Joe Coulombe, owner of a convenience store in Los Angeles, decided in 1967 to open a chain of grocery stores to attract a small but growing number of well-educated, well-traveled consumers who had been ignored by mainstream supermarkets.
Coulomb realized that international tourism was about to explode with the introduction of the new Boeing 747. For the name of his new store, Coulomb settled on Trader Joe’s to evoke exotic imagery of the South Seas. The name was inspired by Trader Vic’s, a popular Tiki Bar restaurant in California.
But the business caught on, and in 1967 the first Trader Joe’s store opened in Pasadena, California. The location was ideal for his new target client, surrounded by college campuses, a hospital, and major engineering firms.
The first Trader Joe’s store was decorated in a nautical theme with nautical artifacts including a ship’s bell, a fishing net, and half a rowboat. The front desk was an island with a roof. The staff wore Polynesian shirts and Bermuda shorts. The manager was called the captain, and the assistant was called the first mate. And melodic Hawaiian music played from the speakers.
But the merchandise was nothing like what you find today at Trader Joe’s.
The original store had a typical range of everyday products, as well as discount magazines, books, socks and hosiery, records, and photo manipulation. However, the biggest benefit was the choice of alcohol.
California has fair trade alcohol laws, so producers set minimum prices below which it was illegal. Since Coulombe couldn’t compete with low prices, he realized he had to offer a wide range of products to stand out.
The first Trader Joe’s boasted the world’s largest range of alcohol – 100 brands of whiskey, 50 brands of bourbon and gin, and 14 types of tequila.
Coulombe eventually found a loophole in California’s fair trade laws that allowed his shop to import high-quality French wine and sell it at lower prices than competitors, which helped him attract wine connoisseurs. (It wasn’t until years later that Trader Joe’s released its famous $1.99 Charles Shaw wine known as “Two-Buck Chuck”.)
Passion for health
By the early 1970s, Coulomb seized on the growing health food movement, believing it would appeal to the same type of clientele who also happened to be wine connoisseurs.
“His grocery marketing ideas came from his wine marketing,” said Benjamin Lorr.
The first Trader Joe product was muesli, then freshly squeezed orange juice, vitamins, nuts, dried foods and cheese were added to it. At one point, Trader Joe’s was the largest importer of brie in the US.
Coulombe immersed himself in healthy eating culture in Berkeley and San Francisco.
“I hired a young hippie woman from UC Santa Cruz to teach us the lingo,” he said.
Brandenburg Brownies and Sir Isaac Newtons
In 1977, Coulombe redesigned Trader Joe’s again, setting it on a path that would be more familiar to today’s customers.
“As we evolved Trader Joe’s, its biggest departure from the norm was not its size or décor,” Coulomb said. “It was our commitment to product knowledge, which was completely foreign to the culture of mass commerce, and our rejection of branded goods.”
The company has even positioned its own branding and branding to connect with well-educated customers, Coulomb says, such as Brandenburg Brownies and Sir Issac Newtons.
Building strong private label offerings that can compete with national brands will be one of his achievements in the supermarket industry, Lorr says. “It changed the balance in the grocery industry. All of a sudden, grocers have new opportunities.”
But Coulomb resisted opening dozens of new stores.
The few stores that Coulomb did open were in Southern California that fit the demographic he was looking for—teachers, musicians, journalists, and other professionals.
Aldi executives traveled from Germany to visit Trader Joe’s about once a year, but they kept a low profile in overseeing the growing network.
By the time Coulomb stepped down as CEO in 1988, Trader Joe’s had 27 stores in California and estimated sales of $150 million.
“My successors at Trader Joe’s have opened a chain of 30 stores across the country, demonstrating remarkable adherence to the core concepts we started with,” Coulomb said in 2010.