Trader Joe's Keeps Quiet On Secrets Of Success

The cover of the current issue of Fortune Magazine features a company that maintains cult-like secrecy. Beth Kowitt, who spent two months investigating the quirky but very successful grocery chain Trader Joe's, talks to Renee Montagne about what she's learned. While most grocery stores emphasize quantity, Trader Joe's stocks just a few carefully selected varieties of each item — usually under its own label.

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LINDA WERTHEIMER, host:

This is MORNING EDITION from NPR News. I'm Linda Wertheimer.

RENEE MONTAGNE, host:

And I'm Renee Montagne.

The cover of the current issue of Fortune magazine features a company that maintains cult-like secrecy, an organization whose executives never speak to the press - virtually - so secretive it doesn't even have its name or logo printed on its company headquarters.

We're talking here about Trader Joe's. That's the quirky grocery store where the employees wear Hawaiian shirts, and many of its products appear and disappear - seemingly on a whim.

The store is known for high-quality food, cheaply priced. And even those who don't have a Trader Joe's in town might have heard of its famous Two Buck Chuck - a decent bottle of wine for just $2. The store has inspired such loyalty in its customers that one posted a YouTube tribute that's been viewed over half a million times.

(Soundbite of music)

Unidentified Man: (Singing) It's booze. It's nuts. It's pills. It's peas. It's the peanut butter made of sunflower seeds. It's a box of soup. It's a bell from a boat. It's yogurt made from the milk of a goat. A bottle of juice with a crazy name. Ten kinds of soy milk that all taste the same. A $2wine that tastes like 4. All your favorite stuff they don't have anymore.

MONTAGNE: Fortune's Beth Kowitt joins us now to tell us about what she found, in reporting on Trader Joe's.

Good morning.

Ms. BETH KOWITT (Fortune magazine): Hi. How are you?

MONTAGNE: Fine, thanks. And I guess we can tell from that little clip that there's a certain jokey affection for Trader Joe's, from those who shop there. But in fact, as you report, this is a very successful company with sales last year at roughly $8 billion.

Ms. KOWITT: That's right. And I think that's one of the secrets behind the company, that they have this neighborhood store vibe, yet they are actually quite large. And you know, in the story we note that they're bigger than Bed, Bath & Beyond, even.

MONTAGNE: How can the store afford to sell this high quality of food for such a low cost?

Ms. KOWITT: Well, it has a very streamlined distribution center, which takes out a lot of the costs. But they also - they buy directly from producers whenever possible, which takes out a lot of costs. So there are no middlemen involved. So they're not going through distributors. Also, because they're buying in such large volume, they can secure large discounts from producers.

MONTAGNE: You know, one thing about Trader Joe's, for people who've shopped there a long time, is that there was once - there was a Joe. Tell us what the story is: who started it, and who owns it now.

Ms. KOWITT: Trader Joe's was founded by Joe Coulombe, who is still alive. He's 80. He had the idea that this growing class of educated consumers, that was well-traveled, was going to want things that reminded them of being abroad. But Joe hasn't had anything to do with the business in about two decades. He sold to the Albrecht family of Aldi Nord, which is a supermarket empire. They're German. And the company is now held in a family trust.

MONTAGNE: You tried to get Trader Joe's to cooperate on your story. And your story's very positive. But Trader Joe's declined. NPR called them to get their take on your story, and a spokesman politely declined. What's with all the secrecy?

Ms. KOWITT: Part of that really does have to do with the ties to the Albrecht family. They are extremely private. And that really has trickled down, you know, into the Trader Joe's culture.

Also, the grocery business is highly competitive. And they're a privately held company. They don't have to give away any of their secrets. So part of it is that they don't.

They don't want to talk about, you know, who's supplying for them. They don't want to talk about their streamlined distribution center. They don't really want their consumer to know Stacey's, which is owned by PepsiCo Frito-Lay, is making their pita chips. It's just - they would rather you think that, you know, it's Trader Joe's brand.

MONTAGNE: So about that YouTube song: What do you make of that? I mean, what does that say about the whole Trader Joe's experience?

Ms. KOWITT: Yeah. I think they really don't do much advertising, and that's partly because their customers are, you know, their best ambassadors of the brand. They tell their friends to go shop here. They tell them about their favorite products. And people really have an obsession with the store.

I think that's going to be the big challenge for them going forward. You know, they'll hit 350 stores soon. They're going into Omaha. And I think, really, they're going to have to work to keep that quirky, off-beat vibe as they get bigger.

MONTAGNE: Beth Kowitt is a reporter for Fortune magazine, which features on its cover Trader Joe's.

Thanks very much.

Ms. KOWITT: Thanks.

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