Everybody's got a Trader Joe's story, and the original one belongs to the original Joe, Joe Coulombe, the founder, a San Diego native and Stanford MBA. He parted company with Trader Joe's more than 20 years ago, but he has hardly been idle -- sitting on boards, advising companies, speaking at South Pasadena's Rotary Club, wine touring in France and painting pictures of relatives and friends (he's holding a self-portrait with grandchild.)
Trader Joe's has become something of a lifestyle feature here, like the weather. It's hard to imagine Southern California without it. How did it start, and why?
I had opened a chain called Pronto markets. I got financing from Adohr Milk Farms, but in late 1965, Adohr was bought by 7-Eleven, which meant the 800-pound gorilla of convenience stores was not only coming to town but now owned my source of capital. So I had to do something different. Scientific American had a story that of all people qualified to go to college, 60% were going. I felt this newly educated -- not smarter but better-educated -- class of people would want something different, and that was the genesis of Trader Joe's.
All Trader Joe's were located near centers of learning. Pasadena, where I opened the first one, was because Pasadena is the epitome of a well-educated town. I reframed this: Trader Joe's is for overeducated and underpaid people, for all the classical musicians, museum curators, journalists -- that's why we've always had good press, frankly!
I can't think of Trader Joe's and 7-Eleven as competitors. It's like Twinkies versus tofu.
That was true of Pronto Markets too. Pronto was the first drugstore to sell health and beauty aids, to sell paperback books, to promote photo finishing. It was a big deal. We tried a lot of things.
And you sold ammunition for a while!
That's right, until Robert Kennedy got shot and all kinds of new rules came in.
You opened the first Trader Joe's in 1967. What made it different?
The fundamental difference between Trader Joe's and all other retailers is the income level of employees. I said the average full-time employee will make median family income for California. In those days that was about $7,000. Median family income soared, but we stayed with it, and today [Trader Joe's stores pay] whatever it is, $58,000, $59,000. That will vary state by state. And the benefits are rich -- medical plans, extended in recent years to part-time employees.
What I keep telling people [is] forget about the merchandise; it's the quality of the people in the stores. [At Trader Joe's the] tenure is typically 35 years. I call them the roach motels: They check in and they don't check out. Some of the people I hired in the 1960s [are] finally retiring. We also made a real effort to hire women managers. So it's the quality of the people and new ideas. This was not a one-man show.
I will say this: The Pill disrupted my supply of manpower. Once [it] kicked in, there weren't so many forced marriages where the guy had to go to work!
You used scarcity as a marketing tool; some item may be there for a while, but you can't count on it being there forever, like items in grocery stores.
I learned that lesson with vintage wines. There's only so much 1966 Lafite Rothschild. So we deliberately pursued a policy of discontinuity, as opposed to, say, Coca-Cola, which is in infinite supply. For example, we had the only vintage-dated, field-specific canned corn in existence, and it was the best damned canned corn there was. But there was only so much produced every year, and when you're out, you're out.
Trader Joe's expanded into Northern California before you left the company in 1989. When it went out of state, were you concerned about its maintaining quality?
A lot of things are made possible now by the new electronics, the ability to communicate with distribution centers and vendors. Circa 1982, thanks to my son, who is a Macintosh freak, we had an Apple II to communicate with 13 small bakers. It was a primitive version of what goes on today. Basically all the Western United States is served out of Chino; back East everything is served out of a place near Boston. The more distribution centers you have, the more problems you have, exponentially. The East Coast doesn't have the same products as the West Coast.
There's a Facebook battle in Alabama to get a Trader Joe's. It's become like landing an NFL franchise.