« Freakonomics Radio

359. Should America Be Run by … Trader Joe’s? (Rebroadcast)

2019-08-22 | 🔗

The quirky little grocery chain with California roots and German ownership has a lot to teach all of us about choice architecture, efficiency, frugality, collaboration, and team spirit.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This podcast dynamically inserts audio advertisements of varying lengths for each download. As a result, the transcription time indexes may be inaccurate.
Fr Economics. Radio sponsored by progressive insurance were customers save an average of more than seven hundred fifty dollars when they switch and save visit, progressive dot com to get your car insurance quote. It only takes about seven, national annual average auto insurance savings by new customers surveyed in twenty nineteen potential savings will very, if you'd like to listen to for economics, radio without ads the place to do that is sticker premium, five dollars and you can get a free month trial by going to stick your premium dot com and use a promo code freak. You also get access to all our bonus. Episodes and you'll be supporting our show to that sticker premium: dot, com, promo code, freak thanks
it back ass listeners this week we are replaying for you, one of our most popular episode from last year. It's called: should America be run by trader Jones? Among the many things that makes trader chosen unusual company is that they turned I'm pretty much all media request. So, as you'll hear in this episode, we never did get to interview any current trader Jos personnel, but after the observed ran, we did get a letter. The firm CEO Dan Bain in your latest economic radio podcast, he wrote you pose the quest. should America be run by trader Jos. We are pretty sure such work would likely require a coat and tie we like hawaiian shirts, so we will pass thanks. So you're here for many current trader Jos personnel in this re broadcast either hope you enjoy it. Nonetheless,
Let's play shark tank today, you're the investors charcoal if you dont know, is the tv show where people pitch business ideas to famous investors? You might be marked Cuba. MR wonderful you're trying to side would you invest in that? Is Michael Roberto he's a business professed. at Bryant University, formerly of the Harvard Business School. These one left there, he likes to start by giving his students this fictional shark tank pitch I'd like to open a new kind of grocery store. We're not gonna. Have any branded items? It's all gonna, be private label we're going to have no television, advertising, no social media whatsoever, We're never gonna have anything on sale. We're not going to accept coupons, love, no loyalty car. We won't have a circular that appears in the Sunday newspaper will have no self check out.
We won't have wide isles or big parking lots. Would you invest in my company and of course, years I think there is no way out invest in that company. That sounds like the stupidest company ever and, of course, it a lot. consternation. That's when Roberta reveals that not only does such a grocery store already exist, but there crushing the competition there at the top by a wide wide margin, they sales per square footage barring unbelievable means three and four times better than some of the leading players in the industry. So sounds like customers love this place, but you might think a story This would be brutal to work for and yet it's ranked among the hundred best american companies work. For so what's it called?
later. Jos trader, gesture Jos, Treader, Jos, strange as I do love trader jobs. There is a good chance. You have never Shopton Trigger Jos, maybe never even heard of it. It's got fewer than five hundred stores, the big chains like Kroger and Albert Sins, have well over two thousand Walmart cells. Groceries more than four thousand vit stores and as Michael Roberto told us trader, Jos, doesn't advertise or do a lot of things, the typical grocery store does that typical grocery store has askew cow Skew stands for stock keeping units, a number of different items, carrying a store. What's vaguely grocery store up, a supermarket might have thirty five thousand scheme right, a tremendous selection and variety you gotta traders Josie, they only have say three thousand start keeping units.
Traitor chose the grocery. Business is famous for low profit margins, lots of competition and lately and even bigger problem for the first time, history. American consumers are spending more money in restaurants and bars than in grocery stores. Trader Jos seems to be bucking this downward trend. It doesn't just have customers, it has The first thing I do when I know I'm going somewheres get on the internet. and find where the closest trader choses. It's never been. Easy to run a grocery chain. The trader Jos, makes it look easy and weirdly fun Walk ended, trader Jos, with eight wrong to do list. It's not a chore. When I walk in The train in Jos, it's a variety seeking exercised. So suddenly do it. That's the question. Try to answer today. A question made more difficult by the fact that trader Jos is a fairly secretive company.
