Trader Joe's Secrets

An exposé on the grocer of choice for the hipster thriftster.

Compiled with material from Fortune Magazine

and Trader Joe's researcher, Rahul Kamath.

Setting the Scene

In Madison, WI, marketing researcher Rahul Kamath's apartment is just blocks away from Trader Joe’s, the perennial grocery store of choice of a group Kamath describes as “progressive yuppies.”

"Don’t get me wrong," says Kamath, "I love Trader Joe’s. They have a somewhat interesting— if a bit odd— selection of food, low prices on alternative-lifestyle staples like Morningstar Farms Vegetarian Meats, Hummus, and Dr. Bronner’s Soap, and the staff usually seem engaged and friendly in a way that you rarely see in the bigger chains."

Fortune Magazine's Beth Kowitt agrees.  "Trader Joe's is no ordinary grocery chain. It's an offbeat, fun discovery zone that elevates food shopping from a chore to a cultural experience. It stocks its shelves with a winning combination of low-cost, yuppie-friendly staples (cage-free eggs and organic blue agave sweetener) and exotic, affordable luxuries -- Belgian butter waffle cookies or Thai lime-and-chili cashews -- that you simply can't find anyplace else."

Yet despite these virtues, there’s always been something that Kamath has found very curious and fascinating about the store given its primary clientele: they package the hell out of everything.  "I’m talking about putting often unnecessary plastic bags around nearly all their produce (which is, incidentally, prepackaged and shipped from afar), hard plastic shells around fruits and tomatoes, and things like individually wrapped biscottis inside yet another layer of paper bags."

"The produce sections of standard grocery stores like Kroger and Safeway aren’t much better, but you can tell that there’s a lot less waste going on, on the whole. You can buy fruits and vegetables without using a plastic bag at all, but if you choose to use one, very thin plastic bags on a roll are offered. You can stuff your plastic bag with as much salad mix as you want. The bags at Trader Joe’s are much thicker, presumably so that they can ship without incurring damage to the contents of the bag, but they are sealed so that if you want 10oz of salad mix, you’ll be forced to buy two 5oz packages of the stuff."

"Now, the interesting thing that I’ve noticed is that if you talk to people about Trader Joe’s, you will see that many if not most of its clientele view the store as being ‘environmentally sound’, espousing the values prioritized by the politically and environmentally progressive consumer, words like: organic, sustainable, socially-conscious, green, fair-trade, healthy, whole-grain, eco-friendly, and so on."

The Switcheroo

Strangely, as the store is able to capitalize on those concepts, there is little in the direct customer experience that should really suggest any of those things any more than any other grocery store. Not all of Trader Joe’s produce is organic or whole-grain, not all of their coffee is fair-trade, and not all of their eggs and meat are cage-free or free-range. Few customers know anything about what Trader Joe’s has to say about labor rights, politics, or environmental issues, "but if you asked," says Kamath, "I would bet they’d place them in the top 20% of American companies in all these categories. And yeah, they sell canvas bags, but they still bag your groceries by default in paper bags."

Yet both Kroger and Safeway both have sections dedicated to organic and whole-grain foods. Both also sell fair-trade coffee and free-range eggs and meat. Nobody considers those companies progressive in any way.

So what exactly is going on here? Why does Trader Joe’s get a free pass on environmental concerns and get to capitalize on all the standard jargon of the socially-minded left while the other guys are left to be viewed as the mainstream guys who don’t really give a damn about broader social concerns?

"Part of it," Kamath says, "is that Trader Joe’s is a much smaller store than Kroger and Safeway. It’s a mere fraction of the size by volume, but they carry a similar variety of foods but certainly not the diversity of brands. And for that matter, many of the brands they do carry are not to be found in other grocery stores."

They don’t, for example, carry Kraft Macaroni and Cheese or Tropicana Orange Juice. Sometimes such products are on their own private label brand (whose name changes depending on what product it is; their Mexican products are stamped with “Trader Jose” and Italian products have the ridiculous name “Trader Giotto’s” on them). They also carry an unusually large percentage of imported or apparently exotic goods. These don’t by themselves convey the aforementioned concepts, but these features do set them apart in the minds of the consumers, which is important.

