the world — a fracture in the status quo.
- Cheap eggs propelled store success during a recession.
- More educated and well-traveled consumers were ready for a small store with quirky food products.
- Paying employees well led to loyalty and higher customer engagement that created differentiation in the bland grocery world.
This is how strategy and success work now. Finding a way to be relentlessly relevant in a constantly changing world.
The good news is that the pandemic is the biggest fracture in the status quo in history. Literally, everything is being reimagined and reinvented …
- how we work, where we work, when we work
- how we exercise, play, travel, and entertain ourselves
- how we cook and feed our families
- how we learn, teach, and connect
… to name a few.
Like Trader Joe’s you too can stumble into success if you’re aware of how your strengths, resources, and talents match up with changes going on in the world today.
Mark Schaefer is the executive director of Schaefer Marketing Solutions. He is the author of some of the world’s bestselling digital marketing books and is an acclaimed keynote speaker, college educator, and business consultant. The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon.
