On the Hunt for the Grocery Store Everyone Wants
Few things are as shrouded in mystery as Trader Joe’s operating strategy. The Hawaiian shirt-clad grocers are notoriously tight-lipped about their business practices, and even more so about where and when they open a new store.
For communities in search of a TJ’s, that void gives rise to copious amounts of speculation, rumor and even desperation. Take San Jose, for example. In hopes of boosting its struggling downtown, city officials proposed a $2.9 million subsidy to help lure the reluctant market to a shopping center.
Last month, Auburn, Calif., city council members ditched their suits and ties in exchange for Hawaiian shirts and leis in a stunt to grab the attention of Trader Joe’s corporate offices. According to the Auburn Journal, the council is considering an ordinance requiring property owners to give TJ’s first crack at vacant retail space and offering a public TV channel as incentive.
Downtown Los Angeles hasn’t escaped the cultish zeal. For at least the last five years, since the rush of new loft buildings kicked off the current residential boom, one burning question has been on everyone’s lips: When are we going to get a Trader Joe’s?
There’s been no shortage of speculation. In November, one reader on blogdowntown.com asked if there was any truth to reports that grocery store officials had surveyed a parking lot on the southeast corner of Second and Broadway.
A few months ago during a lunch at the Palm, one longtime Downtown player said he had heard that a planned residential project northwest of Staples Center may have a contract with Trader Joe’s, but that the project is tied up in litigation and it could be years before the store opens.
Still another report, this one in a March 2006 issue of Variety, quoted market spokeswoman Alison Mochizuki as saying: “Downtown Los Angeles is not in Trader Joe’s two-year strategy at this point.”
A call to Mochizuki came up with the same response, but this time with one caveat.
“At this time Downtown Los Angeles is not in our two-year plan,” she said. “However things change all the time.”
Wooing the Market
The fact that the company is even going on the record about Downtown is a shift from previous years, when most inquiries elicited no comment or, more frequently, unreturned calls.
Trader Joe’s stipulates in its leases that no formal announcement of a store opening can be made until one month before the location debuts. But of course, word always leaks.
What is known is that Downtown business leaders have actively been trying to recruit the market since 1994. The popular low-priced chain appears to have increased its consideration of Downtown in November 2005, when company brass toured the area. For many, it was a victory just to get the store’s real estate hunter, Doug Yokumizo, to the Central City. Just three years prior he had dismissed the area altogether.
“He said then, ‘You could give me free rent, build the store and I still wouldn’t build Downtown,’” recalled Hal Bastian, senior vice president and director of economic development for the Downtown Center Business Improvement District.
The reason, according to those who have dealt with the store’s representatives, is that Downtown doesn’t have enough density yet or even the right market demographic.
It’s a claim that baffles many, particularly in light of a recent DCBID survey of Downtown residents in which 84.8% responded that their top choice for a grocer would be Trader Joe’s.
“I don’t know and I don’t understand what they don’t see,” Bastian said. “How could we not be their market? It makes no sense.”
He quickly added, “But I want to make sure they know I love them, want them and will personally stock the first shelves.”
Big in New York
The first Trader Joe’s was founded by Joe Coulombe in South Pasadena in 1967. The operation was bought in 1979 by a family that owns the German grocer Aldi. The private chain now has more than 250 stores in more than 20 states and is ranked as the nation’s 27th biggest supermarket chain, according toSupermarket News.
The average Trader Joe’s is about 10,000 square feet, and is typically located in a strip mall or older shopping district where overhead is lower. But there are cases when the quirky company has broken with tradition.
Last year, TJ’s opened an outlet in New York City’s bustling Union Square, a much more cosmopolitan setting than it normally occupies. Typically jaded New Yorkers proved the frenzy reaches across all demographics when they lined up on the sidewalk for opening day.
Meanwhile, the Downtown Los Angeles residential population is expected to hit about 40,000 by the end of 2008, and the workforce is currently pegged at nearly half a million. Most retail experts agree that a population of about 15,000 people is needed to support one supermarket.
All of which makes many Downtowners wonder what exactly Trader Joe’s is looking for.
Meanwhile, other grocers are stepping in. This summer Ralphs will open at Ninth and Flower streets on the bottom of the Market Lofts with a gourmet Fresh Fare concept.
In the $2 billion Grand Avenue project expected to open in 2011, a gourmet grocer – possibly a Whole Foods – is planned for a 50,000-square-foot space at First and Olive streets. Additionally, the planned Fig Central project at Figueroa and 11th streets is eying a specialty grocer. That project and three other developers in South Park are known to be gunning for Trader Joe’s, said one real estate source.
In the absence of a local store, Downtowners routinely make the trek to get their mango salsa, mini quiches and Two-Buck Chuck at the notoriously congested Silver Lake Trader Joe’s on Hyperion Boulevard – about four miles east of Downtown L.A.
In fact, Downtown shoppers noticed that the Silver Lake and South Pasadena stores were recently asking customers for their zip code in a potential attempt to gauge demand for a new location.
While Downtown leaders say they aren’t offering incentives to sweeten the deal, Bastian said he has three retail spaces available immediately that would suit the grocer’s needs.
“We feel the market is ripe for a Trader Joe’s,” he said. “They are taking a wait-and-see approach, and want to see how the Ralphs store does. My hope is they make a commitment to Downtown before it becomes too expensive to get here.”
For now, though, Downtowners will have to commute if they want their candy-covered blueberries, herbed goat cheese and vegan chocolate chip cookies. Or, they’ll get used to Ralphs, which in a possible preemptive strike plans to have wine, cheese and olive stations in its Downtown store.