Trader Joe's Secrets: The Business Practices of the Freemasons of Food

By Daniel Fromson

The headquarters of what Fortune Magazine has just dubbed an "obsessively secretive" organization sits about 25 miles east of Los Angeles, in a building that does not display its name or logo. The group is neither the Illuminati nor the Freemasons. It is Trader Joe's.

The grocery chain—"one of the hottest retailers in the U.S.," Fortune calls it—refuses to speak to the press about its operations, but Fortune has spent two months interviewing former TJ's executives, competitors, industry analysts, and suppliers, most of whom requested anonymity. The result? "Inside the Secret World of Trader Joe's," which offers nuggets of forbidden wisdom about the company's inner workings, like the following:

Customers accept that Trader Joe's has only two kinds of pudding or one kind of polenta because they trust that those few items will be very good. "If they're going to get behind only one jar of Greek olives, then they're sure as heck going to make sure it's the most fabulous jar of Greek olives they can find for the price," explains one former employee. To ferret out those wow items, Trader Joe's has four top buyers, called product developers, do some serious globetrotting. A former senior executive told me that Trader Joe's biggest R&D expense is travel for those product-finding missions. Trade shows that feature the flavor of the moment "are for rookies," a former buyer said. Trader Joe's doesn't pick up on trends -- it sets them.

The other dozen or so buyers, or category leaders, spend more time in the office, fielding hundreds of cold calls a week from vendors tripping over themselves to make Trader Joe's a customer. Trader Joe's is a supplier's dream account: It pays on time and doesn't mess with extra charges for advertising, couponing, or slotting fees that traditional supermarkets charge suppliers to get their products onto the shelves. "It's all transparent -- no BS," says a former executive. In exchange, suppliers have to agree to operate under Trader Joe's cloak of secrecy. Fortune obtained a copy of a standard vendor agreement, which states, "Vendor shall not publicize its business relationship with TJ's in any manner."

Read the full story at Fortune.

This article available online at:

http://www.theatlantic.com/health/archive/2010/08/trader-joes-secrets-the-business-practices-of-the-freemasons-of-food/61901/