Meet Company That Could Eventually Take Down Walmart
Retail analysts say the world’s biggest retailer has reason to fear a small grocery chain that’s based in Idaho and boasts a business model that allows it to undercut Walmart on prices.
So about that eye-catching Walmart quote. Those are the words of Burt Flickinger III, a widely respected supermarket-retailing-industry expert who works for the Strategic Resource Group. Flickinger was quoted in a recent Idaho Statesman story about WinCo, a chain of roughly 100 supermarkets in the western U.S., based in Boise, Idaho.“WinCo arguably may be the best retailer in the western U.S.,” Flickinger says while touring a WinCo store. “WinCo is really unstoppable at this point,” he goes on. “They’re Walmart’s worst nightmare.”
Flickinger isn’t the only industry insider discussing WinCo and Walmart in the same breath. “While many supermarkets strive to keep within a few percentage points of Walmart stores’ prices, WinCo Foods often undersells the massive discount chain,” the industry publication Supermarket News explained last spring.
How does WinCo manage to undercut Walmart on prices? And why should the world’s largest retailer have any reason to fear a small regional grocery chain that most Americans have never heard of? First off, the reason you probably haven’t heard of WinCo is partly that at this point its stores are limited to a handful of states in the West. But WinCo is a little-known player also because the company is a privately held enterprise that seems to take its privacy seriously, preferring a low-key, low-profile approach — which is extremely rare in a world of retailers boisterously begging for shoppers’ attention.
Simply put, WinCo “communicates low prices by delivering low prices,” Jon Hauptman, a partner at Willard Bishop, a retail-consulting firm, told Supermarket News. “WinCo doesn’t do much to communicate price and value. It convinces shoppers of value based on the shopping experience, rather than relying on smoke and mirrors to convince them.”
As for how WinCo can deliver such low prices, the Statesman story details the company’s history and business model. It all began, interestingly enough, when two Idaho businessmen opened a warehouse-type discount store with a name that could have been pulled from a movie slyly spoofing Walmart. Waremart, it was called. The company became employee-owned in 1985, and changed its name to WinCo (short for Winning Company) in 1999.
Customers bag their own groceries at checkout counters at WinCo Foods on Fairview Avenue in Boise, Idaho, on July 1, 2013 | Joe Jaszewski / The Idaho Statesman / AP
Prices are kept low through a variety of strategies, the main one being that it often cuts out distributors and other middlemen and buys many goods directly from farms and factories. WinCo also trims costs by not accepting credit cards and by asking customers to bag their own groceries. Similar to warehouse membership stores like Sam’s Club and Costco, and also to successful discount grocers with small stores like Trader Joe’s and Aldi, WinCo stores are organized and minimalist, without many frills, and without the tremendous variety of merchandise that’s become standard at most supermarkets. “Everything is neat and clean, but basic,” Hauptman told Supermarket News. “Though the stores are very large, with a lot of categories, they lack depth or breadth of variety.”
While all these factors help WinCo compete with Walmart on price, what really might scare the world’s largest retailer is how WinCo treats its employees. In sharp contrast to Walmart, which regularly comes under fire for practices like understaffing stores to keep costs down and hiring tons of temporary workers as a means to avoid paying full-time workers benefits, WinCo has a reputation for doing right by employees. It provides health benefits to all staffers who work at least 24 hours per week. The company also has a pension, with employees getting an amount equal to 20% of their annual salary put in a plan that’s paid for by WinCo; a company spokesperson told the Idaho Statesman that more than 400 nonexecutive workers (cashiers, produce clerks and such) currently have pensions worth over $1 million apiece.
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Generally speaking, shoppers tolerate Walmart’s empty shelves and subpar customer service because the prices are so good. The fact that another retailer — even a small regional one — is able to compete and sometimes beat Walmart on prices, while also operating well-organized stores staffed by workers who enjoy their jobs, like their employer and genuinely want the company to be successful? Well, that’s got to alarm the world’s biggest retailer, if not keep executives up at night.
While WinCo does keep its business quiet, we do know one thing: the company is in the process of expanding to new states, with two locations opening in north Texas, for example. Flickinger anticipates rapid growth in the near future, with WinCo doubling in size every five to seven years going forward.
Is this store owned by Americans? individuals or a big corporation?
The article says that the company is employee owned since 1985.
