Apr 25 2012
THE BOOZE BIN
By Rosalie Morton (@rosaliemo)
As a Pasadena, Calif. native, I have a special place in my heart for Trader Joe’s. The very first store is only a few miles from my house. I love the “crew” with their Hawaiian shirts, the friendly neighborhood atmosphere, the sample stations, the amazing pre-packaged salads, the innovative private-label selection, and most of all the low prices and phenomenal wine and beer section. I mean, Trader Joe’s invented the reusable “Save-A-Tree” bag back in 1977. What’s not to love?
And, America loves Trader Joe’s. Its stores sell an estimated $1,750 in merchandise per square foot, double that of Whole Foods. The story gets better… this ridiculously successful, kid-friendly neighborhood market with a cult following was a brand built on booze.
Here are three marketing lessons we can learn from Joe Coulombe, the founder of Trader Joe’s, who created one of the most well-loved markets in America:
Choose a specific audience (and choose wisely) who has a need: Joe Coulombe opened the first Trader Joe’s store to serve overeducated and underpaid population of Pasadena – the journalists, teachers, museum curators and musicians. He chose this group because their influence is disproportionate to their salaries, and they love to share their discoveries with their friends of the same strata. Furthermore, Coulombe noted a strong correlation between alcohol consumption and education level.
He understood that these folks liked to get their drink on, appreciated quality alcohol, but couldn’t afford the really expensive stuff. So, if he provided them with good alcohol at a good price, he knew that not only would they buy it… they would tell their friends to buy it too.
Build loyalty by addressing that need better than ANYONE else: Coulombe stocked the first store with 70 bourbons and 100 scotches. In the 1960s, Trader Joe’s literally sold every California wine available. Coulombe bet on the booze and he bet on value. He set out to prove that you could buy a decent bottle of wine for less than $10, and he built his empire on this notion.
He also secured an old license that leveraged a loophole in the fair trade laws. This license enabled him to act as a wholesaler and develop a private label, which was actually the precursor to the infamous Charles Shaw wine a.k.a. Two Buck Chuck.
Create a sense of urgency and never stop innovating: Once he conquered booze, Coulombe also knew this educated crowd had sophisticated and experimental palates. Trader Joe’s has an urgency to understand what their shoppers want even before they do. The company doesn’t follow trends — it creates them — from Mochi Ice Cream, to Kettle Corn, to Quinoa. According to a Fortune article, a former senior executive revealed that TJ’s biggest research and development expense is travel to find these taste-making foods. It’s through this sense of urgency and dedication to innovation that the company continues to captivate its audience.
By golly, it worked. Today, Trader Joe’s is known not only for its value wine selection, “make your own six pack” loose craft beers and house-brand spirits (Vodka of the Gods, anyone?), but also its incredible top quality, low cost, house-label, limited run food. True TJ’s devotees can tell you their favorite TJ’s product that only comes once a year. For me, it’s the Candy Cane Green Tea at Christmas.
Nearly 50 years since the first store opened, the word-of-mouth continues as well, but now it’s amplified by an army of social media-savvy TJ’s addicts. In fact, Trader Joe’s wine section has inspired a series of spin-off blogs, TJ’s Wine Notes, Trader Joe’s Wine Compendium, and TJ’s Wine List to name a few.
So wave your Fearless Flyer and raise a glass of Two Buck Chuck to Joe Coulombe to thank him for a remarkable lesson in Marketing 101 and for bringing us Trader Joe’s.
Annnd… I’ll keep driving 20 minutes to the TJs in Short Pump to do my grocery shopping.