To determine what products to sell in his stores when he started his business half a century ago, Joe Coulombe applied what he calls the four tests: âhigh value per cubic inch; high consumption rate; easy to manipulate ; and something in which we could be exceptional in terms of price or assortment. This is how Trader Joe’s ended up selling bullets.
Granted, that was California in the 1960s, a time before gun control laws took hold in the state. Following the assassination of Robert F. Kennedy, however, and a host of regulations restricting the sale of ammunition, Coulombe decided to remove bullets from its shelves. Besides, there were other deals to be made: wine, maple syrup, even brie. The key was adaptability.
In fact, there are many keys to building a successful business, and Coulombe shares them all in âBecoming Trader Joeâ, a posthumous memoir and column on how to be successful in business. (Coulombe died last year at the age of 89.) Among other essentials: Be well informed (ie read the fine print in rental agreements); offer generous compensation to workers to reduce turnover (and discourage unionization); and beware of opening a store with access to a freeway. “Heists are more common in stores closest to freeway ramps because it is easier to escape.”
From 1967 to 1988 Coulombe ran Trader Joe’s, and ran it beautifully. Although he sold the business to the Albrecht family (of Aldi grocery fame) in 1979, it still bears the imprint of his original idea. “We went from gill leverage at the start to zero leverage in 1975,” he writes, adding that “we never lost money in a year, and every year was more profitable. than the previous year despite the sharp fluctuations in income tax. rates. ” Given such a track record, any budding entrepreneur would do well to follow his advice, starting with having a clear goal.
âThe basic job of a retailer is to buy whole products, cut them into pieces and sell the pieces to end consumers,â Coulombe writes. âThis is the most important mental construct I can pass on to those of you who want to get into retail. Of course, it’s not that simple: he describes the complexity of interstate commerce laws, the restrictions of the Fair Labor Standards Act, the hardships of tax audits, and the problems he had with the United Farms. Workers: Selling merchandise “full of piss and pesticides” has distracted attention from this important mental construct.