Joe Coulombe

"But I was reading The Guns of August, by Barbara W. Tuchman, with its implicit concept of multiple solutions to non-convex problems."

"Carry individual items as opposed to whole lines."

"The willingness to do without any given product is one of the cornerstones of Trader Joe’s merchandising philosophy."

"Twenty-eight years later, the Economist of November 10, 1990, put it this way: . . . non-convex problems . . . are puzzles in which there may be several good but not ideal answers which classical search techniques may wrongly identify as the best one. I concluded that I didn’t have to find an optimum solution to Pronto’s difficulties, just a reasonable one. Trying to find an optimum solution in business is a waste of time: the factors in the equation are changing all the time. But you’ve got to have something to hang your hat on. The one core value that I chose was our high compensation policies, which I had put in place from the very start in 1958."

"That’s something to be remembered in this distribution discussion: we were not dealing with a static problem. The company was growing 20 percent per year (doubling every 3.6 years). And the more efficacious the distribution program became, the more our sales increased."

"where I thought we should go: “We want continuous products. Any sane person does. The trick is to have continuous products which are profitable without creating a high-price image.” To create such products, they needed to be differentiated at least in order to avoid direct price comparison. Of course there was no price comparison for almond butter (it was our exclusive) except vs. peanut butter. Products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. I was willing to continue to indulge in"

"The fundamental “chunk” of Trader Joe’s is the individual store with its highly paid Captain and staff: people who are capable of exercising discretion. I admire Nordstrom’s fundamental instruction to its employees: use your best judgment."

"The Brooks Brothers Strategy After an especially awful experience with the promotion of some branded frozen food in 1987, I began to lose my zest for that game. I took a survey of the 1,500 SKUs in the stores and realized that, excluding wines, about 80 percent of them were continuous in supply. They were mostly private labeled, including breads and Alta Dena dairy products. They were differentiated by their qualities, yes, but from chocolate chip cookies to black tiger shrimp they were more or less continuous in supply. They could be replicated by our competitors, but our competitors either weren’t aware of their volume potential (maple syrup) or were too engaged in other competitive battles to try to match us. Jarlsberg was a good example. The supermarkets knew perfectly well the sales potential of Jarlsberg if they matched our price, which they did once in a blue moon for a weekend, but they were too tied up in their own knots to follow us. In November 1987, I outlined to the buyers where I thought we should go: “We want continuous products. Any sane person does. The trick is to have continuous products which are profitable without creating a high-price image.” To create such products, they needed to be differentiated at least in order to avoid direct price comparison. Of course there was no price comparison for almond butter (it was our exclusive) except vs. peanut butter. Products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. I was willing to continue to indulge in the spectacular “closeout” sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label. In other words, I wanted those branded promotions to be as big in absolute dollars but a smaller percentage of our sales."

"No Place for Secrets People like secrets, because secrets bring power. Consider the priests of ancient Greece who kept the secret of pi. This is one reason I never had a secretary. When I found “executive secretaries” in the various companies I took over after leaving Trader Joe’s, I got rid of them. They hold too many secrets and are actively interested in augmenting their inventory."

"In a lecture at the University of Southern California Business School, I talked about this. A young woman raised her hand: “But how could you afford to pay so much more than your competition?” The answer, of course, is that good people pay by their extra productivity. You can’t afford to have cheap employees."

"The Most Important Strategic Decision Was to Become a Genuine Retailer The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers. This is the most important mental construct I can impart to those of you who want to enter retailing. Most “retailers” have no idea of the formal meaning of the word. Time and again I had to remind myself just what my role in society was supposed to be. Many of the policy decisions for a retailer boil down to this: How closely should we stick to the fundamental retailing job? “Retail” comes from a medieval French verb, retailer, which means “to cut into pieces.” “Tailor” comes from the same verb. The fact is that most so-called retailers don’t want to face up to their basic job. In Pronto Markets we did everything we could to avoid retailing. We tried to shift the burden to suppliers, buying prepackaged goods, hopefully pre-price-marked (potato chips, bread, cupcakes, magazines, paperback books) so we had no role in the pricing decision. The goods were ordered, displayed, and returned by outside salespeople. To this day, supermarkets fight with the retail clerks’ union to expand their right to let core store work be done by outsiders. Whole Earth Harry’s moves into wine and health foods had taken us quite a distance into genuine retailing. In our cheese departments we were literally taking whole wheels and cutting them into pieces. I took this as an analogy for what we should do with everything we sold. Getting rid of all outside salespeople was corollary to the programs that would unfold during the next five years. In Mac the Knife, no outsiders of any sort were permitted in the store. All the work was done by employees. The closest thing to it that I see these days is Costco, which shares many features with Trader Joe’s."

"At that point, in February 1966, I wrote what I call a white paper, something that I have tried to do at every important turn of events. I started with the founding of Pronto Markets. In a white paper you try to write down everything you plan to do, and the reason why you think you should do it. That way, when things don’t work out, you can’t play the role of a Soviet historian and airbrush history. The other important use of a white paper is to circulate it to the troops, to engage their support and solicit their ideas."

"Summary As the private label program grew, its growth was given additional stimulus by a hysteresis or feedback loop among the private label products. Confidence in one product led to purchases of another. As you will find in the next chapter, From “Discrete to Indiscretions,” I wound up wishing we sold nothing else, the “Brooks Bros.” strategy. But that was with the value of hindsight in 1987, after having built the Trader Joe’s brand for twenty years."

"Letting Off Steam Equally important was our practice of giving every full-time employee an interview every six months. At Stanford I’d been taught that employees never organize because of money: they organize because of un-listened-to grievances. We set up a program under which each employee (including some part-timers) was interviewed, not by the immediate superior, the store manager, but by the manager’s superior. The principal purpose of this program was to vent grievances and address them where possible. And I think this program was as important as pay in keeping employees with us."