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

The answer is to design a store that has no competition. That’s why Mac the Knife should not carry any SKU in which it is not outstanding.

We fundamentally changed the point of view of the business from customer-oriented to buyer-oriented. I put our buyers in charge of the company.

One of the most important Supply Side constraints is the stamina of the Chief Executive Officer. I haven’t listed it above, but it’s there. And the sort of thing that wore down this CEO was year after year of employee theft.

It didn’t help that Sol Price had sold FedMart the previous year to another German capitalist, a sale that ended in an explosive exit by Sol, and the subsequent collapse of FedMart.

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.

I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn his plans, but that his own troops would not.

This is one of the most important things I can impart: in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations.

We really didn’t pay more per hour than union scale, but we gave people hours. Because union scale is so high, the supermarkets are very stingy with hours and will do anything to avoid paying overtime. I simply built overtime into the system: everyone was to work a five day, forty-eight-hour week. Actually, because of fluctuations in the business,

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.

We never had “closeout” sales. What a terrible practice! You train your customers to wait for the “sale.” Any product that failed to sell was given to charity. We were developing new products all the time; sometimes they didn’t pan out. So we gave them away. I do not believe in “market testing” new products.