Kowitt has tracked down the provenances of some of these mysterious foods.  "Take Tasty Bite, which makes much of Trader Joe's Indian food. The Tasty Bite Punjab Eggplant ran $3.39 at a Whole Foods in Manhattan. The seemingly identical Punjab Eggplant that the Stamford, Conn., company makes for Trader Joe's is more than $1 cheaper.

Those Trader Joe's pita chips? Made by Stacy's, a division of PepsiCo's Frito-Lay. On the East Coast much of its yogurt is supplied by Danon's Stonyfield Farm. And finicky foodies probably don't like to think about how Trader Joe's scale enables the chain to sell a pound of organic lemons for $2."

Who Shops at Trader Joes?

"Contrast the feeling you get while walking in the close, friendly quarters of the Trader Joe’s store with one you get when walking the cold, labyrinthine halls of Kroger. Contrast the warm wood paneling and comparatively low ceilings of Trader Joe’s with the stony white floors and high ceilings of Safeway. Notice the prevalence of baskets in the Trader Joe’s store, and the gargantuan supermarket carts elsewhere." says Kamath.

"Also, and this is important, notice the clientele. There is a very obvious difference in who the typical shopper in each of these stores is. It’s impossible to tell without some form of surveying, but I would be extremely surprised if the average Trader Joe’s shopper wasn’t more educated, of a higher socio-economic status, with a higher disposable income, and a more liberal bent. But is it the store’s ostensibly progressive values that attracts this clientele, or does the store get its progressive image from the people who shop there? Certainly, there’s a feedback loop happening here, but it’s also true that there wouldn’t be such an attraction to these sorts of people without some compelling cause."

Kowitt believes the clientele is more diverse.  "Who's a fan of Trader Joe's? Young Hollywood types like Jessica Alba are regularly photographed brandishing Trader Joe's shopping bags -- but Supreme Court Justice Sonia Sotomayor reportedly is a fan too. "What's not to like?" says Costco co-founder and CEO Jim Sinegal. "They're very good retailers, and we admire them a lot." Visit a Trader Joe's early in the day, and there are senior citizens on fixed incomes shopping for bargains; on weekends and evenings a well-heeled crowd takes over. Kevin Kelley, whose consulting firm Shook Kelley has researched Trader Joe's for its competitors, jokes that the typical shopper is the "Volvo-driving professor who could be CEO of a Fortune 100 company if he could get over his capitalist angst."

One possible cause could be that progressives are attracted to each other and teem into places where there are people like themselves, even in the absence of any gastronomical pretense. "Possible," says Kamath, "but I don’t find it very likely to be the root cause in the case of Trader Joe’s; after all, why would this trend begin in the first place? A more convincing reason for the progressive psychographic’s descent onto this store is its decidedly eclectic selection of food, where exotic foods like shitake mushrooms and shelled edamame are placed fashionably next to staples like baby carrots, and exotic Hollandic stroopwaffels oh-so-nonchalantly next to chocolate chip cookies. This post-modern melting pot of food is likely the central point of resonance at Trader Joe’s. After all, if we are to cull the messages from all the progressive radio stations, left-wing talking points, bumper stickers, and Bay Area street fairs, it is this very quality of 'diversity' that presents itself as some kind guiding principle of progressive thought and which shapes the idealistic visions of progressive society. It is in this world that 'diversity' in itself is considered a virtue, even in the absence of any dialectic."

Of course, diversity of foodstuffs is one thing, but where does the image of social consciousness come from? The household cleaners aisle, which is right next to where you’d buy “natural” toothpaste (do Poloxamer 335 and Propylene Glycol really count as natural?), doesn’t feature the usual allotment of chemicals like Ajax and Windex, but instead has products like all-purpose ‘natural’ orange cleaner made from degreasing compounds apparently found in citrus fruits, and mouthwashes with tell-tale signs of products that are trying to market themselves as ‘natural,’ muted brownish packages.

The Secrets of Trader Joes

And speaking of muted packaging, it just might be that as a whole, Trader Joe’s packaging is of a more muted health-food store color than their mainstream rivals. With the notable exception of the produce section where colors like brown and white are not typically indicators of quality, the remainder of the store makes use of these earth tones in a manner not consistent of mainstream stores, where bright colors and fluorescence are used in packaging the same way that circus carnies shout and prod passers-by with their staccato brayings.

