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Trader Joe's and its CEO, Dan Bane, declined repeated requests to speak to Fortune, and the <br />company has never participated in a major story about its business operations. <br />Some of that may be because Trader Joe's business tactics are often very much at odds with its <br />image as the funky shop around the corner that sources its wares from local farms and food <br />artisans. Sometimes it does, but big, well-known companies also make many of Trader Joe's <br />products. Those Trader Joe's pita chips? Made by Stacy's, a division of PepsiCo's (PEP,Fortune <br />500) Frito-Lay. On the East Coast much of its yogurt is supplied by Danone's Stonyfield Farm. And <br />finicky foodies probably don't like to think about how Trader Joe's scale enables the chain to sell a <br />pound of organic lemons for $2. <br />To get inside the mysterious world of Trader Joe's, Fortune spent two months speaking with former <br />executives, competitors, industry analysts, and suppliers, most of whom asked not to be named. <br />What emerged is a picture of a business at a crossroads: As the company expands into new <br />markets and adds stores -- analysts say the grocer could easily triple its size in the coming years -- it <br />must find a way to maintain its small-store vibe with customers. "They see themselves as a national <br />chain of neighborhood specialty grocery stores," says Mark Mallinger, a Pepperdine University <br />professor who has done research for the company. "It means you want to create an image of mom <br />and pop as you grow." That's no easy task. Just ask Starbucks (SBUX,Fortune 500) CEO Howard <br />Schultz, whose expansion has been a huge success but has come at the expense of credibility with <br />some coffee aficionados. The alternative is to remain a small brand with unflagging devotees, like <br />outdoor clothier Patagonia. If it can get the balance right, Trader Joe's may be one of the few <br />retailers to marry cult appeal with scale. Just don't expect anyone from the company to talk about it. <br />Who's a fan of Trader Joe's? Young Hollywood types like Jessica Alba are regularly photographed <br />brandishing Trader Joe's shopping bags -- but Supreme Court Justice Sonia Sotomayor reportedly is <br />a fan too. "What's not to like?" says Costco (COST,Fortune 500) co-founder and CEO Jim Sinegal. <br />"They're very good retailers, and we admire them a lot." Visit a Trader Joe's early in the day, and <br />there are senior citizens on fixed incomes shopping for bargains; on weekends and evenings a well- <br />heeled crowd takes over. Kevin Kelley, whose consulting firm Shook Kelley has researched Trader <br />Joe's for its competitors, jokes that the typical shopper is the "Volvo-driving professor who could be <br />CEO of a Fortune 100 company if he could get over his capitalist angst." <br />The rise of Trader Joe's reflects Americans' changing attitudes about food. While Trader Joe's is not <br />a health food chain, it stocks a dizzying array of organics. It sells billions of dollars in food and <br />beverages that years ago would have been considered gourmet but are now mainstays of the U.S. <br />diet, such as craft beers and white-cheese popcorn. The genius of Trader Joe's is staying a step <br />ahead of Americans' increasingly adventurous palates with interesting new items that shoppers will <br />collectively buy in big volumes. <br />The retailer's foodie roots and quirky in-store culture date to the original Joe. Joe Coulombe <br />(pronounced COO-lomb), now 80, opened the first Trader Joe's 43 years ago in Pasadena to serve <br />a sophisticated -- but strapped -- consumer. He named the store Trader Joe's to evoke images of the <br /> <br />