How Trader Joe's Built an Iconic Brand Through Employee Engagement
You already know customer satisfaction is critical to success. But what about employee engagement?
Joe Coulombe started Trader Joe’s out of a nondescript location in Pasadena, California, in 1958. Noting that more Americans were traveling and enjoying the good life, Coulombe created his stores with a tropical theme in a South Seas motif. Little did he know that the chain would grow to more than 500 stores and revolutionize the U.S. food business.
In 1979, a German named Theo Albrecht bought Trader Joe’s with ambitions to grow the chain nationwide. And that’s where this story really begins.
Albrecht’s family is known for its ownership of Aldi, a discount grocery chain with 10,000 stores in 20 countries. Aldi’s format is about scale and low prices, and its stores lack much in the way of branding and identity. So, it’s unusual that the Albrechts would grow Trader Joe’s into one of America’s most trusted brands. It has a cult following because of its quirky products, low prices, and adventurous customer experience.
So how did Trader Joe’s build such a following? At the root of its success is a unique culture. Glassdoor rates Trader Joe’s 70th in the Best Places to Work report in 2018, which is remarkable given the competition: a glut of notable technology companies and consulting firms such as Google and McKinsey.
What’s stunning about the story of Trader Joe’s is that one would think the mother ship (Aldi) would mold the company in its image, but nothing could be further from the truth. These six keys can help you scale a business while maintaining its culture:
1. Get the ownership structure right.
Trader Joe’s has remained privately held. In many cases, chasing cheaper capital in public markets accelerates growth, but with it come compliance and unwanted bureaucracy. For Trader Joe’s, maintaining local control and a steady and reasonable growth rate have been integral to its success.
2. Establish customs and symbols that resonate with employees.
Each Trader Joe’s has a “captain” supported by “mates, merchants, and a crew.” This symbolism carries forward a theme that is engaging, spontaneous, and rich in tradition. Creating customs and symbols provides texture to the employee experience. These themes are also repeatable across the enterprise.
3. Reinforce your culture every day.
Trader Joe’s has seven values that govern employee behavior and are deeply rooted within the daily operations. For example, the value “We are a national chain of neighborhood grocery stores” is evidenced by the autonomy that store managers are given to be part of their community and satisfy local tastes.
Trader Joe’s practices “decentralized command” in which each location has a unique style (including employing local artists to create chalk sketches in the store). Unlike larger chains depending on slotting fees and the influence of big brands, Trader Joe’s stands alone as a merchant focused on the happiness of its customers.
The company translates its values into expectations for employees such as committing to “every customer experience being rewarding, eventful, and fun.” Many companies are realizing the importance of converting values into behaviors, and some are even using them as the basis of performance reviews and feedback loops.
4. Don’t take yourself too seriously.
Famously, Trader Joe’s was a pioneer in the wine category. The company made waves with the brand Charles Shaw, a low-end brand of California wine. While other retailers tried to expand selections and offer more expensive vintages, Trader Joe’s mocked itself with the tag “Two-Buck Chuck.” According to Wikipedia, Trader Joe’s sold 800 million bottles of Charles Shaw between 2002 and 2013. The playfulness in the way Trader Joe’s depicts its products is part of the allure.
5. Be consistent.
Trader Joe’s has had only three CEOs in the past 60 years. One of the company’s values is Kaizen (continuous improvement). While Kaizen is popular in manufacturing environments, it’s unusual for a grocery chain to institute it (I was in this business for 20 years). The proof is in the pudding–literally. The company has high stock conditions and control over pricing, delivering the highest level of satisfaction in the grocery business.
6. Ensure your brand stands for something.
Joe Coulombe once said, “We are not a conventional grocery store. We’re closer to the fashion business than the supermarket business.” This form of showmanship is on display daily as the company provides samples, changes its displays, and provides opportunities for customers to “try something new.” Every holiday season, customers stalk their local store waiting for seasonal items such as sea salt caramels to hit the store.
Naturally, working in a place that is dynamic is a lot more interesting than working in a static showroom.