Walking into one of Trader Joe's 24 Southern California specialty grocery stores is like walking into a South Seas trading post. Employees sport Hawaiian shirts; barrels and hatch covers serve as check stands; and the prices are comparably rustic. But not the quality—with bargains such as a quart of virgin olive oil for $2.89, a pound of French Brie cheese for $2.98, and good California wines for $1.99 a bottle.
Presiding over this eccentric grocery empire is Joe Coulombe. He is not the laid-back surfer one might imagine from his stores, but an energetic entrepreneur.
After earning his master's degree in business administration from Stanford University in the early 1950s, Coulombe was hired by the Rexall Drug Company to do research on their ailing retail chain, Owl Drugs. In the course of his research he discovered 7-Eleven stores in Texas, and it was this form of retailing that the young business manager used as president of a six-store, experimental Pronto Market chain opened by Rexall in Southern California. In 1961, when Rexall decided to drop the Pronto chain, Coulombe borrowed the money to buy the six markets, which he expanded to 18 stores.
Then, as he recounts, "in 1966, 7-Eleven came to California. I took one look at their balance sheet and one look at ours and decided I'd better get the hell out of the convenience store business. So I invented 'Trader Joe' and opened the first one in 1967 in Pasadena." They were such a success that he phased out the Pronto Markets, selling some of them to 7-Eleven.
The key to this entrepreneurial success had been a savvy projection of changing consumer tastes. "I designed Trader Joe to take advantage of two demographic trends. The first was the tremendously elevated levels of education in the US" after World War II. "As these people went into the job market and matured," he figured there would be "a change in public tastes away from the station-wagon culture of the 1950s, which had been dominated by I Love Lucy and Gunsmoke."
And Coulombe saw another catalyst at work. "I knew the jumbo jet, the 747, was going into production, and I felt it would radically drop the cost of foreign travel for Americans. We had observed in Pronto Markets that our customers who had traveled, just to San Francisco, had a greater tolerance for new things."
So he picked the name Trader to evoke images of the South Seas. "Trader Joe from the beginning featured the exotic. All of our advertising has been literate, always written up, never down. It assumes an open mind and a desire, a thirst, for knowledge."
Part of the attraction of the stores is the humorous, informational soft-sell of the advertising and of the bimonthly mailer, "Fearless Flyer," whose copy Coulombe writes himself. An antique etching of two cows might feature word balloons with these gems: "Did you know Brie has parameters?" "Not if it's pasteurized."
And if you don't hurry in for the latest bargains the Flyer mentions, you may not be able to get them later. "We deliberately lack continuity," says Coulombe. He and his eight buyers snap up odd-lot bargains and pass the savings on to their customers. "We like to sell stuff that's a one-shot deal—with no intention of ever having it back in stock." This not only adds to the sense of adventure in shopping at Trader Joe's; it is the very flexibility that makes the low prices possible.
Changing with the times has kept Trader Joe's afloat while other, "full-service" supermarket chains have hit the rocks. When the chain first opened, much of the stores' business was wine and liquor. When the health-food movement gathered momentum, "without hesitation, we grafted raw milk right on top of bourbon." In 1977 and 1978 came the elimination of California's "fair trade" laws, which had kept retailers from discounting milk and liquor—items accounting for 50 percent of Trader Joe's sales. Coulombe had begun changing the operation even before the laws were struck down, becoming more of a food merchant, selling items of broad consumption but high quality, such as mayonnaise and cooking oil—"safflower oil, walnut oil, grapeseed oil, as opposed to Wesson oil."
Coulombe, who has been known to slip a free-enterprise comment into his advertising copy, doesn't do too much lobbying. But there are issues on which he's vocal, such as bills in the state legislature that would create monopolistic wholesale territories for beer and imported wines. "I believe in free people," he explains, "and I do not believe it is possible to attain political freedom without free markets. Whether you're a big corporation or not, in the long run you harm your own personal freedom if you go running to the government to solve your problems." He frequently votes for Libertarian Party candidates, he notes—not because he expects them to win, but to keep the party on the ballot and able to offer interesting political alternatives.
Coulombe likes to garden, hike, and listen to Mozart. But most of all, he is a voracious reader. He even has his kids bring home books they read at college. "The two books I always quote when I lecture at business schools are The Revolt of the Masses by José Ortega y Gasset, and The Guns of August by Barbara Tuchman. I just finished reading Jean Renoir's biography of his father." Not the reading of the average businessman? "I don't think the cultural stereotypes of businessmen have kept up with the facts."
John Dentinger is a free-lance writer and a columnist for the LA Daily News.
This article originally appeared in print under the headline "Spotlight: Epicurean Entrepreneur".