Trader Joe's and GE are two of my favorite companies mostly because of their amazing depth of vertical integration. They've got this stuff down to an art form.
GE really is an incredible "behind-the-scenes" sort of company. When you first think of GE, you probably think something along the lines of "Oh yeah, don't they make light bulbs or something?" But the more you look into them, the more you realize just how big and diversified that company is. Taking a look at http://en.wikipedia.org/wiki/List_of_assets_owned_by_General... is a good starting point, and then start clicking on the links therein and you'll probably find that GE is behind a lot of products and involved in a lot of industries that you'd never have guessed.
I'm not sure vertical integration is something to be inspired by. In fact, it tends to create a variety of conflicts of interests, and anti competitive environments. Both effects are generally bad for competition and consumer choice.
As a european grad student at Caltech - I can say that the pasadena Trader Joe's bread and cheese is the only thing that allowed me to survive American (or at least LA) cuisine.
Uhhhhhh, I'm guessing that you were eating cheap. There's no reason that you'd have to "survive" LA cuisine unless you actually didn't spend money on it and just went to McDonalds. There are amazing restaurants in LA. Lots.
Well it was Pasadena, so Mexican or McD were the options.
Go into an American supermarket and there are dozens of types (or at least shapes) of bread - all the same oversweet soft wonderloaf inside, and dozens of types (or colors) of cheese - that all taste the same.
When I lived there, live cheese was banned, pot is being legalized but Brie is illegal !!!!
The Trader Joes return policy is pretty amazing. For the first 5 years I shoped there I never even thought to bring something back, but then once a few years back I felt the need to give it a test -- and honestly I couldn't believe they'd even accept a label off a microwave dish and my word that it tasted awful.
The manager was cheerful about it, and told me I wasn't the first person to bring back that particular item. Then he reeled me in:
"I'll gladly get you a refund; did you have any other shopping to do today? I can have the checker credit your order."
"Oh... I suppose I do."
I returned an item that cost less than $2, and then ended up buying a week's worth of groceries at $50.
Zappos may be the only other company I can think of that has the kind of return policy that increases revenue in the long run.
Amazing timing - I returned my first ever item to Trader Joe's today, and the experience was memorable.
My wife bought blackberries this morning. Tonight, after dinner, we realized they were moldy. I went to exchange them at about 8:30 pm, just before closing. The store was out of blackberries, though. I called home to ask if there was anything else I should get.
"Olive oil" was the answer. So I walk up to the counter, ready to do an exchange, and the cashier looked at the $8 bottle of Olive Oil, the $3 carton of moldy blackberries, and said:
"Yeah those are about even. Have a good night." He then shooed me out the door without even ringing anything up on the computer.
That kind of autonomy is not what you expect from ANY retail establishment, let alone a grocery store.
I once bought a package of smoked salmon at Trader Joe's. It was gross, so I took it back, and the guy asked me to try a different brand instead. I said "OK," and it was gross again. I went back very apologetic just asking for a refund, and he asked me to try a third type. I refused entirely, until he MADE me take the third type of smoked salmon. That third type was really good and I've probably bought $200 worth of it since that day.
Target used to have an incredibly generous return policy as well, no receipt was no problem, and they'd take back things like dead plants that had no chance of being resold. Store credit is a helluva drug at stores with a wide array of goods.
Even when you don't buy anything immediately, this kind of policy definitely helps hold on to customers.
About 12 years ago my friend and I were shopping at a local Middle Eastern grocery/restaurant (Holy Land in North Minneapolis for those local) and she happened to mention to the owner in passing that the halvah we bought a week ago had a funny taste. He immediately jumped on it "oh, we had some trouble with the refrigerator last weekend. Here, let me give you some more for free!" That was a complete surprise and to this day if I'm in the area, it's the first place I think of to stop and get a bite to eat at.
I've found over the years that most places have such mediocre service that anyone who rises just a bit above the mean sticks in my mind and I tend to patronize their business from that point on.
A Trader Joe's is opening in the on 72nd and Columbus in Manhattan that. It's already causing the local groceries to change their game and they haven't even opened yet.
