60 years ago Joe Coulombe was a young entrepreneur who ran the failing convenience store chain known as Pronto Markets.
He’s now popularly known for his role as “Trader Joe,” the person who started the national chain of grocery stores. The chain boasts more than 530 stores across all of the U.S., with 10,000 employees, with an estimated 2020 annual revenue of $16.5 billion as per Supermarket News as well as U.K. Research firm IGD.
In a memoir that was published earlier in the year, this would never be possible without a tiny number of large eggs.
Coulombe who died in February 2020, at age 89, recounted the tale within ” Becoming Trader Joe: How I Did Business My Way & Still Beat the Big Guys,” that was released after his death in June. The story began in 1962, at the time that Pronto Markets was a small chain with about 10 locations located in California that was trying to stay ahead of bigger rivals like 7-Eleven.
A farmer approached Coulombe and offered to buy eggs. “Into my tiny office came the egg man,” Coulombe wrote. “He had a problem: too many Extra Large AA eggs.”
The farmer in desperate need offered to sell eggs to Coulombe at the same cost as the regular-sized Large eggs, even though they were 12 percent larger. The farmer only had a small quantity of eggs that wasn’t enough to permit large supermarkets to put in an order, yet he’d be a significant loss in the event that he could not unload them.
Coulombe enthusiastically accepted the farmer’s offer of the offer, and immediately put out advertisements advertising the discounted eggs that he offered for exactly the same amount as normal eggs. The business was booming — but most important, the situation inspired Coulombe to consider different ways to capitalize on loopholes in the market and create low prices.
“The ads that we began running revolutionized Pronto Markets,” Coulombe wrote. “And they helped to generate the profits I needed, first to stay afloat, and later to build Trader Joe’s.”
A loophole, as an example one, was involving imports of wine. In 1970, just three years after he had opened the first store to be branded Trader Joe’s in Pasadena, California, Coulombe found a reliable importer who could source wines from France’s renowned Bordeaux region at a much lower cost than the wholesalers employed by other stores.
The importer allowed Coulombe determine his own prices to offer the wine to his customers. This meant Trader Joe’s could undercut the prices that other retailers were charging that are set by wholesalers in accordance with the California’s Fair Trade Law.
“We had found a loophole in the law, and by God we drove a truck through it!” Coulombe wrote.
As the company grew in the past the egg experiment was “one of the foundations of Trader Joe’s merchandising,” He wrote in his report, which helped him develop four tests to identify the products to sell. Products had for them to meet the criteria of “high value per cubic inch, high rate of consumption, easily handled and something in which we could be outstanding in terms of price or assortment.”
At some moment, Coulombe and his team discovered the U.S. regulators had placed strict restrictions on the import of all kinds of cheeses to ensure that domestic cheeses are competitive however, no regulations were in place for Brie.
Trade Joe’s quickly became America’s largest importer of Brie and even offered Brie for less than Velveeta at times. The company later used the same principles to use with items like whole coffee beans as well as maple syrup. They purchased the former with 50 gallon drums purchased from the Quebec cooperative.
in his autobiography, Coulombe wrote about the large eggs that he offered during Pronto Market as “our first product knowledge breakthrough.”