Worshipping at the Church of Trader Joe’s

I love Trader Joe’s.  Of course I do. I’m right smack in the middle of the target demographic for their olive oil and their French-milled hand soap and their organic gluten-free, free-trade, free-range hummus. I drive my car-share Prius into the underground parking lot of their urban oasis and open my wallet, feeling virtuous about getting pretty good prices on pretty-good-for-me food…and ignoring the fact that the total on my receipt skyrockets because of all the less-than-good-for-me wine I’ve snuck in with my frozen Indian food and monkey-picked oolong tea.

Fortune Magazine has a new story up about TJ’s that examines the carefully constructed image of the grocery store we love to love.

I’m fascinated by our relationships with retailers. Watching the roll-out of the iPhone 4 this year was particularly illuminating — the anger expressed at Steve Jobs and Apple was real and visceral, and yet people (myself included) jockeyed for the opportunity to hand over our money.

Trader Joe’s has been particularly successful at maintaining its image as a local, funky, straight-outta-Berkeley kind of operation, despite the fact that it is the spawn of a huge European company. As TJ’s considers the pros and cons of further expansion, it will be interesting to see if they can maintain that good guy image or if they start shift from being the store people love to love to being the store with which people have a love/hate relationship, like Apple or, in the grocery arena, Whole Foods. Though if they are still making a profit, do they really care how we feel about them? Does it matter?

To get inside the mysterious world of Trader Joe’s, Fortune spent two months speaking with former executives, competitors, industry analysts, and suppliers, most of whom asked not to be named. What emerged is a picture of a business at a crossroads: As the company expands into new markets and adds stores — analysts say the grocer could easily triple its size in the coming years — it must find a way to maintain its small-store vibe with customers. “They see themselves as a national chain of neighborhood specialty grocery stores,” says Mark Mallinger, a Pepperdine University professor who has done research for the company. “It means you want to create an image of mom and pop as you grow.” That’s no easy task. Just ask Starbucks (SBUX, Fortune 500) CEO Howard Schultz, whose expansion has been a huge success but has come at the expense of credibility with some coffee aficionados. The alternative is to remain a small brand with unflagging devotees, like outdoor clothier Patagonia. If it can get the balance right, Trader Joe’s may be one of the few retailers to marry cult appeal with scale. Just don’t expect anyone from the company to talk about it.

The Fortune piece is here.

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