I love Trader Joe's. They have an excellent supply of fancier foods and a pretty good selection of pantry items at good prices. I feel as though I get the same level of quality from them without paying for it like I do at Whole Foods.
I love the New Zealand Cheddar they sell there. I have no idea why but it's my favorite cheese. My two year old daughter can't get enough of it either so maybe it's genetic.
My understanding is New Zealand cows are grass fed. Makes a difference, I think. (Irish cows too. Try the Kerrygold Dubliner cheese at TJs. Try the Kerrygold butter too. Now that's butter!)
Wow, I've been a regular Trader Joe's shopper ever since one opened up down the street about a year ago. Frankly, I was always a bit worried that between the price and the quality there was a "too good to be true" angle that I was missing. But from this article, it seems like they rely on:
* Buying good food
* Distributing it efficiently
* Paying their employees well.
I don't really care how "quirky cool" they are or are not, that's pretty sweet.
A closer look at its selection of items underscores the brilliance of Coulombe's limited-selection, high-turnover model. Take peanut butter. Trader Joe's sells 10 varieties. That might sound like a lot, but most supermarkets sell about 40 SKUs. For simplicity's sake, say both a typical supermarket and a Trader Joe's sell 40 jars a week. Trader Joe's would sell an average of four of each type, while the supermarket might sell only one. With the greater turnover on a smaller number of items, Trader Joe's can buy large quantities and secure deep discounts. And it makes the whole business -- from stocking shelves to checking out customers -- much simpler.
I see the opposite side of that here in London. All the main supermarkets - Tescos, Asda, Morrisons, etc. - have very little in the way of product choice. Living in east London, I have to go well out of my way to find a different branch of Sainsburys or Waitrose to get certain products.
For example, "McCains Simply Gorgeous Chunky Chips", a variety of oven chips in beef dripping, is vanishingly rare; there's a Sainsburys in Bethnal Green which sells them, but that's going well into the city.
Similarly, for The Berry Company juices - things like açaí, blueberry, goji berry - I have to go to Waitrose in Canary Wharf. Other Waitrose outlets are hit and miss, with patchy coverage of the line; and there's virtually no chance of finding the products elsewhere.
I was amused to find once I went to a Tescos Extra that they largely just had twice the space on the shelf for the same number of SKUs.
I actually managed to get lost in a new one, which serves the vast sprawl of nearly prefab housing stretching beyond Canary Wharf down to the Dagenham bend and beyond. Last i looked, there's no update of the views on Google Maps to shock and awe you that housing so many miles from any kind of center could be so close to central prices.
But, yeah, big supermarkets are rare. The trend has been to "corner shop" style stores, which is basically the supermarkets gaming the planning system ("local amenities, social infrastructure", erk) so they can game the prices (20% markup on same SKUs compared with their own bigger stores not unusual, but this is just another incentive for them to not keep SKUs in every store, as the Frozen Chips Lament supports)
Tesco's one of the world's most profitable retailers (I think it's #4 globally) and ASDA is a subsidiary of Wal-Mart. London's just a special case - where do you put an out-of-town superstore in zones 1 or 2 of the Tube map?
I wouldn't mind if they were in zones 4 or 5, but it still doesn't add much choice. Tesco Extra stores aren't exactly small, but they still don't have much choice in the grocery side.
If a different store had the range, I'd go there instead. But each store targeting a slice of the demographic pie has very much the same limited range with a tiny bit of diversity outside of store brands.
Having grown up in the States and lived in London for nearly seven years, I have to agree.
It's not that UK supermarkets don't have choice, it's that US supermarkets are spoiled for choice. I mean, I went back home and saw a WALL of bread, and a long aisle where half was just cans of soup! For me, it's not just the difference between 10 different SKUs of peanut butter and 50+, but US stores seem to have much more stock of each SKU, too.
