Trader Joe’s founder, Joe Coulombe wrote the book to share lessons he learned in business. Most of the lessons are specific to food retailing but many apply to any entrepreneurial venture.

Decades before COVID-19 caused many small businesses to consider policies of no longer accepting cash, Joe Coulombe thought about instituting a ‘credit card only’ rule at his Trader Joe’s stores.

It was 1988 and, at the time, Coulombe had ongoing problems with bad checks. A policy of accepting only credit cards would have eliminated that problem along with the systems used to avoid bad checks. In addition, it would have ended all the trips to the bank for cash, it would have simplified cash accounting at the store level and it would have ended most bank statement reconciliation work.

In the end, Coulombe said he “chickened out” due to a concern for how the policy would be perceived by customers in new markets such as Northern California. Despite chickening out, he called the idea “an exercise in constitutional contempt for doing business as usual.”

It’s that sort of forward thinking, along with the contempt for “business as usual,” that helped Coulombe build and successfully grow his Trader Joe stores over a 21-year run from 1967 to 1988 when he retired. He sprinkles plenty of similar anecdotes in the recently published memoir entitled “Becoming Trader Joe: How I Did Business My Way & Still Beat the Big Guys.”

Coulombe, who died in February 2020 at the age of 89, initially ran a chain of convenience stores in Southern California before going into the grocery business. He was known for his brash management style and even answered his own phone when he was CEO of Trader Joe’s. He had a deep love of reading and enjoyed traveling to Europe to scout for new products.

The posthumously published memoir has plenty of advice for would-be grocers and retailers. Here are just a few of the ideas Coulombe imparted:

Know that You Are a ‘Retailer’
The most important “mental construct” Coulombe wanted to impart to would-be retailers is this: “The fundamental job of a retailer is to buy goods whole, cut them into pieces and sell the pieces to the ultimate consumers.”

Most retailers have no idea of the formal meaning of the word, Coulombe wrote. In practical terms, this often meant not allowing outside suppliers or salespeople to do any work inside the store (their merchandise was already cut into pieces). On a more basic level, it meant the cheese departments at Trader Joe’s would literally take whole wheels of cheese and cut them into pieces.

This helped Trader Joe’s maintain profit margins. It also helped the store differentiate itself from the competition by having a truly unique selection of goods.

Working With Vendors
Coulombe spent a good part of the book talking about vendors. It may seem somewhat surprising, but he held them in great respect.

“They [vendors] should not be treated as adversaries. … Many of our best product ideas and special buying opportunities came from vendors,” he wrote.

About Buyers
On the other side of the table, Coulombe wanted his Trader Joe buyers to be very product-knowledgeable. He also wanted little-to-no “layers” in a buyer department’s organizational chart. In other words, their jobs should be free from distractions, and they should require very little oversight.

“Buyers should buy, and be free of paperwork and routine reordering,” he wrote. “Buyers need to be deeply knowledgeable about manufacturing, packaging, shipping, etc. but these aspects of vertical interference should be handled by assistants.”

Never Meet or Beat Competitor Prices
Trader Joe’s steered clear of “price comparison advertising” while Coulombe ran the company. It was a practice he considered to be “intellectually feeble.”

He went on to say: “You should price a product where you think it should be in terms of the market and stick with it.”

Along those same lines, he never had a “closeout” sale at Trader Joe’s.

“What a terrible practice,” Coulombe wrote. “You train your customers to wait for the ‘sale.’ Any product that failed to sell [at Trader Joe’s] was given to charity.”

Being Willing to Drop Products
Over the years, Coulombe made several tough calls to drop products he didn’t feel good about. It was usually because the product would never become truly “outstanding” inside a Trader Joe’s store or because the product drew complaints from some customers.

In the latter category, Coulombe described the effect of dropping cigarettes from his stores. He said it caused a furor among come customers but, overall, the public viewed it as a positive step. As an added bonus, burglaries at the stores stopped cold. Apparently, cigarettes had been the target of choice for thieves.

Preventing Theft
Speaking of burglaries, Coulombe mentioned crime several times in the book. If anything, he seemed to want to impart the idea that it pays to be hyper vigilant when it came to theft in the grocery business. At one point, he mentions that he spent almost half his time dealing with crime in one way or another.

And, it wasn’t just thieves stealing cigarettes that concerned Coulombe. He worried about internal theft as well, whether it be a cashier who stole items directly from checkout line or truckers who pinched boxes of merchandise that went undelivered or even real estate department employees who may be unscrupulous in their leases.

“There is no such thing as a low-paid, and honest, employee in charge of leasing,” Coulombe wrote. “I’ve seen some real horror stories.”

Employee theft was the greatest dollar problem, he wrote, but robberies were the most traumatic. Trader Joe’s averaged one robbery every three months back in those days and while there were some precautions that could be taken to minimize the losses, there was nothing to stop them from happening.

Coulombe’s Thoughts On Home Delivery
While he did lots of reminiscing throughout the book, Coulombe did address some current issues confronting grocers. In particular, he talked about internet retailing and home delivery. In a word, Coulombe doesn’t think home delivery will invade food retailing because it involves four different temperatures: dry grocery, refrigerated products, frozen products and ice cream.

“Significant advanced will have to be created in order to solve this problem,” he wrote. “It will impact, however, non-foods sold by supermarkets.”

Other Books Recommended by Coulombe
As mentioned earlier, Coulombe had a deep love of reading. He quotes from several books in his memoir but there was one book that stood out: The Guns of August by Barbara Tuchman. Coulombe called this account of the first 90 days of World War I the best book on management and, especially mismanagement – that he ever read.

“The most basic conclusion I drew from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you’ll probably succeed,” Coulombe wrote. “Tenacity is as important as brilliance.”

Spoken like a true entrepreneur.

Interested in learning more about the book? Find it hear on Amazon: Becoming Trader Joe: How I Did Business My Way & Still Beat the Big Guys

Want to learn about other ways to improve grocery store operations? Contact us today to learn how a grocery point of sale system can improve sales, labor management and marketing.

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