Danger, Trader Joes!
 Subscribe to the Three Star Leadership Blog |
 |
| The Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. |
 |
| Contact Wally about coaching, consulting, or speaking to your group. |
I lived in California for 22 years. Most of the time it we were not a good match.
The city taxed my business' gross income and required me to swear that I never owned slaves or sold nuclear weapons. It cost several hundred dollars to register my vehicle every year. And I got to hear, "You know, you're the only person we know who owns a gun" way too often.
There was the inability to get an abusive teacher disciplined (let alone fired) and a legal system that put a friend's murderer back on the street in just a few years. So, you may understand why I was glad to see California in my rear view mirror when I moved back to the East Coast.
But I did miss Trader Joe's (TJs). My children, who still lived in California then, would taunt me about not living near one.
"Hi, Dad," my daughter might say, "I just called because I'm standing in Trader Joe's. What was it you said you liked?'
Don't worry about me, though. I live in Charlotte now, within a ten minute drive of a Trader Joe's. There are two other stores in Charlotte, both opened since we moved here about two years ago.
Those two stores are part of Trader Joe's expansion that has taken them to 344 stores in 25 states. That expansion is one of the subjects of an excellent Fortune magazine article by Beth Kowitt titled "Inside the secret world of Trader Joe's ."
It's a secret world because the company is privately held. It's secretive beyond that. They don't talk to the media. At all. They just run a very profitable business.
Trader Joe's basic strategy has been the same since it was founded. When Theo Albrecht and his Aldi Nord bought Trader Joe's, they left the strategy in place. I told some of that story in my post "Theo Albrecht, Trader Joe's, and Ruthless Focus ."
Trader Joe's answers the two Ruthless Focus questions simply. The stores sell groceries that appeal to sophisticated bargain hunters. They sell less than 10 percent of the SKUs of the average grocery store, 80 percent with their own label. The combination of a fun place to shop and the products generate more than double the sales per square foot of Whole Foods. They are debt free.
The article asks "Can Trader Joe's maintain that kind of charm as it expands?" I would ask a broader question. "Will Trader Joe's abandon the ruthless focus on a simple, profitable strategy to worship the golden calf of growth?"
After a long period of profitability combined with some growth, it starts to look like ramping up the growth engine will be easy. It hardly ever is. Ask Chico's. Ask Toyota.
Beware Trader Joe's! Be true to yourself and maintain a ruthless focus on your core strategy and you may grow more slowly. But you're more likely to stay profitable, not to mention a great place to shop.
Check out, Ruthless Focus, at Amazon.
Posts about Ruthless Focus
Ruthless Focus: How to use key core strategies to grow your business
The Story of the Book
Annotated Table of Contents
Keep it Simple, Strategist
Strategy: Staying with What Works
Ruthless Focus on the Business Basics
Theo Albrecht, Trader Joe's, and Ruthless Focus
Ruthless Focus: What about Toyota?
Ruthless Focus: Three Kinds of Crisis
The story of Yahoo's shifting strategy
Tom Stemberg, Staples, and the Two Strategy Questions
How Doing Acquisitions is like being a Fighter Pilot
Learning about Differentiation from Barbeque
Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.
Categories: Ruthless Focus, Strategy
Tags: Ruthless Focus Strategy
You should have just moved to Reno, Walley. We have Traders Joe's and a lot of ex-Californian's.
I like Trader Joe's. They have great products and very reliable service. But they are not located near my home, and corner they are located on is not that easily accessible. So even when I am in the area I rarely stop there. Convenience, for me, is huge.
Reply to this
I love Reno, Bret. But I don't think I'll ever live outside the South again, unless we do a stint in Italy. As for Trader Joe's, for me it would be a place worth going out of my way for, inconvenient corner and all. But you probably could have guessed that. For an awful lot of my shopping, though, convenience determines where I go.
Reply to this
Hey Wally,
I'm one of Bret's students and new (again) to the west coast.
I have witnessed In and Out Burger make the jump, Del Taco make the jump, and a few others, like Coors all make a successful expansion eastward. Even PF Chang's eastward migration was a success in the over saturated restaurant market. I think they did well because they didn't dilute their core values or senior leadership to accommodate that growth. I think they even managed to keep their cult like followings by recreating the "buzz" in the newly expanded area through a combination of shrewd marketing and transplanting talent.
Anyway, I'm sure Trader Joe's will do well!
Reply to this
Thanks for coming by, Rick. You make a good point that expansion/growth is possible. The issue we found researching Ruthless Focus was that many companies shift their gaze from the core strategy to growth. When they do that, trouble follows. Very few companies recover from that trouble, but it's possible. Marriott, years ago, virtually destroyed its reputation during a growth spurt. They fixed things but it took more than a decade.
Reply to this
Personally I’m a little aggravated with TJ’s. Curious of the totem poles out front I strolled in to the San Luis Obispo location several times only to be met by large crowds and long lines while the Food-4-Less next door tended to be deserted. While the crowds were a little displeasing to me the Hawaiian shirts, south pacific feel and unusual goods that are apparently so appealing to Californians will surly find a niche among East Coasters.
Reply to this
Thanks for that unique perspective, Matt.
Reply to this
Wally, you're exactly right about the appeals of Trader Joe's. I always hate to admit that I'm right in the marketing cross-hairs of a company, but I shop there because the layout is simple, the food is quite good, and the prices are competitive. It seems like they do attract a lot of customers with their environmentally-friendly image, and I'm curious if that will be as effective as they expand eastward.
Reply to this
Scott – thanks for coming by and commenting. I'm in Charlotte and I've seen that "expansion to the East" at first hand. I don't think fitting in will be a problems for TJ's. The product selection and atmosphere in the stores and the customer service work just as well on the East Coast or in the South as they do in the Bay Area of California.
Reply to this
Trader Joe's is a great example of organizational culture. You can go into a Trader Joe's and the attitude of staff is actually to help people. That is so rare that it is very noticeable that something different is going on here.
It is very easy to lose the culture that creates such an atmosphere. If they start to lose that, a big part of their success will be gone. Hopefully they won't be taken over by the customer hostile attitude of most organizations.
Reply to this
Culture is a powerful thing. As Lou Gerstner said, "It is the game." But it takes time for a culture to emerge and it's easy to poison the well. Thanks for adding your voice to the discussion.
Reply to this
Secret's of Sucess TJ’s offers high-quality products at rock bottom prices.Since it carries fewer products, its volumes are higher, giving it bargaining power when negotiating with its coveted suppliers. Everybody wins. It’s nothing new in business operations, but it’s very new in the grocery business.
Reply to this