"I have to go well out of my way to find a different branch of Sainsburys or Waitrose to get certain products"
Gah, too bloody right. The supermarkets aggressively target SKU's to demographics, and in the E2 . . E14 area, demos are all over the board. One time this borough qualified as one of the lowest per capitas in the EU, yeah, riiight, it's a cash economy, which isn't obviously getting measured, off the back of which Tower Hamlets gained vast supplementary funding which they used to create a hegemenous political enclave.
Oops, off topic there, sorry. For readers not familiar with this territory, you've got a social housing ghetto sandwiched between Canary Wharf and Liverpool Street, our primary banking districts. I use the word ghetto accurately i believe, because the census puts young immigrant families of a single origin at beyond 60% of population, this over a vast area and this group are in one bit of it, a group i assure you is not equally represented in banking or professional services.
Yup, doing the shopping here involves Waitrose at Canary, Tesco Liverpool St, Sainsbury at Stepney Green. Maybe i should make something out of it by doing guided tours at the same time, since that triangle covers half of the biggest district in the country . .
I'm on HN, and we're discussing local frozen chip shortages, and we can't solve them. Ouch!
trivia: local slang for neigborhood in the East End of London has always been "Manor". As in "i'm going to be on yer Manor later, mate". I wonder if this has anything to do with the fact stretches of Victoria Park and elsewhere were, before urbanisation, in fact private Manors, some created by Canal barons, who got land deals like Rail Barons did in the USA. See, that guided shopping tour idea might have something in it . .
My GF and I have done a lot of shopping at the Chelsea store from the article. Funny the author pointed out "random Manhattan strangers" as I noticed this yesterday when we did our week shopping.
I think the Chelsea store opened a few weeks back, as someone from our office stumbled upon it and brought back peanut butter filled pretzels nuggets - which were awesome. Needless to say, once I heard they opened a TJ in the area, I had to stop by and experience it.
The Chelsea store is so much more open with high ceilings compared to the Union Square location. If you live in NYC, I recommend shopping in this location.
FYI, the rather reclusive owner of the company, Theo Albrecht, died quite recently. It may surprise you to know he was one of the world's richest men.
TJs has the lowest number of different products in it stores of any major supermarket, plays employees significantly above the industry average ($40-60k; managers can earn 6 figures), gets a far greater $/sq foot return than competitors, and does over $8 billion a year in sales. And pretty much everyone likes them.
Herr Albrecht is a pretty good role model if you ask me.
Not in any way meaning to disrespect the man, but i'm not sure which Herr Albrecht you mean, of the brothers, and we know so very little about them.
In Europe ALDI goes hand in hand with all the same complaints attributed to WalMart, often with good reason, but possibly with less scope of impact due to sharper anti-monopoly enforcement.
Actually, on very narrow lines, if you're in America, looking at Europe from a distance, ALDI (AlbrechtDiscount) = WalMart. Even the business names are in the same style :)
I wasn't aware of Trader Joe's (not living in the territory) until this discussion ~ it sounds a very cool place, way beyond the comparatively - by the sounds of things - stiff and terrifyingly expensive up-scale food outlets i see in London. (but then comparing food prices is always going to be a shock between such vastly different scale markets)
I'm actually shocked that they (Trader Joe's) offer a wage you might be able to live on in a major city. That's a model business. Just not sure about the role model thing, as that's so personal.
This is all good, but ~ not checked into this ~ presumably, like ALDI, Trader Joe's is a private company, and so we've little insight into profitability. Anyone got any intel on that? The oddest thing is why a known ruthless operator would do almost the opposite style so thoroughly. I can only put it down to the sibling dynamics where they locked each other out of territories. Hmm, maybe there's a business model in that. 1. Have twins 2. . . .
Aldi is feared in Germany by their suppliers.
Once they pressured farmers to sell their milk at such low prices that the farmers went on strike and poured their milk onto the fields instead of selling it.
The working conditions seem to be average for a discounter. Meaning: Not very good but that is to be expected.
To be honest though, farmers in Europe go on strike and pour out their milk or throw out tomatoes every couple of months. They've been spoiled by economically insane price support and import tariff policies, and don't (maybe refuse to) face the economic reality that agriculture in Europe can't compete globally.
