Rarely has a grocery so small garnered such deeply loyal — some say fanatical — followers as Trader Joe’s, a California-based chain that is opening its first Texas stores Friday at 8 a.m. in Fort Worth and The Woodlands near Houston.
“There’s a lot of buzz,” said Yogi Florsheim, whose Yogi’s Deli is located across from the Fort Worth location at 2701 S. Hulen St., a 12,500-foot space originally occupied by Ronnie’s, a wine shop and gourmet bakery. “Many, like me, have shopped there in other states and the rest have heard about it. I really don’t think they’re going to have enough parking spaces.”Whenever Judie Byrd flies to Phoenix, her first stop is at Trader Joe’s to stock up on house-brand shredded wheat, nuts, creamy tomato soup, chicken broth, mango black tea and its famous, budget-priced Charles “Two Buck Chuck” Shaw wine. (The bargain-bin cognoscenti recommend the Pinot Grigio and Cabernet Sauvignon.)“We have a list of what we buy each time,” said Byrd, founder of the Culinary School of Fort Worth and a food writer. “I love the price point and the quality, but I’m a huge Central Market person and Trader Joe’s won’t have that extravagant, holiday atmosphere. It’s more utilitarian.”Analysts agree. While they give Trader Joe’s the highest marks for executing its strategy — and say it has yet to fail in a market — the chain won’t give competitors that much pain because it’s difficult to do an entire week’s shopping there because of its limited assortment, predicted John Rand of Kantar Retail and Jim Hertel of Willard Bishop.Some 80 percent of its 4,000 or so items carry house brand names, priced cheaper than national brands. (By comparison, traditional supermarkets carry tens of thousands of items, and only in recent years have these national chains emphasized private-label products.)“It does a wonderful job selling the whole deal — they kind of romance the whole Trader Joe’s brand — Trader Jose’s for Mexican foods, Trader Giotti’s for Italian and Trader’s Ming’s for Asian,” Hertel said in a telephone interview. “They’re very good at generating their image with rustic-looking circulars that make the mimeographed tests we took as kids look good.”“I had to buy a new freezer when they came to Chicago,” said Hertel, referring to its frozen main courses. “They have good-tasting food, and it’s cheaper than going out. I especially like their crab cakes.”Store staff wear bright Hawaiian shirts and the stores promote an almost self-mocking myth of traveling up the Amazon, say, to bring back the best Brazil nuts or other exotic products. Yet their buyers spend considerable time and money tracking down new items, looking out for new food trends here and abroad, Rand said.In 2009, Whole Foods CEO John Mackey told the Wall Street Journal that his up-market natural food chain is mindful of its rival.“In competing with Trader Joe’s, we have a policy that our 365 private label (line) has to match Trader Joe’s prices, unless there is a significant difference in quality, in which case it probably shouldn’t be a 365 product.”Whole Foods Market, which has a store in Arlington, is aiming to open a Fort Worth store next year near Edwards Ranch Road.Established chains here expressed no outward worry about yet another rival in what Central Market’s chief called one of the most competitive retail food markets in the country.“We have learned that competition helps everyone sharpen their game, and the customer always comes out ahead,” said Stephen Butt, senior vice president of H.E. Butt Grocery Company’s Central Market Division. Said Kroger spokesman Gary Huddleston: “Trader Joe’s is a good competitor. We believe we offer the best value to customers with larger variety, great customer service and low prices.”Trader Joe’s stores are about one fourth the size of a traditional supermarket but do far more business on a square foot basis, industry experts say. Hertel figures a typical Trader Joe’s in the Chicago market does about 80 percent of the business that a traditional supermarket does, but in half the space.Fortune magazine reported in 2010 that it sold $1.75 of goods per square foot, more than double what Whole Foods did. A Trader Joe’s spokeswoman declined to comment on the Fortune article.In fact, the company would discuss very little. Trader Joe’s seldom if ever participates in industry conferences and is widely considered the most secretive retail food chain.Regarding its ownership, all the Trader Joe’s website says is that it’s privately owned — not a word of its connection to Germany’s billionaire Albrecht family. It built the international Aldi discount chain empire, which had divided the world between Aldi Nord (North) and Aldi Süd (South) after a feud between the two Albrecht brothers, Karl and Theo. South operates the Aldi stores in the U.S., while North purchased what was the small Trader Joe’s chain in 1979 and operates it independently."The company won’t disclose if there are any product sourcing or logistical synergies. But Rand says there are similar marketing approaches, albeit for different types of customers.In any case, the recent entry to an already heavily stored North Texas market with Aldi, Sprouts Farmers Markets and now Trader Joe’s can only work to the average consumer’s benefit. By keeping gallon jugs of milk under $2 and a dozen eggs for less than $1, Aldi has kept prices low for such staples.***Trader Joe’s hasn’t made everybody happy all the time.For two years, the chain resisted demands that it join a campaign for safe working conditions and fair wages on Florida tomato farms, a position that Whole Foods but not other national supermarket chains adopted. It had called the Campaign for Fair Food’s approach “unacceptable,” but on Feb. 9 — a day before planned demonstrations at Trader Joe’s stores in 40 cities — the chain gave in, praising the group’s “ground-breaking approach to social responsibility” and agreeing to pay an extra cent per pound of tomatoes.The chain for years concentrated on both coasts before expanding through the central states, self-financing its new stores as it moves into new markets, Rand said. The company, which started in Los Angeles, now has more than 370 stores in 33 states. Expansion plans in Texas include openings in Plano, at 2400 Preston Road, on Sept. 7; two stores in Houston, to open later this year; San Antonio, Oct. 19; two stores in Dallas, at 2001 Greenville Ave., first quarter of 2013, and Preston Hollow, 2014; and Austin in 2014.As intensely close-mouthed as Trader Joe’s is about its management and methods, it goes out of its way to hire chatty, helpful staff. Human resource managers reportedly count how many times a job applicant smiles during the interview process. Job applicants are told on the company website that they must make eye contact with shoppers.And it has a far higher percentage of full-time employees on the floor than other chains, Rand said.“The staff is very friendly, almost nosey about what I plan to do with what I’m buying,” said Mauri Artz, an author and college entrance coach in Gates Mills, Ohio, a Cleveland suburb. “They have probably been coached to start conversations about food. Anyway, the produce is usually good, though I have had some bad packaged melons and grapes. The sushi is awful. Looks bad, tastes horrible.“The flash-frozen fish really works well with soups and sauces — especially the tuna,” Artz said, adding, “I love the in-store demonstrations, and the prices are nice.”The company declined to say if it will offer any different product selection in Fort Worth, which it misspelled "Forth Worth" in its first advertising flyer. But it introduces a dozen new products weekly and Kantar’s Rand said that store managers have surprising freedom to swap out items, a sort of throwback to a bygone era of grocery management.Paying well above industry averages might help explain why Trader Joe’s workers are seemingly so good natured. Full-time clerks are said to earn about $40,000 with medical and dental insurance; managers reportedly get six figures. Moreover, the company makes a 15.4 percent, unmatched contribution into employee retirement accounts.“I am told, but can’t prove it, that they somehow test people for being customer friendly,” Rand said. “They’re very outgoing, very engaged. You don’t get that from a chain retailer very often.”
Barry Shlachter, 817-390-7718 Twitter: @startelegram
