Meet the Low-Key, Low-Cost Grocery Chain Being Called ‘Walmart’s Worst Nightmare’

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Joe Jaszewski / The Idaho Statesman / AP

Customers bag their own groceries at checkout counters at WinCo Foods on Fairview Avenue in Boise, Idaho, on July 1, 2013

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.

(MORE: How Two German-Owned Sister Supermarket Brands Became Hot Trendsetters in the U.S.)

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.

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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.

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.

(MORE: A Disloyalty Movement? Supermarkets and Customers Drop Loyalty-Card Programs)

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 next year, for example. Flickinger anticipates rapid growth in the near future, with WinCo doubling in size every five to seven years going forward.

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496 comments
marco5811
marco5811

The prices are great and the service is friendly, but the main reason we shop at Win-Co is because they treat their employees well. And that means, they aren't having to get food stamps and Medicaid to make ends meet which helps our community. http://bonusz-online.com/unibet/

donewithit
donewithit

If your on the governments dime ie, welfare, ebt, food stamps this is the place for you this company caters to this type of customer look around when your in there lots of low life's including their employees. had no cash in my pocket tried to use my credit card, guess what they don't except credit cards just food stamps ebt and debit cards, was pretty embarrassed when i couldn't pay especially when the person in front of me payed out $144 in food stamps but myself with plenty of funds was turned away. I will never go back to this store, what kind of store doesn't take credit cards. Want to hang out with the lowest lifeforms in our society go to a WinCo

phronesis1
phronesis1

A couple of days ago at Winco I chatted with a cashier. She said that  Winco doesn't pay much and expects workers to work any and all shifts without much notice. She has worked there for about 3 yrs and will continue to do so "because of the pension".  Yesterday I read this article and it struck me that Winco claims that several hundred "non executives" have accumulated pensions of one million dollars.

This sounded too good to be true and so I gave it some thought. I found that this doesn't add up! I figured (and I may be wrong, being no math whiz) that it would take a salary of $125,000 a year, over a career of 40 yrs to earn one million!  I doubt the Winco "non executives" even make much more than $50,000 a year...unless they pay better than Costco. I also doubt that they have so many employees who have worked for Winco for 40 years! Is this an honest mistake? They wouldn't lie about this would they?



E..D.C

AndrewNickell
AndrewNickell

I've lived in Idaho with WinCo right next to me all my life, I never knew how lucky I was!

AnneWilsonDonaldson
AnneWilsonDonaldson

I have worked for Winco 13 years and everything in the above article is true.  We're not only treated well by management, we are also taken seriously as owners of the company.  Walmart is eating our dust, as our new stores are a welcome sight and there's no union trying to drive a wedge between employees and management.  No need for that here.  It's non-stop for my entire shift as a cashier and I wouldn't have it any other way.  Knowing that I already have a half million dollar retirement (that's still growing) is just icing on the cake.  Go Winco!

AlButterfield
AlButterfield

Shopped at Win co in northern Ca. moved to the Houston TX area about 9 years ago and still miss Win Co. Please come to the north Houston area.

therain
therain

A win for the free market. Companies decide on their own how much they pay their employees, and consumers decide on their own if they want to shop there. No government involved and no unions involved.

clemonsderick
clemonsderick

Went to the Wal Mart down the street from a new Win Co store.   The place seemed empty.   All the old customers are heading to the new store because of the prices.  Those billionaires should pay attention.  Better prices and better employees.

CoryRichard
CoryRichard

When my WinCo firs opened up, there was picketing by the grocers union during construction of the building a good year after it opened its doors. WinCo doesn't have a unionized workforce but they do pay somewhat respectable wages from what I've heard from friends who have worked there. Most start off at least $10 an hour and those that have been there for a few years make around $14-$15 a hour. Great prices, I prefer bagging my own groceries anyway and everything's dirt cheap with a huge bulk foods section.

drmarkellis
drmarkellis

Are the owners Mormon? They seem to always be coming up with great business models. The airline Azul here in Brazil is kicking.

DougMcGee
DougMcGee

WinCo is awesome.  They also keep costs low by doing no advertising.  It is all by word of mouth.  An executive with them once told me WinCo stood for the 5 states it was originally located (Washington, Idaho, Nevada, CA & Oregon).  If you have a chance for one to come to your town, support it 100%.  

KathyMartin-Willis
KathyMartin-Willis

I love our store! Small town Independence, Oregon is blessed with a WinCo. Staffed with local residents who enjoy their jobs, are fairly compensated and treat their customers like the neighbors they are :)

applebarrellady
applebarrellady

I work at Walmart, I go to Winco beacause I can't afford the prices at Walmart.

BethMackeyOnoffrey
BethMackeyOnoffrey

They need to come to Greensburg Pennsylvania!!! We would love to support a corporation that VALUES it's employees.

Onepatriot
Onepatriot

Bring WinCo to Missouri, I'd love to have it here.  Competition would be good for Walmart.  They've dished out a lot of it over the years..  Amen to treating their workers fair.  Gotta love it.