So yeah Aldi does put the squeeze on its suppliers (as it should), but the agricultural sector is not the best poster child for that.
If you would like to know more about what made the Albrecht brothers' stores so successful, you should read Dieter Brandes's book. It think the English version is this one:
Yikes, used for $500! Looks like a publishing model that is seriously being missed. I know a screenwriting book that sells for a couple hundred if it can be found. A lot of work to get the copyrights for a short publishing run but sure looks like it could be lucritive.
Great commercial. I recognized almost every product there. TJ really does have a unique and eclectic mix of food. The thing I notice is that I can find 99% of all the items I need when grocery shopping there but I only end up spending $50-60 a week instead of $100 or more that the same items would cost at a Stop and Shop or Whole Foods.
The one thing they seem to be lacking is a meat and seafood department. All their meat is shipped in; it's not bad, but it can't compare to Whole Foods. My solution is to get everything at TJ, then stop by Whole Foods to buy a pound of fish and chicken. Best of both worlds...
Kidding aside, I used to live one block away from a Trader Joe's and am sort of over them now. It can be a frustrating place to shop when you just want 'regular stuff', rather than paying the markup for fancy varieties of things. It's very nice to have as a supplement to a normal grocery store though.
Trader Joe's is a boostrapper's dream: cheap, tasty and quick meals.
Their prepared foods and marinated meats are really pretty good. Their cheese and wine selections are quite good. I found a Petite Syrah I absolutely _love_ there for $3.99. We buy it by the case. Bread is consistently some of the better bread I've found outside of dedicated bakeries here in the US (our bread generally sucks). A glass of wine ($3.99 a bottle), a loaf of bread ($1.99 a baguette lasting a day or two), a bit of low fat goat's milk brie ($2.99 a round lasting several days), a bit of sliced salami ($2.99 a for 2 salami's lasting 4 meals), some dried almonds ($3.00 for a pack of 20 mini bags), and I have very tasty no-cook meals for a day or two.
If you're in Silicon Valley (or anywhere that has a Joe's), and trying to eat well on a budget visit Trader Joe's.
I go there and there are about fives things I want and which are good deal. Then there are ten things I'd buy if I was in a hurry and are only a good deal if want I to pay premium for processed stuff. I get a good deal there but I suspect most customers throw down a lot of money for convenience that isn't cheap or healthy - but I suppose that's what they want.
It's a real tragedy when TJs discontinues one of your favorite items. Still mourning the loss of those flat New Zealand buiscuits filled with apricots and raisins. Also the pomegranate syrup is gone...
53 comments
[ 65.9 ms ] story [ 3213 ms ] threadGo into an American supermarket and there are dozens of types (or at least shapes) of bread - all the same oversweet soft wonderloaf inside, and dozens of types (or colors) of cheese - that all taste the same.
When I lived there, live cheese was banned, pot is being legalized but Brie is illegal !!!!
The manager was cheerful about it, and told me I wasn't the first person to bring back that particular item. Then he reeled me in:
"I'll gladly get you a refund; did you have any other shopping to do today? I can have the checker credit your order."
"Oh... I suppose I do."
I returned an item that cost less than $2, and then ended up buying a week's worth of groceries at $50.
Zappos may be the only other company I can think of that has the kind of return policy that increases revenue in the long run.
My wife bought blackberries this morning. Tonight, after dinner, we realized they were moldy. I went to exchange them at about 8:30 pm, just before closing. The store was out of blackberries, though. I called home to ask if there was anything else I should get.
"Olive oil" was the answer. So I walk up to the counter, ready to do an exchange, and the cashier looked at the $8 bottle of Olive Oil, the $3 carton of moldy blackberries, and said:
"Yeah those are about even. Have a good night." He then shooed me out the door without even ringing anything up on the computer.
That kind of autonomy is not what you expect from ANY retail establishment, let alone a grocery store.
