There’s no mystery to building a brand. At least that’s the impression one gets listening to Doug Rauch.
Rauch retired as President of Trader Joe’s in 2008. He worked his way up the corporate ladder for 31 years. When Rauch started with TJ’s, they had 17 stores in Southern California. Today they have over 360 stores in 27 states. Among his many accomplishments at Trader Joe’s, Doug was instrumental in expanding TJ’s private label products and opening Trader Joe’s along the Eastern seaboard. Trader Joe’s is a story of branding done beautifully and a company culture that has held fast to its roots.
Currently, Rauch is a Fellow at the Harvard Advanced Leadership Initiative and serves on various for-profit and non-profit boards. I was fortunate to hear Rauch speak recently to the Los Angeles Chamber of Commerce. He is an engaging, entertaining speaker with many good stories and, in less than an hour, convincingly documented how Trader Joe’s has built, and maintained, their brand: one store at a time.
1958, Joe Coulombe opened a small chain of stores in the LA area called “Pronto Markets.” At the time, most major grocery chains closed at 5 p.m. and few were open on Sunday. If one needed fresh milk or the morning cereal, you were out of luck. Pronto filled the void. For some time, Pronto Markets was successful. But then 7-Eleven came to town. They were highly capitalized and opened stores at a breakneck pace. Joe knew he couldn’t compete. So he took a Caribbean vacation to think about it.
Joe surmised (correctly) that people were traveling more — they were experiencing new and unusual products and food. So Joe came home and transformed Pronto Markets into Trader Joe’s. Featuring exotic foodstuffs and staff wearing Hawaiian shirts, the markets were a hit.
In his Chamber presentation, Rauch made points about branding, marketing and leadership that relate to businesses of any size — and lessons that all business owners could learn (or remember).
1) Ask “Why do we exist?” From the beginning, Trader Joe’s espoused a clear sense of purpose — they defined their mission.
2) Stay focused; don’t jump on every new idea. Says Rauch, “‘This can dilute your brand.” Trader Joe’s focuses on great products and a superior customer experience.
3) It’s not what you do but how you do it: TJ’s emphasizes better value and customer service.
4) Be willing to adapt: famed management consultant (and Rauch’s MBA professor), Peter Drucker, once asked Rauch if he knew why most businesses fail. Of course, responded Rauch, “Their expenses exceed their income.” “Wrong,” retorted Drucker, “it’s because they are too busy ‘navel-gazing.’” Rauch added, “They become myopic and stop monitoring their environment. They ignore ‘disruptive changes’ and the speed of these changes is increasing.” Rauch cited the example of Smith-Corona…the personal computer came along and typewriters became obsolete.
5) Trader Joe’s biggest secret weapon? Company culture. Which Rauch says “eats strategy for breakfast.” A successful company culture includes living the company’s core values and offering a consistent experience: the farthest-away unit should feel the same as the one around the corner.
Aside from their relatively-limited 3000-SKU product-offering and customer-focused product buying and creation process, the biggest success component of this company culture is the employees. Rauch talked about recognizing, measuring and rewarding the extraordinary behavior of personnel. The two most important ways to create an “engaged crew?” 1) Ask: Does the staffer feel he or she has a voice? and 2) What happens when he or she asks: “Does somebody here care about my growth and advancement?”
Rauch iterated ways to build a lasting brand:
- Create relationships and connections – with people and products that are emotive and associative
- Marketing is not a department — each member of the crew interracts with customers — each crew member is an independant “moment of truth.” Be more personal and direct: market to one customer at a time.
- Branding is about all aspects of your business.
- The bigger you get, the smaller you act: be like a neighborhood store in your treatment of customers and employees.
- Trader Joe’s is a “store of stories.” TJ’s promotional “Fearless Flyer” circular is designed to be a blend of entertainment, inspiration and information. It reinforces the credibility and reliability of Trader Joe’s. It reinforces a feeling of empathy that TJ has for its customers. The “Fearless Flyer” is direct marketing at its best.
On leadership, Rauch said that in his view, his job at TJ’s was to “grow the people and grow the company.” He said he’d prefer having a employee that needed rope vs. one that needed rocket fuel. Translation: he’d rather rein in enthusiasm than kick somebody in the proverbial pants. Rauch said that leaders must remember “why you’re doing what you’re doing and create meaning and purpose for everything you touch.”
The Trader Joe philosophy is that instead of trying to “be all things to all people,” by carrying many varieties, they pick the best and carry that one. This laser-like focus on product and service is the cornerstone of their brand.
If you’ve been in a Trader Joe’s lately, you can see how well it’s working.
Martha Spelman is a Los Angeles-based marketing, branding and social media consultant. Want marketing ideas and inspiration? Please sign up for Martha’s Blog: Marketing Musings and Tips du Jour. You can reach Martha directly at: email@example.com or 310.670.5300.