Some of the secrecy is probably due to, who owns them. So we put on our frequent comics goggles in tempt to reverse engineer the secrets of trader Jos, which it turns out, are incredibly free, economical things like choice, architecture, indecision, theory, things like nudging and an embrace of experimentation. In fact, if we economics were grocery store, it might be a trader. Jos really try to be it's like a real life case. Study of behavioral. Economics network. So here's the big question if trader Jos is really so good, should their philosophy be applied elsewhere too trader Jos, can't we can say this, but should trader Jos be running America,
from stature and debonnair productions. This is Reaganomics, radio, the and explores the hidden side of everything. Here's your house Stephen definite. I first got interested and traders, but ten years ago, had never been too their stores, but I had a general impression, cheap and cheerful melody. We laid back and sort of groovy for a grocery store, apparently reflection of its surface. California roots also not aggressively health conscious. But leaning in that direction, and then I read Wall Street Journal article about a german grocery chain called Aldi. That was ramping up. It's! U S! Expansion Aldi is a super cheap so Generic grocery store more than ninety percent of its products, warehouse brands and was beating even Walmart on price. The article said the Ile DE chain had
two branches back in Germany, separately, owned by to wealthy brothers named Albrecht and that one of those branches also owned trader jokes. I found this fact surprising only because when I think of german business practices, I dont think groovy earthy crunchy, California surfing the web, but there it was. I also learned that true Jos stores were much smaller and typical supermarkets that they had their own way. doing things and that places without trader Jos often started petitions to bring one to their town, It was a sort of loony devotion, usually reserved for sports teams. Are your favorite band kind? A grocery store has a following like that
and then when I learned that trader Jos out cells, all other grocery stores per square foot, I really start paying attention. Then one opened up near my office. Your New York started shopping there and, for the most part loving it I realize is not for everyone. In fact, predator strategy is trying not to be for everyone, but I did want to know the secret to their success. We reached out to the traded Jos headquarters in Monrovia, California, and were politely told to get lost, as we mentioned here the company is known for its secrecy, the too broad who founded Aldi North Howdy South in Germany, but you know, have arrived. Heard of that Michael Roberto again, that was kind of the family. Herod early being pretty secretive about their business operations and really they weren't, even you can fine photos of them like on the internet for years. You know they were very secretive. It's a strange combination, affirmed that prides itself on user friendliness, while also keeping its distance, which means that
a lot of what's known about it, comes from industry, analysts and other secondary sources. Blitz start here. In the very beginning, there really was a Joe behind trader Jos, Joe Cologne. He opened the first store in nineteen sixty seven in Pasadena California. He went with a south seas, theme BT, Ceausescu's Hawaiians. Kurtz calling employees, captains and crew members in eighteen. Seventy nine cologne sold the chain to one of the secretive Albrecht brothers feel feel Albrecht was a reckless. Perhaps it was said because he had once been kidnapped and held for ransom for seventeen days in Germany. Albert died in two thousand and ten. The trader Jos remains notoriously press Jai, it's also a privately held company, so no earnings. Calls with investment analysts, no public proclamations of any sort really about how it does business and so to figure out,
How it works will rely on a few people who spent a lot of time. Thinking about trader Jos, including the business school proof, Sir Michael Roberto whom you ve already met correct, also the Columbia Business School. Pressure Sheena younger, whose research specialty is particularly relevant here had been studying choice. Why do we choice, one of the things that affect how in what we choose and what are some things we can do to improve our choice, making abilities. They also talk to a traitor. Jos Super Pham money. Kirk to Serbia, I reside in Seward. Alaska Seward by the way does not have a trader Jos, nor does the state of Alaska the closest store from this. Me, his house is two thousand two hundred ninety five miles away by car in Bellingham Washington to Serbia, is the guy who we heard earlier say this. The first thing I do an ongoing somewheres
get on the internet and find where the closest trader doses and will hear from a spy in the house of trader, chose a former advertising executive, Nay marked gardener, who became obsessed with the chain- and I just have this thought. Like me now, What if I just went and workfare? What would I learn about this company? ah What are your learned about the company? Is it just about everything trader Jos? Does outside of exchanging food for money? Is unorthodox for modern grocery store is a lot to talk about the products of course, the economics of their business model there very homemade. Do it yourself a static, including the hand painted murals that reflect the neighbourhood of every store, Let's start with, when the first things I noticed my start shopping there, the employees, yes, they are friendly and helpful and enthusiastic.
