October 2006


Obvious_adams “Obvious Adams” was a recommended reading in “The Art of Profitability”, a book which can be read a zillion times, each time you can get a new learning. One of the fascinating things about “The Art of Profitability” is that it takes the reader through various classic books that had been written in the past and gels it with the current and potential business realities.

The book “Obvious Adams” written b Robert R. Updegraff is a small 56 page book and it delivers a very powerful message. It says that successful people are the ones who do obvious things once they decide what they want to do in their lives. The book traces the life of Oliver B. Adams who began his life in a grocery store and became known to the world as “Obvious Adams” , the successful business man . At every step of his life, Adams, once decided to work on something, did pretty much the obvious thing, the thing which people might not even think about it and go about in a complex way.

When Adams decides to work for a world famous advertising agency James B Oswald, he does the obvious. He directly goes and meets him in person and the Oswald, at first reluctant to talk to Adams gives in when he sees through Adams logic of doing the obvious. Once employed in the firm, Adams solves most of the problems through simple common sense approach. When Adams starts his work at the agency , he clearly sees that the quality of his stuff as being way below the people working in the agency and he could never see himself getting an independent contract in the days to come. One of the nice looking ad campaign fails and Adams who is emotionally attached to the product wants to prove that he can bring back the product to the attention of the people. And he does infact. The Obvious thing for an ad campaign failure is to try again. But how many of products nowadays are killed merely because there appears to be no way to market these products.

Adams believed that advertising need not be mushy ads always. If one were to provide good information, people would definitely read. No wonder, Trader Joe’s 23 page Fearless Flyer is read avidly among all its customers. It serves as a great retention strategy. However one needs to be cautious about flooding the brochure with only facts. It must be like a graphic novel where customers can easily understand the things that are being said

Takeaway from the book –
Picking out the obvious presupposes analysis. Analysis presupposes Thinking. Hence taking obvious decisions which lead to success is not all that easy, but at the same time, it is one of most crucial factors for a great business

The ending of the book is a charmer. It builds a story as though it is going to tell you the secret of success and ends the book with the line

“There is no secret to success. Just do the obvious” – Though such one-liners suffer from a flawed self-referential logic, I guess, that’s fine , considering that the wealthiest and most successful people do the things which are bloody obvious, though in hindsight only , for most of the people.

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TRADER JOE’s ADVENTURE

  • Small stores which are generally one-sixth of the size of regular supermarket
  • In-store layouts that are difficult to navigate
  • Insufficient Parking
  • Inconvenient Locations
  • No National Brands, eliminating the use of manufacturer coupons
  • Limited variety of 2000 to 2500 products – 10% of consumers find their typical local supermarket
  • No emphasis on sales or promotions
  • Emphasis on private labels, which represents 80 to 85% of all items stocked

The above descriptions do not appear to characterize 2.3 Billion Annual revenue chain, Revenue of 12 Million USD per store. However they do. The chain we are taking about is Trader Joe

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The first thing that strikes from the above descriptions is the us
e of differentiation as a strategy. Let us look at what has it done right


What has it eliminated ?

  • Convenience items like Coke, pepsi, lighters etc
  • Formal attire for employees
  • 0 marketing budget for ad campaigns , inserts, and direct mailers


What has it reduced ?

  • Reduced opex by having smaller stores
  • Reduce tech investments so that customers can remain in the store for more   time.Auto-Check out counter idea     was desisted in almost all the stores
  • Not very aggressive in opening stores ( remember Webvan )


What has it created ?

  • Unique fun type culture in the store
  • Store which is to be fun and informative.
  • Making a visit to the store more of an adventure than a mundane activity
  • Organic food store
  • Buy overstocked items from vendors and sell them at a discount, not sacrificing on the quality of the goods
  • 5 to 10 R&D stores where quick experimentation can be done on various products
  • Two Buck Chuck wine – brilliant move to democratize the wine usage in USA
  • Fearless Flyer to market the store thr word of mouth
  • Radio Spots to market the store thr word of mouth

What has it improved ?

  • Understanding the customer – Create a need for him — Make him aware that Organic food is good and then pitch     the product   
  • Leverage Parent company’s relationship – Aldi- and at the same time retain its unique way of doing biz
  • 25 items introduced every week and it is – survival of the fittest- for the private labels

Overall lesson from the founder Joe coulombe :
" You must observe people like an anthropologist. You must observe their Spending habits, Entertainment habits, Commuting habits, Dating habits, etc. The only way to create a great business is to create a need in such a way that it changes one of their habits..This is a tough task..but if you succeed…nothing like it "

The book gives a non-retail industry person a nice overview of the industry and narrates Trader Joe’s success in that context. To have a look at one of their stores, here are some of the snaps