Eastern Trader Route : Joe’s Heads to Other Coast With Its Natural Recipe for Success


Unused to even faint signs of civility from store personnel, suburban New Yorkers sometimes mistake the heartiness of Trader Joe’s checkout clerks for sarcasm.

“They look at you like, ‘What’s the catch?’ ” says Carl Wenzinger, an effervescent, goateed Culver City transplant who is riding the first wave of Trader Joe’s assault on the East Coast.

Wenzinger, for his part, finds it hard to break through the Yankee reserve of some of his new customers. “They’ve kind of got the ‘droid thing going,” he says.

Cultural differences aside, the South Pasadena-based grocery chain appears well on its way to making itself as much a fixture on the Atlantic seaboard as it is on the Pacific.


Privately owned Trader Joe’s keeps its books to itself, and Chief Executive John Shields says only that East Coast sales to date are “ahead of plan.” But Shields does not dispute an estimate that the 91-store mango chutney pasta, curried veggie burger and Classic Mt. Baldy Trail Mix juggernaut is on track to reach annual sales of $1 billion, probably next year.

The Scarsdale store, which opened eight weeks ago, is the latest of six pushpins in Trader Joe’s strategic map of the Northeast. Three other new outlets are in Greater Boston and two are on Long Island. Ritzy Westport and Darien, Conn., are next in line, and then New Jersey, as the retailer spreads its gospel of upscale food at down-market prices.

It expects to have 15 East Coast locations by the end of the year. At the stores in the East, the signs all read, “Trader Joe’s--A Unique Grocery Store,” adding a description that would be totally unnecessary in Los Angeles.

For its first expansion outside the West, Trader Joe’s has kept its successful formula intact, offering the same selection of all-natural, gourmet edibles, outfitting the sales staff in the familiar Hawaiian shirts and using an all-Californian managerial crew to nurture the stores’ trademark casual ambience.


The choice of locations, however, is anything but casual.

Leafy Scarsdale, of slate-roofed Tudor homes and carriage houses, is the health-conscious village where cardiologist and bon vivant Herman Tarnower developed his famous Scarsdale Diet--until the spurned former headmistress of an exclusive girls school shot him to death in a jealous rage.

It’s also the bedroom community from which, before heading west to invent Las Vegas, Benjamin “Bugsy” Siegel commuted to his job in New York City at the firm of Murder Inc.

More to the point, Scarsdale bubbled to the top of two enviable categories in the 1990 U.S. Census, with an average household income of $121,275 and with 72% of its adult population holding at least a bachelor’s degree. The Internet site for Scarsdale High School (average 1995 SAT scores: 610 math, 521 verbal) directs kids to a cyberspace address where they can bone up on fractal geometry.

Shields, who took over as chief executive in 1988 from his Stanford University roommate and Trader Joe’s founder Joseph H. Coulombe, insists that education counts more than income in targeting new locations.

“A schoolteacher could be our best customer,” he says.

Chicago-based food consultant Neil Stern agrees, saying that Trader Joe’s “needs people educated enough to understand what they’re offering. A lot of people just don’t get it.”

Carol Perlmutter gets it. A registered dietitian, she detours through Scarsdale to stop at Trader Joe’s on her way home from work in the Bronx.


“They comply with all the labeling laws!” Perlmutter marvels on a recent shopping trip as she scans the ingredients on a ready-made Caesar salad in the refrigerator compartment. “It’s important because some people can’t eat salt or they want to know the protein content.”

Perlmutter, who learned about Trader Joe’s from relatives in Sherman Oaks and Laguna Niguel, is relieved that she won’t have to drag bags full of Trader Joe’s goodies home on the airplane anymore after family visits.

The loyalty of the California emigre community is certainly one factor in the chain’s strong East Coast launch. Maria Iacobo, for example, who returned to the Boston area in 1995 after five years in Los Angeles, was waiting in the parking lot of the Cambridge, Mass., Trader Joe’s last June when the doors first opened.

The company is also adding some marketing oomph by distributing its campy “Fearless Flyer” brochure and running radio ads in Boston--but not in New York. “Too expensive,” Shields says.

Trader Joe’s has had to make a few modifications during the expansion. New York state laws prevent it from selling wine or liquor, so the crates of cheap wine that can take up a third of the floor space in the California stores are notably absent in the 8,500-square-foot Scarsdale location. The store can sell beer, so the signature microbrewery labels are much in evidence.

Also, there is strong demand for more kosher items, which Shields says Trader Joe’s buyers are hunting down.

Shields says the Eastern stores from now on will hire local managers too, instead of exporting Californians.

Although you can’t buy stock in Trader Joe’s--the chain is owned outright by Germany’s wealthy Albrecht family--analysts pay attention to the company because it competes against such publicly traded grocers as Whole Foods Market Inc., parent of Mrs. Gooch’s and the Bread & Circus stores around Boston.


Trader Joe’s stores are typically 8,000 to 10,000 square feet, with yearly sales of $8 million to $10 million--another figure Shields doesn’t quibble with. The $1,000-per-square-foot annual sales number--an obscure but key industry barometer--is stunning. “At least double what any California supermarket does,” says consultant Stern.

The profit margins are probably much higher as well, he adds, since Trader Joe’s stocks mainly its own private-label products and thus avoids paying marketing overhead to Procter & Gamble or Kraft.

If the formula is so sure-fire, where are the clones? Why doesn’t Safeway or Ralph’s do the same thing? The problem for would-be imitators, analysts say, is that Trader Joe’s business isn’t food at all--it’s fashion.

“There really only is one Trader Joe’s,” Stern says. “They buy a lot of close-outs, they buy wine and spirits and unusual items in small batches, and then they romance the hell out of them in their brochures.”