Becoming Trader Joe

Coulombe founded Trader Joe's and ran it from 1967 to 1989. He wrote this memoir in his late eighties, and it is unusually specific about the reasoning behind each decision rather than about the story.

The strategy began with a demographic observation. Coulombe identified a customer he described as overeducated and underpaid, produced in large numbers by the expansion of American higher education and by the return of Peace Corps volunteers and travellers with acquired tastes. These people wanted interesting food and wine but had limited money. He built a store for them rather than for the general grocery shopper.

The operating decisions follow. He carried a small number of items, each selected and repeatedly reviewed, and removed anything that did not sell well enough to justify its shelf space. He bought direct from producers, avoiding brokers and distributors, and used private label so that price comparison was impossible and so that he controlled specification. He exploited regulatory arbitrage where it existed, most importantly in wine, where California law and the Fair Trade repeal let him price aggressively. He paid full-time employees well above supermarket wages, targeting median household income for the region, on the argument that turnover and theft cost more than wages. He kept stores small and inexpensive and did not advertise conventionally, using the Fearless Flyer newsletter instead.

The book is candid about failures and about decisions that were accidents. It stops at his 1989 departure and does not cover the Aldi Nord ownership or the chain's national expansion. It is a single founder's account with no independent verification, and the demographic strategy he describes was specific to California in the 1960s and 1970s, so the transferable content is the method of reasoning rather than the conclusions.