By Beth Kowitt, FORTUNE.
Apple’s retail stores aren’t the only place where lines form these days. It’s 7:30 on a July morning, and already a crowd has gathered for the opening of Trader Joe’s newest outpost, in Manhattan’s Chelsea neighborhood. The waiting shoppers chat about their favorite Trader Joe’s foods, and a woman in line launches into a monologue comparing the retailer’s West Coast and East Coast locations. Another customer suggests that the chain will be good for Chelsea, even though the area is already brimming with places to buy groceries, including Whole Foods and several upscale food boutiques.
But Trader Joe’s is no ordinary grocery chain. It’s an offbeat, fun discovery zone that elevates food shopping from a chore to a cultural experience. It stocks its shelves with a winning combination of low-cost, yuppie-friendly staples (cage-free eggs and organic blue agave sweetener) and exotic, affordable luxuries — Belgian butter waffle cookies or Thai lime-and-chili cashews — that you simply can’t find anyplace else.
Employees dress in goofy trademark Hawaiian shirts, hand stickers out to your squirming kids, and cheerfully refund your money if you’re unhappy with a purchase — no questions asked. At the Chelsea store opening, workers greeted customers with high-fives and free cookies. Try getting that kind of love at the Piggly Wiggly.
It’s little wonder that Trader Joe’s is one of the hottest retailers in the U.S. It now boasts 344 stores in 25 states and Washington, D.C., and strip-mall operators and consumers alike aggressively lobby the chain, based in Monrovia, Calif., to come to their towns. A Trader Joe’s brings with it good jobs, and its presence in your community is like an affirmation that you and your neighbors are worldly and smart.
The privately held company’s sales last year were roughly $8 billion, the same size as Whole Foods’ and bigger than those of Bed Bath & Beyond, No. 314 on the Fortune 500 list. Unlike those massive shopping emporiums, Trader Joe’s has a deliberately scaled-down strategy: It is opening just five more locations this year. The company selects relatively small stores with a carefully curated selection of items. (Typical grocery stores can carry 50,000 stock-keeping units, or SKUs; Trader Joe’s sells about 4,000 SKUs, and about 80% of the stock bears the Trader Joe’s brand.) The result: Its stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods’. The company has no debt and funds all growth from its own coffers.