At your Jos, what they want is in place the aisles who have sample the product no the product who can say heavy, try, this wine or that cheese. But what they caught my eye was the sheer number of employees There are so many of them If you go in during slow time, you can easily be outnumbered by employees in their tea these t, shirts and hawaiian Prince one reads: Is there rather than stocking shelves overnight, like most grocery stores trader Jos stocks them during business hours? Why our gardener learned when he went to work there. The priority is, maximize customer interaction, so they would tell us you're gonna be looking for customers who seem like they can't find something that they want, or just seem curious about. Some thing you're going to initiate conversations with these people and that we want you to be friendly. We want you to be chatty, we want you to be empathetic and more than
anything else. We want you to do what it takes to make. Customers feel appreciated and wanted so that explains why there are so many employees in the aisles, but there are also a ton of employees, staffing the check out on one level. This makes sense, makes the long check outline move fast and check out, after all, is where a store takes the customers money. Lesson number one in sales, don't make it hard for but give you their money but trader. Jos also has employees directing traffic at the check out one telling you which register to go to one pulling out of the big q and into the final q. And one or two holding up handmaid sign marking the middle of the queue and the beginning. That's three or four employees do the job that most stores use zero employees. Or maybe they use them. Software. The trader Jos, seems to be aggressively low tech. No self check out I'll
no online ordering and pick up no customer loyalty programmes and apparently later Jos gathers no significant data on customers at all. in the modern business world. This is heresy if you shop at whole foods which is owned by Amazon you can be sure the company has an algorithmic target on your back trader. Jos mean oh really matter, if it was a lie look, lady, that was looking for one five dollar bottle of wine, and if the wine shipment had just come in the back, and I would go and look look through a hundred different cases and see, if I can Find the one that she wanted and get her that on bottle of wine. If I spent fifteen minutes doing that, and that made the customer really happy, then the managers were happy and the store was happy so. This is a riddle. Here's a company that doesn't harness big data and doesn't
we seem to embrace a lot of technology. It employs a lot of real life people and pays them above. The industry. Standard as of two thousand thirteen full time trader. Jos crew members made about fifty thousand dollars a year while captain, made more than a hundred thousand, also with better than average benefits It is also a company that sells its products at very low prices. According to one of those investigations, comparing a basket of items at a bunch of different grocery stores. This one was done in two thousand. Sixteen by the market watch website in the San Francisco Bay Area trader Jos. easily the cheapest compared to Safeway Target and whole foods with thirty two percent cheaper than whole food. So on earth can trader Jos, as Michael Roberto told us, again, the most revenue per square foot in the industry there at the top by a wide wide margin Two thousand twelve analysis estimated that trader Joe cells just
for two thousand dollars of groceries per square foot, all foods about twelve hundred dollars, Walmart six hundred dollars. How is this happening? We should probably start with the products traded cells. Here, let me read off some of what they say are the most popular items, spats cocked limit rosemary Chicken and Carney Assad authentic. Robbie salad blend and cold pressed macho green tea, lemonade Cecil. Turban Otto Sugar chocolate almonds and go to John almonds. Peanut butter filled pretzels in five seed almond bars from the freezer section, chicken, teacup, marsala and gluten free cheese pizza the cauliflower crust. These are the sort of foods that laid up Instagram, accounts and Facebook pages that inspire finance.