Fry's : Best Buy; backcountry.com : REI
About 12 years ago my friend and I were shopping at a local Middle Eastern grocery/restaurant (Holy Land in North Minneapolis for those local) and she happened to mention to the owner in passing that the halvah we bought a week ago had a funny taste. He immediately jumped on it "oh, we had some trouble with the refrigerator last weekend. Here, let me give you some more for free!" That was a complete surprise and to this day if I'm in the area, it's the first place I think of to stop and get a bite to eat at.
I've found over the years that most places have such mediocre service that anyone who rises just a bit above the mean sticks in my mind and I tend to patronize their business from that point on.
I love the New Zealand Cheddar they sell there. I have no idea why but it's my favorite cheese. My two year old daughter can't get enough of it either so maybe it's genetic.
* Buying good food
* Distributing it efficiently
* Paying their employees well.
I don't really care how "quirky cool" they are or are not, that's pretty sweet.
A closer look at its selection of items underscores the brilliance of Coulombe's limited-selection, high-turnover model. Take peanut butter. Trader Joe's sells 10 varieties. That might sound like a lot, but most supermarkets sell about 40 SKUs. For simplicity's sake, say both a typical supermarket and a Trader Joe's sell 40 jars a week. Trader Joe's would sell an average of four of each type, while the supermarket might sell only one. With the greater turnover on a smaller number of items, Trader Joe's can buy large quantities and secure deep discounts. And it makes the whole business -- from stocking shelves to checking out customers -- much simpler.
For example, "McCains Simply Gorgeous Chunky Chips", a variety of oven chips in beef dripping, is vanishingly rare; there's a Sainsburys in Bethnal Green which sells them, but that's going well into the city.
Similarly, for The Berry Company juices - things like açaí, blueberry, goji berry - I have to go to Waitrose in Canary Wharf. Other Waitrose outlets are hit and miss, with patchy coverage of the line; and there's virtually no chance of finding the products elsewhere.
I was amused to find once I went to a Tescos Extra that they largely just had twice the space on the shelf for the same number of SKUs.
But, yeah, big supermarkets are rare. The trend has been to "corner shop" style stores, which is basically the supermarkets gaming the planning system ("local amenities, social infrastructure", erk) so they can game the prices (20% markup on same SKUs compared with their own bigger stores not unusual, but this is just another incentive for them to not keep SKUs in every store, as the Frozen Chips Lament supports)
If a different store had the range, I'd go there instead. But each store targeting a slice of the demographic pie has very much the same limited range with a tiny bit of diversity outside of store brands.
It's not that UK supermarkets don't have choice, it's that US supermarkets are spoiled for choice. I mean, I went back home and saw a WALL of bread, and a long aisle where half was just cans of soup! For me, it's not just the difference between 10 different SKUs of peanut butter and 50+, but US stores seem to have much more stock of each SKU, too.
That said, YMMV.
Gah, too bloody right. The supermarkets aggressively target SKU's to demographics, and in the E2 . . E14 area, demos are all over the board. One time this borough qualified as one of the lowest per capitas in the EU, yeah, riiight, it's a cash economy, which isn't obviously getting measured, off the back of which Tower Hamlets gained vast supplementary funding which they used to create a hegemenous political enclave.
Oops, off topic there, sorry. For readers not familiar with this territory, you've got a social housing ghetto sandwiched between Canary Wharf and Liverpool Street, our primary banking districts. I use the word ghetto accurately i believe, because the census puts young immigrant families of a single origin at beyond 60% of population, this over a vast area and this group are in one bit of it, a group i assure you is not equally represented in banking or professional services.
Yup, doing the shopping here involves Waitrose at Canary, Tesco Liverpool St, Sainsbury at Stepney Green. Maybe i should make something out of it by doing guided tours at the same time, since that triangle covers half of the biggest district in the country . .
I'm on HN, and we're discussing local frozen chip shortages, and we can't solve them. Ouch!
trivia: local slang for neigborhood in the East End of London has always been "Manor". As in "i'm going to be on yer Manor later, mate". I wonder if this has anything to do with the fact stretches of Victoria Park and elsewhere were, before urbanisation, in fact private Manors, some created by Canal barons, who got land deals like Rail Barons did in the USA. See, that guided shopping tour idea might have something in it . .
