Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys

We tried to stay out of all functions that were not central to our primary job in society: namely, buying and selling merchandise.

One of my grand objectives in Five Year Plan ’77 was to eliminate all outsiders from our stores and to halt all direct store deliveries. This was one of the most radical features of Trader Joe’s, vis-a-vis the rest of the grocery industry.

But my preference is to have a few stores, as far apart as possible, and to make them as high volume as possible. With Mac the Knife we could draw people from twenty-five to fifty miles away. When we opened Ventura in 1983, 30 percent of our business came from Santa Barbara. Sales per store, sales per square foot: those are the measures I look at.

1970. It deliberately copied the physical layout of Consumer Reports: the 8.5” x 11” size,

On the left side of the ledger is the business in terms of how its customers see it: I call this the Demand Side. On the right side of the ledger are the factors that limit or determine the retailer’s ability to satisfy those demands: the Supply Side.

David Ogilvy’s Confessions of an Advertising Man. The numbered paragraphs, the boxes drawn around the articles, are all Ogilvy’s ideas. I still think his books are the best on advertising that I’ve ever read and I recommend them.

Yet it cuts a wide swath in food retailing thanks to Intensive Buying, which is what the 1977 Five Year Plan boiled down to, which I formally named by the end of that plan, and which stressed mobility, irregularity, and adaptability.

how we built a successful business on high wages.

My cash policy was this: we would always have cash at least equal to two weeks’ sales. (I think this is called an “heuristic” decision in business school.) Any month we didn’t meet the test, I would borrow from Bank of America on a five-year term loan ostensibly secured by store fixtures. But I wasn’t borrowing for fixtures and inventory, as I took