gold devotion, even among people who don't have a trader Jos, within twenty three hundred miles like Kirk to who works as a facilities manager for the National Park Service in Alaska. Whenever I leave estate, I usually by a couple hundred dollars worth of goods- and I have an extra suitcase or duffel bag with me in my luggage to Serbia. His duffel bag have been all over. I've been, I know, to some in Portland Oregon. that all over southern California there's a number of them. My wife is from Kentucky, and so we and to that one in Louisville. Now as well as Indianapolis, I got no dc about once a year for work and to go to the trader Jos in Georgetown. What is it about trader Jos Foods that create such a
last, let's put aside for a moment, the question of how good their food is, especially since taste is subjective, leads to some degree. But there are a few things to say about how trader Jos is at least different from typical grocery store. First, there is a sense of Globe Trotting adventure, the Deacon Mozilla, the Carney saga, go to young almonds. That's why Sheena? I anger, thinks of shopping there as a variety seeking exercise. Let's see what kind of candy bars they have, these have cooking. Let's see what kind of deal they might have on wines or cheese is: are their prepared food sections kind of cool? What might they have? I could add some more variety to the house. They also offer rather unsubtle blend of healthy, or at least healthy, seeming and hedonistic. Yes,
you can buy, call Robbie, salad and cauliflower crust pizza, but you ve also got your peanut butter filled, pretzels and seesaw, Inter Bonanno Sugar, chocolate, almonds speaking of which Turban Otto Sugar also known as Natural Brown, sugar, but still sugar. Why add the turban Otto? I have a few guesses one to say: you're, just adding sugar dear already chocolate covered almonds, doesn't sound, very healthy but true, but not of sugar, intriguing, possibly even sophisticated additionally trader Joe seems to understand what everyone in sales understands, especially real estate agents, adjectives, are inexpensive and off.
useful, especially when the actual virtues are limited. A charming house is often in fact, small house trader. Jos reportedly puts a great deal of effort into scouting sourcing and producing food, but their customers truly love, but they also pay a lot of attention to package design and descriptive salesmanship. Their marketing director is called director of words and phrases and causes they publish an old fashioned newsprint bulletin, the fearless flyer with in depth descriptions of new products. When you walk into a trader Jos, there's a playful vibe as if to say, hey you just buying food food is delicious, so enjoy yourself is also an artsy via a writer Levi
More so, oddly enough, then, in a typical bookstore. These details, as casual as they might seem, would also appear to be strategic in two thousand and eleven interview with the Ella Times. Joke alone said that when he started trader chosen, the nineteen sixties. He was inspired by an article he read in scientific American, about the huge spike in Americans attending college. I felt this newly educated class of people would want something different. You recalled, and that was the genesis of Trader Jos, why leeches Pasadena as the first store location bar? As he said, Pasadena is the epitome of a well educated town, trader Josie for over educated and underpaid people for all the classical me actions, museum, curators and journalists. He said this suggests from the very beginning, trader, Jos, understood, cream skimming targeting,
kind of customer and letting the rest slide by. As for the underpaid part of Cologne equation, that would appear to be outdated. An analysis by Time magazine found that, as of two thousand fifteen trader, Jos stores were located in counties with higher household me in income than any other grocery chain, including whole foods, and about ten thousand was higher than U S median income but- and this seems to be another key, component of trader Joe success? They also value frugality, is Michael Alberto found. They usually set up shop in the cheaper parts of the expensive areas from I am in many cases there are all stood law, so they ve save money on the real estate, the real estate firms billow found at home, near trader, Jos stores appreciate more quickly than homes in the city as a whole, concluding that either
you're Jos is really gonna, picking areas that are on the rise or that they are in part causing the rise. So how about a new store in Seward Alaska? That is correct to Serbia's dream. So I started a facebook page. I'll bring trader chose to Alaska. This was in two thousand twelve. I thought man these guys. Maybe they don't know what their missing yet and if I can create the Spaceboat page- and I can get people around us it is our liking it and sending trader Jos, an email to say: hey, we would not to see your store, her then maybe trader Jos Wool, actually listened to us. So after one of US out of town trader Jos shopping binges. When I come home with her two case for I like to throw it on the kitchen table? on, take a picture of it and put it out there, hopefully to motivate people to send
that email to trader Jos and let them know were were out here. His facebook page got some traction about twelve hundred likes I would say most of my friends in Seward are aware that this is something that I would like to see happen unless you think discernment is one of those guys who makes a facebook page for everything. No, so my friends, my time fairly, politically active butter in I honestly, and think of any other store that I might think to start a page to bring up here. Seward Alaska does have a, relatively high median household income, but the population is a problem. Fewer than three thousand people to Serbia concedes that Anchorage a few hours away would be more sensible sight for the first trader, Jos in Alaska and he'd, happily make the drive
