As a native of Pasadena, I have a special place in my heart for Trader Joe’s. The specialty grocer opened its first store in this California town in 1967.
Over time, America has embraced Trader Joe’s. Its stores sell an estimated $1,750 in merchandise per square foot, double that of Whole Foods. And this ridiculously successful, kid-friendly neighborhood market with a cult following is 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 that has a need.
Coulombe opened the first Trader Joe’s store to serve the overeducated and underpaid population of Pasadena—the journalists, teachers, museum curators and musicians. He chose this group because its influence is disproportionate to its salaries, and the members love to share their discoveries with friends.
Furthermore, Coulombe noted a strong correlation between alcohol consumption and education level, according to the travel and dining publication Gayote.
He understood that these folks liked to drink and 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, according to Los Angeles magazine. In the 1960s, Trader Joe’s sold literally 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, Gayote reported. 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—what many people refer to as “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 Quinoa.
According to a Fortune article, a former senior executive revealed that the store’s biggest research and development expense is travel so it can find these taste-making (and tasty) foods. It’s through this sense of urgency and dedication to innovation that the company continues to captivate its audience.
And it has worked. Today, Trader Joe’s is known for its value-wine selection, “make your own six pack” craft beers and house-brand spirits, not to mention its house-label, limited run food. True devotees can tell you their favorite 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, but now it’s amplified by an army of social media-savvy Trader Joe’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.
Rosalie Morton is an account executive at CRT/tanaka. A version of this story first appeared on the Buzz Bin blog.