Trader Joes: Not your “Average Joe” Organization

by in Marketing

pexels-photo-94436Walk through the sliding glass doors at any Trader Joes (TJ’s) and you’ll embark on a unique culinary journey – a refreshing spin on your traditional grocery experience. You’ll be greeted by workers who sport bold Hawaiian-themed shirts. You’ll see every aisle lined with an eclectic collection of offerings, including the likes of chicken parmesan lollipops, bacon jam, and pickle-flavored popcorn. While you shop, you’ll hear sequences of nautical-like bells ringing, sometimes one at a time, sometimes in sequence. You won’t find any scales for weighing produce. And you’ll be hard pressed to find any sale or clearance items.

Beneath the seemingly bizarre facets of TJ’s stores lies an organization that has been designed and crafted as meticulously as the store’s famous “Speculoos Cookie Butter.” The exotic Hawaiian-themed shirts pay homage to the fact that TJ’s staff travel all around the globe in search of exceptional products to source. The unique mix of products represents TJ’s objective of offering customers products they won’t find anywhere else (approximately 80% of the company’s SKUs are TJs brand products). The ringing of bells is a manifestation of TJ’s more aurally-pleasing version of a public address system, alerting workers as to specific actions to be taken. The absence of produce-weighing scales is the result of TJ’s not wanting to clutter its stores with the apparatuses. And prices are never discounted because TJ’s offers its customers the best values every day.

In many ways, TJs’ business model represents a model of a highly-functional organization. All companies and teams, especially sales teams, can benefit from understanding TJ’s business model recipe, a model that is driven by several core tenants:

Encourage felt responsibility

TJ’s employees are heavily screened throughout the hiring process. They’re hired based on their expected ability to operate as part of a close-knit and collaborative team. Employees are called “crew members,” an affectionate term that underscores the fact that they all work together to operate the same ship. Members of the “crew” are well averse at performing a wide variety of tasks; everyone is trained in stocking shelves, manning the cashiers, and, yes, cleaning up messes in the aisles.

Thanks to these and many other efforts, TJ’s employees exude many attributes oftentimes lacking in organizations. Because, for example, crew members perform all major store roles, there’s an understanding of, and appreciation for, fellow shipmates. Workers feel personally responsible for each other (a concept known as felt responsibility in organizational behavior research).

Often overlooked in business, felt responsibility tends to transcend only the most successful organizations. Felt responsibility is especially important in the context of sales organizations. When felt responsibility is high, employees are more likely to collaborate and share goals. Studies show that the more extensively employees collaborate, the greater the odds are of a deal closing.  It’s also been found that shared goals and metrics can result in a 25% increase in the rate of quota achievement and a 27% spike in three-year profit growth rates. Not surprisingly, felt responsibility also favorably impacts employee retention rates. It’s little wonder that TJ’s boasts a full-time worker turnover rate of less than 10%, a rate that is notably lower than that reported across traditional supermarkets.

Advocate strong product knowledge 

Far too often, employees lack a familiarity with the products they are tasked to promote and sell. Without a thorough understanding of product features and functionalities, it’s impossible for sales reps to convey the value of a purchase, especially as compared to “similar” offerings from competitors. At the very least, customers are left frustrated, and organizations are left to defend disappointing bottom-line results.

TJ’s management team appreciates that advocating product knowledge can be a quick-win. Product knowledge is of particular importance for a grocer like TJ’s; in the absence of employee product knowledge, customers would be inclined to quickly jump ship and find “make-do” substitutes at big-box retailers. Additionally, since many TJ’s products are unique, tend to be sold under the TJ’s private brand label, and/or are globally-sourced, employee product knowledge is essential.

TJ’s ensures all crew members are product experts. Product knowledge is advocated in countless ways. Crew members, for example get involved in TJ’s in-store product sampling ritual. According to one employee, “We are always cooking things up…When we get new foods in, we try them out. We eat and drink throughout the day here.” Crew members can also reportedly purchase free or highly subsidized products, an initiative that leads to greater likelihood of purchase and, ultimately, product familiarity.

