Success does leave clues and Trader Joe’s co-founder Doug Rauch has left many clues that food retailers should be paying close attention according to Tacoma, WA based Foodservice Solutions® Grocerant Guru®, Steven Johnson who said “give the consumer what they want and they will be back.”
Doug Rauch, co-founder and former president of Trader Joe’s, there is one question that is most important for them retailers to ask “Why do we exist?” Rauch was a guest speaker this spring at the sixth-annual Foodservice Summit.
Trader Joes was originally called Pronto Markets, the business grew from a small, nine-store chain in Southern California into today’s nationally acclaimed retail success story with more than 340 stores in 30 states. Rauch, who spent 31 years with Trader Joe’s (the last 14 years as president), developed the company’s prized buying philosophy, created its unique private-label food program, and wrote and executed the business plan for expanding Trader Joe’s nationally.
Here are some of this insights and success clues:
1. Trader Joe's, which actually got its start in Southern California as a convenience store chain; a “knockoff of 7-Eleven,” he recalled. 7-Eleven was operating only in Texas at the time.
2. “You innovate or you die,” The marketplace is continuously changing. There’s continuous disruption. … It’s critical that together you and your team are thinking, ‘What are we doing better today than we were yesterday?’”
When it comes to innovation insights, Rauch said there are three benchmarks:
: Can it be done?
: Can you do it and make money doing it?
: Does anyone want it?
Rauch talked about the many steps that they had taken in “reinventing Trader Joe’s” from a c-store chain into its current model. Two major areas of reinvention, though, were buying philosophy and customer experience.
Rauch continued “On the buying side, Trader Joe’s started actively buying rather than passively; began buying direct; limited its SKUs; and redefined value to mean high quality, low price. On the customer experience side, the company began telling its story with humor; employing an artist in every store to create unique, playful signage; and doing in-store product demonstrations.
Rauch explained “This isn’t about selling product. It’s about serving human beings. Caring about your customers like they’re your honored guests; like you’ve invited them into your home…“You have to have congruence between what you say and what you do,” This is a great point.
He followed up with “If you want to be known for fresh, are you leading with that in your ads? Are you communicating that to customers?” He pointed to international sandwich shop chain Pret a Manger and its brand promise of “Made Today, Gone Today” as an example of achieving congruence.
Maybe the most important lesson from Rauch came when he acknowledged that in any reinvention, there will be failures along the way. In fact, he said he’s learned in business to “fail on purpose.” He urged the retailers at the Foodservice Summit to experiment around their purpose, and when there are failures, to share them with the whole organization so that others in the company won’t repeat them.
Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®. Since 1991 www.FoodserviceSolutions.us of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869