I think the Chelsea store opened a few weeks back, as someone from our office stumbled upon it and brought back peanut butter filled pretzels nuggets - which were awesome. Needless to say, once I heard they opened a TJ in the area, I had to stop by and experience it.
The Chelsea store is so much more open with high ceilings compared to the Union Square location. If you live in NYC, I recommend shopping in this location.
TJs has the lowest number of different products in it stores of any major supermarket, plays employees significantly above the industry average ($40-60k; managers can earn 6 figures), gets a far greater $/sq foot return than competitors, and does over $8 billion a year in sales. And pretty much everyone likes them.
Herr Albrecht is a pretty good role model if you ask me.
http://www.guardian.co.uk/business/2010/aug/05/theo-albrecht... http://online.wsj.com/article/SB1000142405274870489500457539...
In Europe ALDI goes hand in hand with all the same complaints attributed to WalMart, often with good reason, but possibly with less scope of impact due to sharper anti-monopoly enforcement.
Actually, on very narrow lines, if you're in America, looking at Europe from a distance, ALDI (AlbrechtDiscount) = WalMart. Even the business names are in the same style :)
I wasn't aware of Trader Joe's (not living in the territory) until this discussion ~ it sounds a very cool place, way beyond the comparatively - by the sounds of things - stiff and terrifyingly expensive up-scale food outlets i see in London. (but then comparing food prices is always going to be a shock between such vastly different scale markets)
I'm actually shocked that they (Trader Joe's) offer a wage you might be able to live on in a major city. That's a model business. Just not sure about the role model thing, as that's so personal.
This is all good, but ~ not checked into this ~ presumably, like ALDI, Trader Joe's is a private company, and so we've little insight into profitability. Anyone got any intel on that? The oddest thing is why a known ruthless operator would do almost the opposite style so thoroughly. I can only put it down to the sibling dynamics where they locked each other out of territories. Hmm, maybe there's a business model in that. 1. Have twins 2. . . .
Aldi is feared in Germany by their suppliers. Once they pressured farmers to sell their milk at such low prices that the farmers went on strike and poured their milk onto the fields instead of selling it.
The working conditions seem to be average for a discounter. Meaning: Not very good but that is to be expected.
So yeah Aldi does put the squeeze on its suppliers (as it should), but the agricultural sector is not the best poster child for that.
http://www.amazon.com/Bare-Essentials-ALDI-Way-Retailing/dp/...
And now it's stuck in your head! ding
The one thing they seem to be lacking is a meat and seafood department. All their meat is shipped in; it's not bad, but it can't compare to Whole Foods. My solution is to get everything at TJ, then stop by Whole Foods to buy a pound of fish and chicken. Best of both worlds...
Kidding aside, I used to live one block away from a Trader Joe's and am sort of over them now. It can be a frustrating place to shop when you just want 'regular stuff', rather than paying the markup for fancy varieties of things. It's very nice to have as a supplement to a normal grocery store though.
Their prepared foods and marinated meats are really pretty good. Their cheese and wine selections are quite good. I found a Petite Syrah I absolutely _love_ there for $3.99. We buy it by the case. Bread is consistently some of the better bread I've found outside of dedicated bakeries here in the US (our bread generally sucks). A glass of wine ($3.99 a bottle), a loaf of bread ($1.99 a baguette lasting a day or two), a bit of low fat goat's milk brie ($2.99 a round lasting several days), a bit of sliced salami ($2.99 a for 2 salami's lasting 4 meals), some dried almonds ($3.00 for a pack of 20 mini bags), and I have very tasty no-cook meals for a day or two.
If you're in Silicon Valley (or anywhere that has a Joe's), and trying to eat well on a budget visit Trader Joe's.
I go there and there are about fives things I want and which are good deal. Then there are ten things I'd buy if I was in a hurry and are only a good deal if want I to pay premium for processed stuff. I get a good deal there but I suspect most customers throw down a lot of money for convenience that isn't cheap or healthy - but I suppose that's what they want.
I am impressed.
https://fortune.com/2010/08/23/inside-the-secret-world-of-tr...