He just really wants a traded shows. Every time I go to a trainer Jos lower forty eight, they always look sideways at me when I, when I'm getting two to three hundred dollars worth of goods, but damn I tell them that's because we live in Alaska and we can't get you guys come up here and since I started this page in two thousand twelve I've never responded to a single email it seems a little unlikely, but hey they're gonna, listen to this interview and then my percentage will go up coming up after the bridge we'll get into the economic details of trader Jos. Success will hear how they flip the script, customer relations. Just again, if you would one if you changed the rules? What if You guys were both on the same side, I will answer the question. We know you ve been thinking what does trader Jos,
in common with Michelangelo coming up and after this. Fr Economics, radio sponsored by capital, one with no is or minimums on checking and savings accounts banking with capital. one is the easiest decision in the history of decisions like choosing to listen to another episode of your favorite podcast and, with their top rated app you can deposit transfer money anytime anywhere, making capital one and even easier decision. That's banking re! Imagine What's in your wallet terms, apply capital one a member of the icy
for economics. Radio sponsored by Petsmart Petsmart makes it safe and easy for you to care for your pet at Petsmart. The health and safety of employees, pet parents and pets are its most important, which is why they require face coverings, social distancing and stop plexiglas shields and enhanced cleaning to follow CDC recommendations for contact with him thing. Just order online at Petsmart, not com or on the Petsmart, app Joy, easy curbside, pick up for same day, delivery powered by door dash free through January thirty. First, two thousand twenty one check out: Petsmart dot com for more details, but all the mystery is concerning the success of greater Jos. Here's! What strikes me as the most interesting one, their stores, as we ve learned
are generally quite small, roughly a third, the size of a typical supermarket Michael Roberto, again we're all acclimated to every other shoe it looks the same as thirty five thousand items, seven million Beriah, toothpaste and tomato sauce. Every other player has all those things betrayed her jos, they only have say three thousand start keeping units of the typical trader, Jos or four thousand most in one of their larger stores. Moreover, as we ve learned Treaty Jos prices, are relatively low, and yet they also take in much higher revenues and stores that have more variety and more expensive items. So how remember trader Joe's doesn't sell a lot of brand name groceries. Roughly eighty percent of their products are private label. Also known as store brands. What that means is traded Joseph mitigated, the power the suppliers might have over them while they're not nearly as biggest covers they can get great purchasing power
because they're, condensing all their buying into made us ass to one vendor for very limited number of items- when you're selling, something that you also manufacture, or at least source directly. You We stand to make more money than if you're buying from middle man. That said even store, branded products and taste good, judging from the chain success. They do in fact, some Traitor Jos branded items, may taste identical to brand name foods. Why? Because it appears they are identical. An investigation by the food website eater using freedom, information ACT, requests found many trader. Jos items are in fact manufactured by the same companies that make the brand name versions of products you can buy in many other grocery stores, usually for significantly more money. For instance those trader Jos, Peter chips would cease all they appear to be
exactly the same as Stacy's simply naked Peter Egypt's trader Jos Gluten free chocolate chip cookies according to the investigation, are quote nearly idea go in taste, packaging and ingredients to teach bakeshops cookies? There's nothing wrong with this. Hardly unusual brandname manufacturers to run side business owing to private labels, but most places that sell a lot of house brands are seen as down market discounters, not upmarket superstars, like trader Jos. So why are they different? Some of the credit must go to the clever packaging and the artful private descriptions but to get to the real secret of trader Jos, when I think might be the single biggest reason for its success. You have to go back to. Who Sheena I anger. I had been at the Columbia Business School since nineteen. Ninety eight and I started to study
place. We back in nineteen, namely I angers Phd is in social psychology is the gradual, double majored in psychology and economics she's born in. Toronto to parents who emigrated from India her background she believes, gave her a different perspective on decision making when she started working in the field, and I got very interested in the kinds of quest that we wouldn't have ordinarily asked like well to all cultures siege. ice in the same way, It assumed that it was an eight. We had assumed that everybody saw it the same way that somehow universal, and I I think, big-
I wasn't asian American. I didn't see it as that obvious. She wanted to explore this question with kids from different backgrounds. Her theory was a asian American, kids and white american kids might think differently about choice. Before comparing the two groups, she wanted to establish a baseline to confirm that for the White KIDS choice indeed had a positive effect. This baseline experiment turned out to be pretty interesting on its own. Here's how it worked. She brought a bunch of three year olds, one by one into a room full of toys. Half of them were allowed to choose any toy and they could switch as a please the other half would be given just one toy with no option to switch. I started by looking at wait. American kids go ahead. Diverse now show that I'm capable of actually replicating what prior scientists would say. What prior scientists would say and had been saying for decades is the choice is motivating