TJ’s has successful gained and maintained customer loyalty through its advocacy of product knowledge. Initiatives that empower staff to increase their product knowledge base are a sure-fire way to develop stronger relationships with customers. Minimal product familiarity on the part of employees threatens and impairs confidence and customer satisfaction, resulting in a less-than-optimal shopping experience.

Implement a well-crafted communication system

One of the biggest challenges faced by an organization is optimizing the manner by which employees communicate with one another. The results can be disastrous. Poor internal communications cost organizations more than $26,000 per employee each year due to lost efficiency.  A well-crafted communication system allows everyone to understand what is being asked of them and where they should focus their efforts. As well, it makes for a collaborative work environment.

TJ’s management team recognizes the value of a well-crafted communication system. The company has opted to forgo the distracting and inherently inefficient public address system typically found at grocery stores. In a brilliant move, TJ’s has opted to replace the often-overbearing PA systems with a nautical-themed Morse code system. If a bell is rung by a crew member, it’s a beckon for help of a nature that is denoted by the number of rings. One ring, for example, signals a request to promptly open an additional cash register. Three rings, on the other hand, signals the need for “captain” (i.e., store manager) assistance at the front of the store. From a customer perspective, TJ’s communication system is music to the ears. There’s an inherent efficiency to it. Instead of crew members soliciting assistance by naming a specific employee who may be located anywhere across the store’s footprint, the first available crew member steps up to the plate to perform the task. Response time is significantly curtained, which ultimately leads to heightened customer experience levels.

Organizations frequently struggle to implement a strong communication system – one that is purposeful and focuses on results and relationships. While bell sequencing isn’t likely to make for a viable communication method for most organizations, other communication tools such as Slack, Asana, and Chatter can constitute viable options. Communications tools must be about much more than eliminating email (it’s been reported that fewer than half of employees open emails that pertain to internal communication). Effective ones offer organizations the power of discussion forums (so, for example, teams can quickly review all conversations related to a particular project or initiative in one central location), instant messaging capabilities (so, for example, employees an quickly and easily communicate), etc.

Encourage autonomy

Autonomy is an essential component of any successful company. Worker autonomy has been found to enhance role performance, job commitment, and job satisfaction (Sadler-Smith, El-Kot, & Leat, 2003). For TJ’s, autonomy penetrates the organizational DNA, starting with its parent company, Aldi Nord, a German-owned supermarket chain that operates approximately 10,000 stores in 18 countries. Aldi hasn’t attempted to micromanage TJ’s. On the contrary, its affiliates only visit TJ’s corporate headquarters once each year.

Autonomy at TJ’s has transcended to its suppliers. Vendors are able, and encouraged to, innovate autonomously, which fuels product innovation. TJ’s will reportedly offer manufacturers detailed specifications for new products along with the price it will pay, but then leave it up to the vendors to create innovative high-quality items.

Autonomy is also pervasive among crew members. Crew members are free to open the packaging of any products customers wish to sample. The crew is also encouraged to recommended personal favorites and be forthright about items that don’t meet their fancy. Taking autonomy to the next level, crew members have the wherewithal to email vendors directly with product suggestions and feedback.

Executives need not have tasted TJ’s famous 19 cent bananas (the cost has remained the same for more than 15 years) to appreciate TJ’s as model of organizational success. Every average-Joe organization has the potential to gain from adopting components of TJ’s business model, a function of felt responsibility, product knowledge, communication, and autonomy.

 

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About The Author

Rebecca Hinds
Rebecca Hinds - View more articles

Rebecca Hinds graduated from Stanford University in 2014 with a M.S. in Management Science and Engineering. In 2013, Rebecca co-founded Stratio, a semi-conductor company developing infrared sensors. The company was selected by the Kairos Society as one of the 50 most innovative student-run businesses in the world.