MGMT6048: Trader Joe’s, an upscale specialty supermarket chain, was founded in 1967 by Joe Coulombe: Organisational Behaviour Case Study, MTU, Ireland

Case Study

Trader Joe’s, an upscale specialty supermarket chain, was founded in 1967 by Joe Coulombe. From the beginning, Coulombe realized that finding a new niche in the supermarket business was only the first step to helping his small, growing company succeed. He knew that to encourage customers to visit his stores and buy more expensive gourmet products, he needed to provide them with excellent customer service. So, he had to find ways to motivate his salespeople to perform at a high level. His approach to organizing was to decentralize authority and empower salespeople to take responsibility for meeting customer needs.

Rather than instructing employees to follow strict operating rules and to get the approval of their supervisor before making customer-specific decisions, employees were given autonomy to make their own decisions and provide personalized customer service. This approach led employees to feel they “owned” their supermarkets. Coulombe worked to develop a culture based on values about providing excellent customer service and developing personalized relationships with customers. Coulombe led by example and created a store environment in which employees were treated as individuals and felt valued as people. For example, the theme behind the design of his stores was to create the feeling of a Hawaiian resort: employees wear loud Hawaiian shirts, and store managers are called captains. Once again, this helped to create strong values and norms that emphasize personalized customer service.

Finally, Joe Coulombe’s approach was strongly influenced by the way he went about controlling salespeople. From the outset, he created a policy of promotion from within the company so that the highest performing salespeople could rise to become store captains and beyond in the organization. And, from the beginning, he recognized the need to treat employees in a fair and equitable way to encourage them to develop the
customer-oriented values and norms needed to provide personalized customer service.

He decided that full-time employees should earn at least the median household income for their communities, which averaged
$7,000 a year in the 1960s and is $48,000 today—an astonishingly high amount compared to the pay of employees of regular supermarkets such as Kroger’s and Safeway. Moreover, store captains, who are vital in
helping create and reinforce Trader Joe’s store culture, are rewarded with salaries and bonuses that can exceed $100,000 a year. And, all salespeople know that as the store chain expands, they may also be promoted
to this level. In summary, Coulombe’s approach to developing the right set of organizational behaviors for his small business created a solid foundation on which this upscale specialty supermarket has grown and prospered.