having choice or even the illusion of choice, is associated with increased satisfaction and feeling more control over your life. Therefore, the kids who could choose their toy should be happier for having the options and more likely to play longer. These ideas about choice were prominent, not just in psychology. They were baked into the foundation of economic thinking at the time that more choice is almost always better than less But when I anger started her study and broaden the kids who could choose from an entire room full of toys, the white kids would come in and they would look at all these toys and still outside the window, and then when I would just give them legos there were really happy and are playing, and I was like wait. This goes coldly against what I'm supposed to find. There's something wrong here so, Anger went back and examined some of those earlier studies about choice and decision, making
Eliza, when those researchers described giving people lots of choice. In reality. That meant something like two to six options, not a roomful like she had tried. So I anger ran a different study this time, limiting the number of choices and now she confirmed what her predecessors had found, but she kept thinking about what happened in that first study with the roomful of toys Where were they staring unhelpful window? I don't get it. I gave them really really cool toy. They gave them all the most modern toys. At the same time, I was going to this upscale grocery store stores called triggers market, its northern California institution. I anger was at Stanford at the time to be had by two hundred and fifty different kinds of mustards in vinegar than amazing and five hundred different kinds of fruits and vegetables and one hundred different kinds of olive oil than oh, my god. It was
bathing and I would go to all these little tasting sessions and try out like ten different kinds of vinegar- and I also then thought to myself So how come you never by any of those things you taste and I then went to the store manager- and I asked him whether his model of offering people all this choice was working now he said he did, and he pointed to the traffic in the store did have a lot of traffic, but it was still an empirical question. Was
helping or was it not so I anger designed and experiment at draggers to answer the question she set up, tasting booth for jams and she alternated the choice set. Sometimes booth would feature six different jams, and sometimes twenty four, and we looked at two things. First, we looked at, in which case did more people, stop the samples and jam, and we found it more people stopped when they were twenty four and display sixty percent stopped when they were twenty four on display verses. When there were six hundred
play only forty percent of the people stopped and then, when people stopped, we gave every body a coupon, giving them one dollar off if they bought a jar of jam and in the back of the coupon was a code that told us if they saw six versus twenty four and what we found was that of the people who stopped when there were twenty foreign display. Only three percent of those coupons were redeemed, whereas other people who stopped when there were six on display Thirty per cent of the coupons were redeem interesting. A larger choice set generates more interests, the smaller choice that generates more China. I angers jam study very simple but very powerful go on to become one, the most famous studies, indecision, science, because it illustrates what a lot of us
when we enter, for instance, gigantic supermarket with defining illustrated. We said we want more choice, presumably because of all the opportunities it provides us but when it comes down to making a choice, we don't want that choice. To be too hard or to conflict ridden or too burdensome, I anger followed up her jams study with look at employee participation in retirement savings plants and essentially what we found was that the plans that offered their employees more options. You saw wheeled decrease in participation rates, so if you had a plan that offered people less than five options, the likelihood to participate was roughly around seventy five percent and by the time you got two plans that offered people around sixty options. Now participation rates had dropped below sea
deeper, that this phenomenon has come to be called the paradox of choice, but I anger doesn't think that's quite right. It's not that more choice. As always, worse than that, less is always better. She argues that choice is both a limiting and a powerful tool. Every context is different. You can imagine that a huge choice is particularly welcome in the digital round, where you can search for exactly what you want with a few keystrokes. Assuming that, as you know what you want, but in the analogue world in the world of the grocery store, for instance, the size of a choice set matters not just because of the cost of real estate and transportation, storage and labour to stop the shelves, but because of how we people make decisions envision a shelf in supermarket is seven million Veronica toothpaste and tomato sauce and the treaty Jos shelf, it doesn't,
overwhelmed me. It usually gives me just a few choice: as per domain and having just a few choices per domain is more likely to lead to action. Imagine yourself, standing in and I'll and Trader Jos, you come across her five seed Almond bar and your lizard brain says. Well, there are no for seed almond bars or succeed almond bar I don't even know why I need seeds in my home and bars, but sure I think I'll get some of those trader Joe. Understands less is more. It understands is a word of the moment, curious fashion. They don't overwhelm me away. Choice, which is why you're more willing to examine each novel choice,
There is a story, probably not true about Michelangelo. Someone supposedly asked him how difficult it had been to sculpt his famous David, and he said it's easy, just chip away the stone that doesn't, look like David. I am not saying trader Jos, Quantum Mc Landfills level, but you get the idea. There is great value in clearing away the clutter. which is one reason Sheena anger personally loves shopping at trader Jos. It doesn't give me the boring stuff right. It keeps me, except because I want to see whether they have and what are they have, that might get be thinking about something I don't ordinarily think about. So they also maintain the mystery of novelty. For me, novelty is also a powerful tool in sales, and this too trader Jos understands it is famous for constantly introducing new products experimenting with them, really, which means old products.
