June 13, 2012

Loyal followers await Trader Joe's opening in Fort Worth on Friday morning

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 Metroplex store at 8 a.m. Friday in Fort Worth.

Rants, raves, reviews and resources for Dallas-Fort Worth parents

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 Metroplex store at 8 a.m. Friday in Fort Worth.

"There's a lot of buzz," said Yogi Florsheim, whose Yogi's Bagel Cafe is across South Hulen Street from the 12,500-square-foot store, in a 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 Shaw wine, aka "Two Buck Chuck." (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 -- they predict that the chain won't give competitors that much pain. It's difficult to do an entire week's shopping at Trader Joe's because of its limited assortment, said John Rand of Kantar Retail and Jim Hertel of Willard Bishop.

Some 80 percent of its 4,000 or so items are house brands, priced cheaper than national brands. (By comparison, traditional supermarkets carry tens of thousands of items, and only in recent years have those chains emphasized private-label products.)

"It does a wonderful job selling the whole deal," Hertel said. "They kind of romance the whole Trader Joe's brand: Trader Jose's for Mexican foods, Trader Giotti's for Italian and Trader Ming's for Asian. 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," Hertel said, referring to its frozen main courses. "They have good-tasting food, and it's cheaper than going out. I especially like their crabcakes."

A crowded market

Employees wear bright Hawaiian shirts, and the stores promote an almost self-mocking mythology of, say, traveling up the Amazon 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 Market CEO John Mackey told The Wall Street Journal that his upscale 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, which has a store in Arlington, aims to open a Fort Worth store next year near Edwards Ranch Road.

Established grocery chains in North Texas expressed no 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 Central Market, a division of H.E. Butt Grocery Co.

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 per square foot, industry experts say. Hertel figures that a typical Trader Joe's in the Chicago area does about 80 percent as much business as a traditional supermarket, but in half the space.

Fortune magazine reported in 2010 that it sold $1,750 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 bought Trader Joe's, then a small chain, in 1979 and operates it independently.

The company won't disclose whether there are any product sourcing or logistical synergies. But Rand says Trader Joe's and Aldi have similar marketing approaches, albeit for different types of customers.

In any case, the recent entries of Aldi, Sprouts Farmers Markets and now Trader Joe's into an already saturated North Texas market can only work to the average consumer's benefit. By keeping gallons of milk under $2 and a dozen eggs under $1, Aldi has kept prices low for such staples.

Corporate plans

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 no other national supermarket chains adopted. It had called the Campaign for Fair Food's approach "unacceptable," but on Feb. 9 -- a day before demonstrations were planned at Trader Joe's stores in 40 cities -- the chain gave in, praising the group's "groundbreaking 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 The Woodlands, near Houston, on Friday; in Plano on Sept. 7; two in Houston later this year; in San Antonio on Oct. 19; on Dallas' Greenville Avenue in the first quarter of 2013; in Dallas' Preston Hollow neighborhood in 2014; and in Austin in 2014.

As intensely close-mouthed as Trader Joe's is about its management and methods, it makes a point of hiring chatty, helpful staff. Human resources 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 the Cleveland suburb of Gates Mills. "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 whether it will offer any different products in Fort Worth, which it misspelled "Forth Worth" in its first advertising flier. But it introduces a dozen new products weekly and analyst 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

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