Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys

by Patty Civalleri

Ogilvy’s Confessions of an Advertising Man.

I liked semi-decayed neighborhoods, where the census tract income statistics looked terrible, but the mortgages were all paid-down, and the kids had left home. Housing and rental prices tend to be lower, and more suitable for those underpaid academics. Related to this, I was more interested in the number of households in a given area than the number of people in a ZIP code. Trader Joe’s is not a store for kids or big families. One or two adults was just fine.

To repeat the statement in “The Guns of August” chapter, the most important single business decision I ever made was to pay people well. The quality of the people recruited, and retained, so dominates the way the stores were run that I might close the discussion here. But I’ll flesh out those earlier statements a little.

Fra Luca Pacioli, revolutionized the concept of business by inventing the system of double entry accounting.

Given the need for long leases, landlords and tenants are trying to outguess each other about the objective future (for example, the business cycle, as opposed to the subjective futures of the parties, the commercial success of the tenant, the demand for the space offered by the landlord). Programs of collaboration should focus on offering some form of relief to the landlord if the objective future runs in the tenant’s favor, while maintaining some degree of protection for the tenant if it runs against the tenant. This is obvious, but mass hysteria usually dominates real estate markets. California plunged from a leasing frenzy to what amounted to a leasing moratorium from 1989 to 1994. In 1998, it was frenzy time again. The point is this: tenants who enter into negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.

Governmental intrusion can be considered as a Supply Side opportunity. The retailer who masters the skills of dealing with the regulatory authorities erects a threshold that his competitors will have to cross. There are several facets to this opportunity, excluding “La Mordida.” Except for the occasional zealot, the “Programme of Collaboration” for most public officials is to avoid rocking the boat.

Frederick P. Brooks Jr., architect of the IBM 360 system, in his insightful 1982 book, The Mythical Man Month, one of my favorite books on management.