This kind of warehouse store is not disability/aging client or moms with kids friendly. It is darn near impossible to shop, load your basket, unload your basket to checkout and pay, bag your groceries, put them back in a cart, ,Go to your car,, transfer the bags to your car, go home and repeat the same procedure to carry in your groceries and put them away. Walmart on the other hand has a checkout aisle for the disabled, You have the ability to do a self check out and bag and use a card if you wish. At least at my Walmart, if I need help and ask for it, I am given that help with a friendly smile. I would be exhausted if I had to shop at Winco. My daughter who is young healthy and is able to use Winco tried shopping there and said she could not find enough variety to want to go back. That is the other side of this story.
I’ve gotten assistance at both our Fresno & Clovis Winco when shopping with my senior mother.
Sorry “Elf” we only had to ask & they delivered.
We shop there once a week.
aldi has operated in this manner for years – works very well – so ppl are not pampered even a little – they enjoy their pampering thru saving money
Can’t comment on winco but what Walmart do you shop at?? I’ve never, and I mean never, been given a smile when asking for help at a Walmart. Walmart in my area often runs out of items for days at a time. Every employee at Walmart gets paid trash and treated like trash. I hope Winco spreads through the south.
I hate shopping at Walmart because they make every thing from China, an authoritarian regime that views US as their enemy. Why big corporations keep feeding the communist, authoritarian country like China???
Tom, I have not entered a Walmart for about 15 years now. So agree with you. As consumers we need to think about what our dollars are supporting.
PS there was a chain in Az yrs ago just like Winco and they went out of business quickly
This sounds like a great business model. Just because the other one failed doesn’t mean that all will fail. I would shope there for my big trips, but I’m sure it would be hard on seniors and disabled people and mothers with young kids.
PS there was a chain in Az yrs ago just like this and they went out of business quickly
I live in Reno, NV we have had 2 Winco stores here for over 20yrs, long before Walmart moved in, with its 6 plus stores here now, and Winco is still just fine, so as for going out of business, highly unlikely, Elf you sound a bit like a Walmart executive ? I like Winco because it cares for it’s employees, this is not a common practice in this day and age and as Normarae, mentioned , if asked, they will assist, Walmart is the economical arm into the USA for China. It’s nice to see a company care about its employee’s and provide good prices to it’s consumers.
I wish we had a Winco in Michigan.
Yes Walmart is a US company that is an economical arm for their mother land China. Stop buying anything that MADE IN CHINA. Stop feeding the authoritarian, brutal communist regime!
Sure wish they would come here to Citrus County, Fl. We could use something like this, instead of the “big box” stores. Basic is great !
Good to see, hope this store makes it. Tired of Wal Mart boasting they are the least expensive, they are not!!!! They are way above other chain stores. I only shop there for few grocery items, some misc stuff, other than that I go to Kroger and Save A lot… get more bang for my buck.. Hope this store makes a go of it but I keep thinking in the back of my mind, Wal Mart has such buying power, but,,,,, think of this, When Wal Mart first opened, they boasted they were only selling items made in America,, well now you are lucky if you can find one item it that store that is made in America.. They have fallen in my eyes and buy cheap stuff from China, which by the way I feel more and more people are turning their noses at buying cheap made junk from China,, I am one of those people..I will go to the dollar stores for a few hardware items, not the food items, only because stuff like scotch tape etc are cheaper than Walmart. Still made in China, but at least I am trying not to buy Chinese stuff. The food in Wal mart especially thet frozen fish is either from China , Viet Nam, etc,, wont buy that stuff either. Look at the box stuff , look at the bagged and canned stuff and the frozen stuff, if it is not made here in the US, I wont buy it. I think more and more people should be looking at not buying if it is not grown or produced right here. Just sayin…
Here in Elizabethtown KY we have a Aldi’s. I often have wondered how they can sell merchandise at such a lower price. Especially their produce, milk……………..so what if I have to bag my own groceries !
Please open a store in Covington, La…:)
We need this in New Jersey
I refuse to shop at walmart. They went into my mother-in-law’s home town saying they would put all of the other stores out of business. Today, the town is nearly a ghost town.
I live in Walmart country only 55 miles from Bentonville Ar. Also worked for Walmart for 19 years, treated good for the most part, however would have been nice to work for a co. that only bought & sold American made, & really treated there associates like people & not numbers. Any chance on ever having a Win-Co in this part of the U.S. ?