From its humble beginnings as a regional hybrid convenience store, Trader Joe's has grown into a $3-billion-a-year national chain with 217 stores. It is adding 8 to 25 stores a year, all stocked with an eclectic selection of bargain gourmet-style foods, wines and health-food supplements. Analysts who study the specialty grocer attribute its financial success to heavy use of private labels, direct deals with producers and very compact stores. A typical Trader Joe's covers 10,000 square feet, a fifth the size of a modern full-service supermarket, and carries a tenth as many items.

But there's another critical element in the mix: the carefully selected employees who know how to keep shoppers coming back for more. Upbeat employees wander the aisles, eager to chat about the latest Brie or the newest flavor of hummus. "Probably the most important thing they do is generate a very engaging experience with the customer, which serves as a powerful marketing tool," says Bill Bishop, president of Willard Bishop Consulting. The cheerful and helpful clerks also know how to move groceries, which boosts margins. Trader Joe's total sales work out to approximately $15 million per store. That means each store generates an average $1,500 in sales per square foot. Compare that to Whole Foods, which generates about $750 per square foot in sales.

Trader Joe's differs from Whole Foods and other grocers in another way. Its stock is constantly changing. To make sure that workers keep up with the stock, stores hold weekly tastings for employees to sample the latest goods. "After the store closed, we would try everything from the wine to frozen pizza to candy," says Melody Derloshon, a former Trader Joe's stock clerk. "It was like a buffet table." Workers also get a 10% store discount, which serves as both an added bonus and an inducement to keep employees acquainted with the products. Trader Joe's workers give the impression that they enjoy being at the stores. "The people who work in our stores are the front line, the first customer contact," says Trader Joe's spokeswoman Pat St. John. "They are the soul of Trader Joe's."

When Trader Joes goes shopping for new employees, it looks for more than generic clerks. While retail experience is a plus, what really impresses managers is a helpful, friendly attitude. Job postings suggest that prospective employees should be ambitious and possess qualities like being outgoing, engaging, upbeat, fun-loving and adventurous. The company's former CEO, John Shields, tells about how managers interviewing job applicants watch for character clues. "In the first interview, if they [the applicants] don't smile within the first 30 seconds, they are gone." The trademark smiling stock clerks and cashiers decked out in Hawaiian shirts can be found in Trader Joe's stores from the West Coast to New England.

The friendly grocery clerks that Trader Joe's tries to cultivate may be more than company ambassadors of good-will. They may also be antidotes to employee theft. Shoplifting, employee theft and other losses, what is called "shrinkage" in retail speak, are a constant problem for shopkeepers. But it's a particularly vexing issue in the low-margin grocery industry. At Trader Joe's, spending extra money on hiring the right employees and then treating and rewarding them well pays off because loyal and satisfied employees tend to rip off the company less and stick around 50% longer than the industry average.

1 What situational factors do you see represented in the article that characterize the context for hiring new grocery clerks at a Trader Joes?

2 How do the situational factors listed in your answer to Question 1 link to emphasizing certain strategic priorities when hiring grocery clerks? Identify five priorities that, given these situational factors, Trader Joes favors when addressing this hiring need.

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