--- title: Book Review | Becoming Trader Joe by Joe Coulombe with Patty Civalleri description: Book Review | Becoming Trader Joe by Joe Coulombe with Patty Civalleri image: https://blog.naos.com.au/hubfs/Trader%20Joes.jpg --- ##### [Subscribe to NAOS NEWS & Insights](https://www.naos.com.au/subscribe) [![](https://assets.website-files.com/5b3d7f5582ecae7f1e026ce2/60be9de099c2716fb2efb4a7_naos.svg) ![](https://assets.website-files.com/5b3d7f5582ecae7f1e026ce2/640666256ede5e8ae8e33da0_B-Corp-Logo-Black-RGB.png)](https://blog.naos.com.au/) [Home](https://www.naos.com.au) About [About NAOS](https://www.naos.com.au/about-our-firm) [Our Team](https://www.naos.com.au/about-our-firm#people) [Why invest with NAOS](https://www.naos.com.au/about-our-firm#why-invest) [Our Investment Beliefs](https://www.naos.com.au/about-our-firm#beliefs) [Our Investment Process](https://www.naos.com.au/about-our-firm#how-we-invest) Listed Investment Companies [NCC: NAOS Emerging Opportunities Company Limited](https://www.naos.com.au/ncc-naos-emerging-opportunities-company-limited) [NSC: NAOS Small Cap Opportunities Company Limited](https://www.naos.com.au/nsc-naos-small-cap-opportunities-company-limited) [NAC: NAOS Ex-50 Opportunities Company Limited](https://www.naos.com.au/nac-naos-ex50-opportunities-company-limited) [Our Listed Investment Companies](https://www.naos.com.au/our-lics-compare-our-lics) [How to Invest](https://www.naos.com.au/our-lics-compare-our-lics#how-to-invest) Private Opportunities [NAOS Private Opportunities Fund](https://www.naos.com.au/npof-naos-private-opportunities-fund) [NAOS Ideas Network](https://www.naos.com.au/naos-ideas-network) E.S.G. 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Seasonal swings.. were handled with overtime pay to full-time employees and by adjusting part-time hours”. * Incentives *“The Captains had a bonus that theoretically had no limit … based on Trades Joe’s overall profit, allocated among the stores based on each store’s contribution”* *“My ideal … was that Captains should have the chance to make more than executives in the office”* Small Store Format  On Maximising the use of a small store format, they utilised the following rules: “I looked for other categories that met the Four Tests 1. High value per cubic inch 2. High rate of consumption 3. Easily handled  4. Something in which we could be outstanding in terms of price or assortment” Testing this method: *“Fruit and vegetables met the first and second test but flunked the third because produce requires constant reworking. * *Fresh meat flunked the third test even more”* *“People often ask me, how many stores did we have at such-and-such a time? It’s the wrong question to ask. What’s important is dollar sales. * *For example from 1980 to 1988, we increased the number of stores by 50 percent, but sales were up 340 percent”* *“Sales per store, sales per square foot: those are the measures I look at. * *Trader Joe’s sales were $1,000 per square foot of total area. The supermarket average is $570, but they use “sales area” not total area” (which excludes the back room area)* Setting of Prices / Margin *“The fact that we wound up with 23 percent (gross profit) is irrelevant. What was relevant was that each SKU was a profit centre after considering all the costs of handling it”.*  Store Location Criteria 1. Demographic coherence 2. Excellent boulevard access 3. Preferably, freestanding locations 4. I was willing to pay extra for a loading dock. You’ll recapture the extra rent in labour savings and worker’s compensation premiums.  Lease Terms *“Never, never, never sign a lease with a “continuous operation” clause.”* Opportunistic Pivots To buy bulk volumes of wine, Coulombe went to France in the 1970s to buy large quantities at “bargain prices”, off Swiss Giant Nestle, who had “made a huge, mistaken commitment” to the inventory.  *“We created Two Wine Banks at stores twenty miles apparat, and wound up storing thousands of cases for customers, Our low rates helped build the popularity of Trader Joe’s with real wine freaks”* Even still, despite the abovementioned success, they decided to shut these banks down, which is a good example at how many times they evolved the business and how many iterations/evolutions of strategy there were.  [Link to book](https://www.amazon.com.au/Becoming-Trader-Joe-Business-Still/dp/1400225434)    ###### [Podcast & Book Reviews](https://blog.naos.com.au/podcast-reviews/topic/podcast-book-reviews) ###### Share this post ### Comments ##### NAOS Asset Management ![](https://uploads-ssl.webflow.com/5b09df434e359cb73f2f80b5/5b09df434e359c362d2f81c4_location-icon-white.svg) Level 34, 25 Martin Place Sydney NSW 2000 ![](https://uploads-ssl.webflow.com/5b09df434e359cb73f2f80b5/5b09df434e359c121c2f81c8_mail-icon-white.svg) [enquiries@naos.com.au](mailto:enquiries@naos.com.au?subject=NAOS%20Website%20Contact) ![](https://uploads-ssl.webflow.com/5b09df434e359cb73f2f80b5/5b09df434e359ce0f62f81c9_phone-icon-white.svg) +61 2 9002 1576 ##### Our Listed Investment Companies [ASX: NCC - NAOS Emerging Oportunities Company Limited](http://www.naos.com.au/ncc-naos-emerging-opportunities-company-limited) [ASX: NSC - NAOS Small Cap Opportunities Company Limited](http://www.naos.com.au/nsc-naos-small-cap-opportunities-company-limited) [ASX: NAC - NAOS Ex-50 Opportunities Company Limited](http://www.naos.com.au/nac-naos-ex50-opportunities-company-limited) [NAOS Private Opportunities Fund](https://www.naos.com.au/npof-naos-private-opportunities-fund) [Listed Investment Companies](http://www.naos.com.au/our-lics-compare-our-lics) [Share Registry](https://boardroomlimited.com.au/) [Corporate Governance](http://www.naos.com.au/corporate-governance) ##### More Links [Privacy Policy](http://www.naos.com.au/privacy-policy) [Terms & Conditions](http://www.naos.com.au/terms-conditions) ##### Follow NAOS [![](https://uploads-ssl.webflow.com/5b3d7f5582ecae7f1e026ce2/5b3d7f5582ecae7e51026d27_twitter-icon-white.svg)](https://twitter.com/naosassetmgmt) [![](https://uploads-ssl.webflow.com/5b09df434e359cb73f2f80b5/5b09df434e359c11092f818c_facebook-icon-white.svg)](https://www.facebook.com/NAOSAssetManagement) [![](https://uploads-ssl.webflow.com/5b3d7f5582ecae7f1e026ce2/5b3d7f5582ecae133c026dca_Group%20261.svg)](https://www.linkedin.com/company/naos-asset-management) [![](https://uploads-ssl.webflow.com/5b3d7f5582ecae7f1e026ce2/5bf6115a4ae34255e68089e1_Asset%201Chart4.svg)](https://www.instagram.com/naos_asset_management/) Join our investment community. 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