Acquired · Oct 26Trader Joe’s: Hawaiian shirts and counter positioning
Joe Coulombe merchandised groceries like a wine merchant, with few SKUs, no coupons, cash payment to suppliers and well-paid crew (5 to 6% turnover vs 65 to 70% in grocery). It earns over $2,000 per square foot, passed $20 billion in revenue across 608 stores by 2023, and over 80% of the store is its own brand.
Tips
- Joe Coulombe chose hard liquor as a moat 7-Eleven could not follow▶ 35:45Pronto turned into mostly a liquor store, which bought Joe a couple of years to work out the bigger plan and stave off 7-Eleven.
- Joe Coulombe refused to race Walmart-style rivals on size and chose to be an active retailer▶ 50:00Every competitor spent the next decade chasing bigger inventories and lower costs, while Joe built a differentiated store.
- Joe Coulombe bet on the college-educated, well-traveled customer before the trend arrived▶ 47:30The 747 cut the cost of travel to Europe by 50% at once, and by a factor of 15 within 10 years.
- Joe Coulombe's team merchandised all of grocery the way a wine merchant sells wine▶ 1:09:30By 1970, three years after the first store, Trader Joe's was the largest wine retailer in California with only a handful of stores.
- Joe Coulombe let private label come only with real differentiation, never as a cheap copy▶ 1:45:40Today over 80% of the store is Trader Joe's brand, and Tasty Bite's Punjab eggplant was $3.39 at Whole Foods versus a dollar less at Trader Joe's.
- After fair trade ended in 1977, Joe Coulombe answered by designing a store with no competition▶ 1:43:57California repealed fair trade in 1977. Trader Joe's stayed profitable and kept growing as many retailers failed.
- Trader Joe's skips slotting fees and retail media and earns only when customers check out▶ 2:57:00Trader Joe's and Costco each stock about 4,000 items, versus about 50,000 at a typical supermarket.
- Joe Coulombe sold Trader Joe's to Theo Albrecht on a one-page deal with five conditions▶ 2:00:04Joe stayed CEO another 10 years until 1988, and the Albrecht family never invested another dollar.
- Joe Coulombe sold employees equity at book value to fund his buyout of Pronto Markets▶ 20:15Closed in summer 1962. The employees' entry price beat Joe's, so they earned almost twice his multiple.
- Joe Coulombe paid crew far above industry rates, and that cut turnover to a tenth▶ 22:00Trader Joe's turnover is about 5 to 6% a year versus 65 to 70% in grocery, and every captain is promoted from within.
- Dan Bane widened Trader Joe's from party store to groceries without making stores bigger▶ 2:15:57Revenue was about $1 billion when he joined and over $20 billion by 2023.
- Fred Franzia turned a $27,000 label and a wine glut into Two Buck Chuck▶ 2:34:30Over a billion bottles sold, and about 10% of Trader Joe's 40 million annual bottles of wine are Charles Shaw.
- Trader Joe's pays suppliers on delivery instead of using their credit like other retailers▶ 3:00:00Inventory turns about 60 times a year, and some stores turn twice a week, so it could float like others but chooses not to.
- Trader Joe's ranks items by dollars of margin per shelf space, not margin percent▶ 2:54:56Sales per square foot of over $2,000, versus about $1,200 at Costco and about $1,000 or so at Whole Foods.
- Trader Joe's skips data, loyalty cards and delivery, and tests technology against opening another store▶ 3:04:00They had no price scanners until Dan Bane became CEO in 2001.
- Joe Coulombe's Pronto Markets cloned 7-Eleven with no moat and nearly died▶ 29:55Landlords would prefer 7-Eleven as a tenant, and Ador was selling its dairy operations.
- Joe Coulombe built the wine bank and learned it dragged the company into divorces▶ 1:15:00Trader Joe's no longer runs wine banks.
- Joe Coulombe stayed regional because bigger was never his goal, and successors scaled the concept▶ 2:08:20Trader Joe's grew from 27 stores to 175 under Shields, and is at 608 stores in 43 states today.
David Senra · Feb 15
Founders · Mar 22
