Trader Joe's is a privately held chain of premium grocery stores with headquarters in Monrovia, California. With an eclectic array of products, a friendly atmosphere, and low prices relative to the quality of its goods, Trader Joe's has become one of the most popular grocery store chains in America and it maintains a very loyal customer base. The company has over 500 stores in 42 states and the District of Columbia.

Key Takeaways

  • Trader Joe's is a privately held chain of premium grocery stores with headquarters in Monrovia, California.
  • While public companies often raise far more money from investors than if they remain privately-held, private companies like Trader Joe's don't have to sacrifice their values in order to appease the expectations of shareholders.
  • Trader Joe's operates small stores with less square footage and doesn't charge its suppliers a slotting fee.

Most people would be thrilled to invest in a company of this caliber. However, investors shouldn't bother looking up the ticker symbol for Trader Joe's because the company has been privately-held since it was founded in 1967 by Joe Coulombe. The company began as a chain of convenience stores in the Greater Los Angeles area in 1958. The first Trader Joe's-branded store opened in 1967 in Pasadena, California. Joe Coulombe was succeeded by John Shields as the company's CEO in 1987. Under Shields' leadership, the company greatly expanded, opening stores in Arizona and the Pacific Northwest. In 1996, the company expanded to the East Coast. Dan Bane became the CEO of Trader Joe's in 2001. The German entrepreneur Theo Albrecht purchased Trader Joe's in 1979. Ownership was passed onto his heirs when he died in 2010.

Between 1990 and 2001, the number of Trader Joe's stores quintupled and the company multiplied its profits by ten. In 2019, Trader Joe's was ranked number 23 in best places to work in the United States by Glassdoor and in 2020, the company ranked number 14. However, there are no short-term plans for Trader Joe's to go public. In fact, part of the reason the company has been able to achieve so much success is that it has remained a privately-owned company.

More Freedom to Maintain Its Brand Values

When a company decides to go public, it has to answer to its shareholders who become partial owners of the company when they purchase shares. Shareholders expect that a company will experience growth year-over-year. If this doesn't happen, shareholders may become dissatisfied. When they go public, many companies are pressured into making changes that expedite their growth but might be executed at the expense of their core values.

Because Trader Joe's doesn't have to answer to shareholders, it can stay true to its brand values and give its consumers, employees, and other internal stakeholders the type of experience they want.

For example, Trader Joe's has made a commitment to operating smaller stores. Although this gives the company less square footage to sell products, it creates a more intimate environment in their stores. Trader Joe's also maintains a smaller selection of products. If a product doesn't appear to be selling well in its stores, then the company can easily get rid of it and replace it with something else. As a result, customers can trust the quality of all of their products.

Trader Joe's also doesn't charge its suppliers a slotting fee. This fee is typical of grocers and means that their suppliers have to pay a fee in return for shelf space. This results in suppliers trying to outbid each other and ensures that the supplier who is willing to pay the highest bid price gets the shelf space. They may not be the most deserving supplier or have the best product to offer. In the case of slotting fees, higher prices are also passed on to customers, so Trader Joe's has opted not to charge their suppliers for slotting fees.

Trader Joe's and the Future of Grocery Chains

Food retailers and grocery chains are facing a changing landscape, with a growing number of discount grocers in the industry. The acquisition of Whole Foods Market (WFM) by Amazon in August 2017 also created more pressure in the industry. There is speculation that Whole Foods will make significant gains in terms of market share and could threaten Trader Joe's growth in the future.