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:
Feasibility: Can it be done?
Viable: Can you do it and make money doing
it?
Desirable: 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
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