to go. Maybe they'll come back, maybe they won't. This strategy would appear to be risky norm in a typical grocery store. If the item that you typically bought, isn't there you're really past right, you're, mad Michael Roberto, again and shortages customers have come to understand and that that's part of the trade off you might say your peach. Mangle salsa disappear, but double something new to try that you can offer at your next cocktail party and while people with anger notes, the strategy also gives every trip to traders There was a sense of a treasure hunt, but that are appetite for novelty. Is domain specific. I deliberately go into that I knew that venue being traded Jos because I want learn about some choices. I'm trying to update my brain on choices. But when I go into my coffee shop in the morning do not engage in any act of updating,
want to know. I walk into my coffee shop, Good morning. I don't even say anything: they just bring me out exactly what they bring me every other day and its ain't. Exactly the same, and I have no interest in engaging in it- kind of variety seek discovered through just totally by accident, That's mark gardener. Again. The former advertising executive who end up working at trader Jos, he was in California. At the time I thought it was a local store or had a kind of a theme and I didn't know any better because they don't do anything I only was exposed to it. Does it have to be in my neighborhood. Then gardener move to Kansas City, yes and vat. When I really learned about trader Jos as a company, because there was no trader chose, but
There were these rumours about we're, gonna get a trader shows and there was so much excitement. There's a facebook page called bring. Traitor chose to Kansas City, the has five thousand friends as a former advertising. gardener was impressed, I think thee. Number one thing that struck me about trader shows is that they almost don't advertise at all. They dont market, that they have a pretty good website. Now but but for years that a rudimentary website they had almost no social media presence today had almost no kind of public relations so that they didn't do a whole bunch of the things that I had, spent my entire working life thinking, while we you know these are the things that you do when you build a brand. So that was really striking to me, and I just had this thought like you know what, if
went and work there. What would I learn about this company gardener learned about the company by working there, that he wrote a book about it called build. A brand like trader shows how did traders respond. Well, as you know, there are very, very secretive company, so they responded exactly the way I expected, which was with utter silence, would initially impress gardener was how trader Jos grown so much without spending all the money that most firm spend on marketing, advertising and so on, but what impressed him once he got inside working as crew member for twelve dollars an hour was the company's culture well before the New Kansas City store had opened on the first or second day of training A trader Jos executive came in to meet with the roughly fifty new hires, including gardener. The proceedings began with that standard heart
I request to say your name and tell a story about yourself, and I am not kidding you. Fifty hands went up It was all these people were. I picked me I want to be the first I want to start. I want to tell you my story- and I looked around at that- that group of here going out, and mine was up to you now, because I that because I love talking about myself but most people- don't at least not a group of strangers- and I thought wow this is not an ordinary group of people and what I realized pretty quickly is: oh, my god. This is what they hire for the higher for this kind of perverted, naturally chatty kind of person. As the training progressed, These guys really weren't too worried about teaching me how to operate a grocery store. Right. I mean there was some discussion about. You know keeping the cold things cold and how important that is, and I M
There was a little bit of discussion about. This is how I cash register works about you know when you're bagging groceries. This is how you do it. There was some discussion of process, but actually there was a lot of discussion of traders those values? There was a tremendous amount of discussion about. How are you going to be with their customers and then once a store opened, no matter how crazy the store was no matter how much pressure there was to do something else. If you were doing something for a custom, her that true, everything seeing how trader Jos encouraged its employees to interact with customers to partner up with them did just makes sense. The gardener it inspired him to wonder why this theoretically obvious approach is, in fact quite rare, consider he says a standard trip to the Department of motor vehicles,
but what happens when you go to the DE envy or what happens if you stand on? One side of a counter and then there's your opponent on the other side of the counter, and it's as if you're, in a sort of a game or a sport where you're trying to get your a license plate, driver's license and they're going to say, oh yeah, have an up to date, inspection certificate for your cars, so get out of here right. It's like a volleyball game. Practically, it's an it's you against them now one. If you change the rules- and one of you said you guys are both on the same side. Your goal is to get them that drivers, licence or that license plate that they need, and so instead of just saying you don't have the right inspection. What if you told them look. This is what's wrong with the certificate that you ve got it's either out of date or as from the wrong state or whatever, and this is where you would go to get the inspection that you need.