"Trader Joe’s expertly weaves a tapestry that references all the signals that progressives look for and can relate to in their political identity, but much of the 'follow-through' is only implied. But the store has called out so many of these reference points, that it creates the illusion that it’s all there—an illusion that many of the store’s patrons seem to appreciate as much as if it really were."

Fortune magazine's  Beth Kowitt reports, "You'd think Trader Joe's would be eager to trumpet its success, but management is obsessively secretive. There are no signs with the company's name or logo at headquarters in Monrovia, about 25 miles east of downtown Los Angeles. Few customers realize the chain is owned by Germany's ultra-private Albrecht family, the people behind the Aldi Nord supermarket empire. (A different branch of the family controls Aldi Süd, parent of the U.S. Aldi grocery chain.) Famous in Germany for not talking to the press, the Albrechts have passed their tightlipped ways on to their U.S. business: Trader Joe's and its CEO, Dan Bane, declined repeated requests to speak to Fortune, and the company has never participated in a major story about its business operations."

How the Most Progressive Grocery Store Came in Last for Sustainability

Mark Bittman's New York Times article about Greenpeace's rankings had Trader Joe's placed dead last in a national survey of grocery store seafood sustainability. It really takes some doing to lose out to guys like Safeway and Kroger. But then, Trader Joe’s never claimed to be eco-friendly and green in the first place, so maybe it’s not that surprising.

Kamath talked to a Trader Joe’s manager about this very issue about their fish last November when he noticed that almost all the fish they sell there were on the “AVOID” column of the Monterrey Bay Aquarium guide to sustainable fish). "The manager told me that Trader Joe’s is a “democracy” and they stock things that people buy, and well, the people like unsustainable fish. I suppose he seemed somewhat apologetic about it, but at the same time he was able to take umbrage under this lofty ideology of populism.

'We don’t consider ourselves a ‘green’ company,' he said, obviously a little tired of once again having to answer to the legions of progressives that shop at Trader Joe’s, and explain why they stock items perceived as being unsustainable or hostile to liberal consumption ideologies. He continued: “We let our customers vote with their dollars about what we put on our shelves, and though I understand your concerns, we sell a LOT of orange roughy.” He tilted his head towards the sky when he said ‘lot.’

"So there’s the confirmation," says Kamath. "The idea that Trader Joe’s is a somehow progressive or green company is a total myth created by the brand’s phenomenal marketing— which is largely based on word-of-mouth."

"Of course, by the same token we can view this democracy as a means by which we are able to use our buying power to promote our ideals through selective purchasing; that is, if we don’t believe a company is representing our values, we can avoid buying there. Being concerned about the state of our collapsing oceans, I did exactly that and stopped buying fish there. I also tried to share this information with friends, colleagues, and anyone who would listen. What I discovered about this is that it’s quite hard to gain credence with others regarding something when your statements directly contradict what others think they know; nearly everyone I told this to seemed to doubt my claims because of Trader Joe’s pervasive 'progressive' reputation."

Earlier this year, Kamath decided to write to Trader Joe’s headquarters about it. "In my letter, I expressed that while I appreciated their apparent democratic ideals, Trader Joe’s could implement a “high road” approach on this, given the scientifically-validated reality that overfishing is destroying the world’s oceans. I attached a copy of the Monterrey Bay Aquarium guide to sustainable fish. Much to my surprise, soon after I sent it, they updated their website to add something about how they are now sourcing their fish based on the Monterrey Bay Aquarium guide. I’m not sure if it was my letter that elicited this, but the timing was pretty remarkable, and I was pleased that maybe one customer’s opinion did matter!

Well, it’s been several months or so since that update on their website. Since then, I’ve gone back numerous times and have not seen any change in their inventory of fish. I’m disappointed, especially since so many people are convinced that they are a company with “principles” and “ideals” relating to environmentalism, and thus do all their shopping there with the implicit understanding that their shopping list has already been filtered for eco-friendliness. Of course, to be fair, TJ’s never claimed that they serve this function.

But boy, they’ve shown that they can really cash in on this misconception."

NOTE: more recent rankings show that Trader Joe's has improved to 10th out of 20 places, just behind Wal-Mart.