Why Nobody Has Been Able To Disrupt Trader Joe's
What's the relationship between customer and employee experience and how does a grocery retailer like Trader Joe's excel at one of them to impact the other?
Today is a big day! My wife Blake Morgan just released her latest book called The 8 Laws of Customer-Focused Leadership: New Rules for Building A Business Around Today’s Customer. As you probably know there’s actually a strong connection between employee and customer experience and quite a few leaders in these respective spaces are working with their counterparts in the other.
Today’s story is just one of many examples of how customer experience impacts the employee experience. But before I get it into that, my wife and I would love it you grab a copy of the book on Amazon to support her launch. She also has her own Substack here.
The book is based on countless interviews she did with the world’s top customer experience leaders. Although I don’t write about customer experience on this Substack there was a story from her book which is very relevant to my audience and it’s all about Trader Joe’s.
This is from Blake’s book…
People have always wondered why Trader Joe’s has never been disrupted. And the answer is simple, it’s employee experience. No other grocer is willing to treat employees like Trader Joe’s treats its employees.
The founder Joe Coulombe - back in the 1960’s - said his standard was simple: the average full-time employee in the stores would make the median family income for California. Back in those days it was about $7,000.” (source: Book - Becoming Trader Joe: How I Did Business My Way And Still Beat The Big Guys). Employees get medical, dental and vision health insurance, they get 20% off of groceries - as well as alcohol - and every crew member has the option to opt into a retirement account which the company matches.
Employees get two raises per year if they pass our work evaluations, and the current crew cap for wages is around $28. According to Reddit, they get $10 extra per hour worked on Sundays and federal holidays. Every January, they get a bonus equal to 6% of their earnings from the previous year. They can either accept it in taxed cash, or put part or all of it in their retirement fund tax free. Have you noticed employees just seem happy at Trader Joe’s? The culture feels free and easy, and the hawaiian shirts and fun music don’t hurt that in-store experience. The customer experience difference they provide IS the people.
Trader Joe’s employees just seem happy. This is one of the few retail stores left that have tons of people working there. I am a weekly customer and I never wait in line - the check out process is very fast, compared to self-checkout which is absolutely abominable, and every single customer has a problem every time. Employees always chit chat with customers, and ask them friendly questions about the recipes they will make with their groceries, or just if they have any fun plans for the day. It’s the little things that the employees due to enhance the customer experience.
How can Trader Joe’s pay employees fairly, without raising prices on customers (they will drop a product if the raw materials get to expensive to make it), and they have zero technology or online delivery.
It really just boils down to innovation, to reducing back-end complexity, and finding out ways to cut costs and bring value to customers in creative ways.
Every so often a company comes along and just refuses to play by the rules that everyone else in the industry is operating under.
In 2022 when many companies were laying off employees, Trader Joe’s opened new locations and hired 24,000 new employees. Their retention is some of the highest in the industry. In 2015 Trader Joe’s revenue was 8 billion. In 2022 Trader Joe’s revenue was $13.3 billion dollars.
Organizations must hire and develop great people, but once they are in your care, you must focus on employee retention, because people are the difference, and that is certainly true for customer experience.
If you enjoyed this story then please make sure to grab a copy of Blake’s book, The 8 Laws of Customer-Focused Leaders: The New Rules For Building A Business Around Today’s Customers.