And let me look at all your other things. While I've got you here and if there's anything else, you need I'll tell you what you need so that the next I am you, come it's gonna, be a slam dunk for you. What if that was what, if it wasn't adversarial what, if you guys we're both on the same side, What, if you guys were both on the same side, good question, don't you think? Look I'm not saying Mark gardeners. Example is necessarily fair to the door. envy. Nor am I saying that trader Jos should win the Nobel Peace Prize, but it does strike me that a lot of interactions in the modern world are set up to be more competitive than they need me and that the benefits of collaboration are often undervalued. I think back to an interview we
with Microsoft. Ceo sucking Adela has been reversing Microsoft, long standing policy of treating tech rivals like Google and Apple as pure arrivals and instead sometimes partnering with them Nothing can be taken for granted that there's no such thing as a perpetual motion machine. What you have to Who is be good at being able to refresh yourself at the crucial times? So, if you the choice. Would you have trader? Jos run the Department of motor vehicles, and maybe even I'm not serious here, except maybe I am Would you have them run America released when you try to export some of their collaborative frugal? Don't take yourself so seriously methodologies, Michael Roberta, the business School professor, whose analyzed trade
It was warns. It's not so easy that it would even be easy for another grocery store to replicate the trader Jos experience to do what they do. just how are the same people they hire you have to emulate. The private label strategy, the real estate strategy, the pricing, the Corky culture, and it's off in the soft things, not just the kind of people you but the way you train them and the culture create them when we can build a store. That looks like a traitor Jos, but when we have people walk in, can they have the same experience or that's very hard to replicate fair enough again. I don't mean to heap undue praise on a grocery changes because they found a way to make their appealing food cheap and people pretty well along the way. But I will say this: we spend a lot of time on this show and in modern society at large, pointing out problems and failures in
sundry idiocy? Is it's nice once in a while to come across an institution even if it's just a grocery store this seemed to work well for several constituencies several dimensions and what can be learned from it. Meanwhile, coming up next time on economics, radio, everything you always want to know about me in developing countries, consumers to add high value proteins to their diet and the future of meat, including needless me, we're gonna make me that's more delicious
and better nutritionally and more affordable, but next time for economics, radio frequencies radio is produced by sticker in Dublin productions. This episode was produced by Alan Meloth. Our staff includes Allison, Craig Low Gregg, Ribbon, Harry Huggins, Zack Le Pen, Ski met Hickey and Korean Wallace. Daphne Chen is our turn our theme: song is MR fortune by the hitchhikers. All the other music was composed by Louis Kara. You can subscribe to for economics, radio on any podcast app, including Spotify, or the apple or Google podcast apps. If you want to get the entire freedoms, radio, archived that is available exclusively on the stitched up or at free economics com, where you can also find transcripts, show notes and sign up for our newsletter. If you want our entire archive without ads, along with bonus, episodes go to stitch premium, dotcom, Flash free, economics we also published every week on medium short text? Version of our new episode go to medium
comes lash for economics, radio. We can also be found on Twitter and Facebook and linked in or the email at radio at for economics that car, economics. Radio also plays on many NPR station. So please check your local station for details. Thank you for listening. Teacher.
Transcript generated on 2021-01-19.