Name Games: Trader Joe's vs. Trader John's
A New York grocer once named John claimed he was also a "trader". Nice try.
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.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter