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Name Games: Trader Joe's vs. Trader John's

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A New York grocer once named John claimed he was also a "trader". Nice try.

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We've heard about the bizarre Chinese knock-off versions of popular American franchises like McDnoald's, Bucksstar Coffee, and Pizza Huh (Is that a question?), complete with reasonable facsimiles of their famous restaurant logos and storefronts. These egregious copycats are designed to dupe the less brand aware (or visually impaired or drunk) consumer into patronizing what they believe is the legitimate establishment. Then again, there's always the possibility the Chinese population prefers the special sauce of the Big Mca over the real thing.

The reasoning behind creating a counterfeit product is pretty cut and dried. It's a relatively effortless way to make a cheap buck (or bucksstar) by replicating what has proven successful without having to invest the time, money, energy, and risk into creating a unique idea. But what is a bit of a head scratcher is when a well-established business abandons its brand and co-opts a competitor's, which is precisely what happened between Gristedes, the New York supermarket, and Trader Joe's, the specialty grocery chain with a cult-like following.

According to Forbes, the decade has been unkind to the Gristedes chain. The century-old business has suffered massive store closings, and sales declined by more than 30 percent, to $275 million, between 2000 and 2008. Meanwhile, sales at Trader Joe's have skyrocketed 190 percent in five years, reaching over $7 billion in 2009.

In early 2009, John Catsimatidis -- the billionaire Gristedes owner, Red Apple Group chairman, and onetime mayoral hopeful -- gave up his fight to compete with the lines outside the Trader Joe's three blocks away from his dumpy 14th Street Gristedes location. Taking the 'if you can't beat 'em, copy 'em' approach, Catsimatidis invested nearly $1 million on a Trader Joe's-esque mock-up of his 10,000 square-foot store, aping the rival shop's signature rustic motifs of wood paneling, wagon wheels and baskets, right down to the red-lettered awning and new name: Trader John's.



Trader John's embodied the style, but not the substance of its trader foe. Rather than stocking its shelves with private labeled, low-priced, and socially and environmentally conscious organic produce, meats, health food, nutritional products, and affectionately nicknamed 'three-buck-chuck' wine, it opted for Wakefern Food Corporation's discount, off-brand products that are sold at ShopRite and PriceRite stores. But Trader John's never got a chance to sell anything. The day before its grand opening, the impostor grocery lost a trademark infringement court case filed by Trader Joe's and was ordered by a Manhattan judge to change its moniker.

In the law suit complaint, Trader Joe's claimed that the makeover of the Gristedes store was a "blatant attempt to confuse consumers and capitalize on Trader Joe's hard-earned goodwill." John Catsimatidis responded, "My name is John. I've been a trader all my life, and we don't think we've done anything wrong."

If Trader John's was a half-hearted attempt to catch some of his competitor's runoff, Catsimatidis gave about a quarter effort with his next concept: Grocer John's. Albeit original, the new name with its blue signage lasted just over a year. In March of 2010, the bad idea was finally dropped by its third incarnation and closed its doors for good.

But Catsimatidis shouldn't be discouraged. The name "Hole Foods" is still up for grabs.

No positions in stocks mentioned.

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