Is Trader Joe’s the Perfect Bait? By Richard Brenneman

Friday February 17, 2006

Trader Joe’s probably ranks as the most attractive bait the city’s seen skewered on a developer’s hook in recent years. 

Locating the popular market on Berkeley’s most popular street would offer something for almost everyone, ranging from Berkeley’s socially conscious shoppers to city officials desperate to balance the municipality’s ailing budgets. 

Proponents and critics of more residential development in the downtown area have pointed to the area’s lack of a major supermarket—and while the store would be a significant walk for a bag-laden resident of, say, the Fine Arts Building on Shattuck Avenue, it’s still closer than anything else. 

Groceries, which comprise the bulk of sales at traditional markets, are exempt from sales tax in California. 

Bulk sales of the taxable booze and snack foods that comprise a large segment of Trader Joe’s transaction are a powerful lure for a cash-strapped city, especially the numbers floated by the developers—maybe $600,000 or as high as a million dollars. 

Developer Evan McDonald said that figure compares to the $25,000 in sales taxes generated for the city by Kragen Auto Parts, the primary tenant in the strip mall that now occupies the site. 

And for the politically conscious and environmentally sensitive, the store won’t stamp its brand on genetically engineered foods or offer any seafood products from the eastern coast of Canada because of those infamous baby seal hunts. 

And Trader Joe’s own branded eggs don’t come from caged factory farm hens, thanks to an agreement the chain signed in November with the Humane Society of the United States. 

The store will, however, carry the controversial items offered under other brand names, though for Berkeley folk averse to enriching avaricious conglomerates, 85 percent of the store’s non-alcoholic products are private label stock rather than nationally known brand names, according to a June 2002 article in the trade publication Private Label Buyer. 

Trader Joe’s is owned by German Theo Albrecht, the 83-year-old billionaire who usually appears on listings of the world’s richest people—though estimates of his wealth vary widely. 

The store began in Southern California, the creation of grocer Joe Coulombe, who in the 1950s had started Pronto markets, fast food stores similar to 7-Eleven. 

According to the Trader Joe’s web site, in 1967 Coulombe decided to expand his product line to include gourmet and hard-to-find items, giving rise to his new brand. 

Albrecht bought the chain through a family trust 12 years later, carrying protecting the store’s image as a pleasant and slightly eccentric venue for would-be gourmets, gourmands and trenchermen.  

Trader Joe’s has avoided union organizers by offering higher pay, according to a Jan. 16, 2004 article in the German paper Deutsche Welle. 

The chain does little conventional advertising, preferring instead to distribute its own “Fearless Flyer” as inserts in local papers. The publication features descriptions of products and recipes illustrated with drawings and antique engravings rather than the more conventional photographs of typical grocery store ads. 

The formula works, and spectacularly. 

According to the cover article in the November/December issue of Private Label Magazine, Trader Joe’s—with its smaller selection and stores—generates about $1,200 to $1,300 per square foot in sales a year, about twice the revenue of conventional markets. 

The stores typically stock about 2,000 to 2,500 items, about one-tenth the stock of typical markets, reports the magazine, which also quotes estimates from industry experts who say that sales amount to about $12 million per store annually, or $2.6 billion for the chain. 

While the article says stores average about 8,000 to 9,000 square feet, McDonald said the chain has asked for 13,5000 square feet in the their building, of which 12,000 would be usable sales area.  

The store has also requested 48 parking spaces, which, with the store, will account for the lion’s share of the building’s ground floor. 

“Trader Joe’s expects it be a very well-performing store,” said Hudson..