Evilroyslade
Evilroyslade

If your running a business and you don't treat your workers fair I won't do business with you. 

DLAtkinson555
DLAtkinson555

We don't shop Wal-Mart either and are so excited that Win-Co has opened up in our town. We go out of our way to shop there. Since large corporations basically own all our politicians these days, the only vote we have left that counts is with our wallets. The prices are great and the service is friendly, but the main reason we shop at Win-Co is because they treat their employees well. And that means, they aren't having to get food stamps and Medicaid to make ends meet which helps our community. 


DonaldAlexander
DonaldAlexander

we call it Wineco for its great low prices on fine wine.Its also got some organic food
.I've boycotted Walmart forever.Sometimes I hear folks say they don't go to Winco because of the no credit card policy ,but thats their loss.The folks that work there all love their gig and going back to then organics,they're getting more and more.

JamesOkeyCaynor
JamesOkeyCaynor

I'm surprised that no one in this thread has mentioned the Aldi chain out of Illinois. We shop there for many staple items at great savings.

coloradochan
coloradochan

I'd love to try WinCo, greetings from Colorado..


PS. Screw WAL-MART!

NOtoGMO
NOtoGMO

It's very sad that people buy their produce or meat at either store.  They are GMO, pesticide laden!   Very unhealthy, no quality and no nutrition!

TracyHelleneButler
TracyHelleneButler

We need small business and little to no incorporated businesses in communities so people can start making money again not just corporations. That dont help us any. Why jump on another corporations band wagon when its not any better for us than Walmart. We need to get back to community and helping ourselves to help ourselves.

tweetycooks2002
tweetycooks2002

Please WinCo come to NE Nevada Elko, NV area. WE really need a store like this as our walmart has the highest prices then any walmart in the country because we live out in no where land and don't have many choices to find good prices on the food we MUST have. I have been to WinCo Stores in N. Calif and I loved it. The facts that you treat your employees right is awesome!

SukhjinderSandhu
SukhjinderSandhu

Now that I know how well they treat their employees I will always shop there. I don't care if I have to pay cash. I travel from surrey to Bellingham every 2 weeks. I buy almost of my groceries there. I put up with long lineups and will continue to do so.

Paul2901
Paul2901

@donewithit So working people buying groceries with food stamps are "takers". Whilst you, paying by credit card, are a pillar of society? Um, where have I heard that before? You're not Cliven Bundy are you?

RandySullivanSeck
RandySullivanSeck

@donewithit You do realize that when you use a credit card or a debit crd as a credit card that a couple of things happen right? 1. Big banks rake in the money. 2. Companies have to pay 2 percent per transaction to the banks and creditors. 3. Often times you have to pay fees or interest for the account or the card itself. 4. Ever think that cash businesses really are the back bone of the United States? 5. Ever think that cash or gold will always be better than anything the big banks offer? 6. Do you realize that many government benefits are only offered on cards now and that the store doesn't have to pay fees for their use? All I am saying is please think about all of these things. Also, the cliental you named are most likely Wal-Mart employees which makes me laugh. Granted you dont have to listen to me because I make next to no money if that is the only thing that determines intelligence in your little mind... #justsayingthough

MBG19
MBG19

@donewithit Yet you were there. No cash. No debit. Just credit cards ie, money borrowed, not yours? Cute.

Paul2901
Paul2901

@phronesis1 No you're wrong. You have just calculated 20% of $125,000 times 40 years equals $1,000,000.


I don't know the actual pension figures, but the whole idea of pensions is that can grow tax-free. So even an fairly conservative growth rate of 5% means the contributions can be much lower, and the time span much shorter. If you put all your contributions into aggressive growth funds, for thirty years, some employees will quite easily achieve $1 million pension pots.


Don't forget there will be many other employees who have been contributing for exactly the same time, with pots very much smaller. It depends on the Fund choices. The more representative figure is the average employee's pension pot size.

AyaPeterson
AyaPeterson

@phronesis1

Not for nothin', there but 

125,000 x8=1,000,000

To make a million in forty years, you would have to make $250,000 every ten years. 

That's Twenty-five thousand a year. 

Winco had better not hire you. You cannot do math, and you'd be giving out change and balancing drawers and such.....

MatthewWilliams
MatthewWilliams

In the beginning of the E.S.O.P.(Employee Stock Ownership Plan), the company was very generous and giving the employees up to 100% of their annual paycheck in the form of shares. Since the initial start of the plan, the stock has grown exponentially years on in and has since split roughly 7 times. When you get double the shares, and the stock keeps going up, you first double, then quadruple, and so on, your earnings. Doesn't take that much math to figure out just how awesome this company is.

tfromvm
tfromvm

@AnneWilsonDonaldson I'm not going to say impossible because most things are not, however the average salary of a WinCo employee is 28k a year based on available information and if you take that with the 21.51% annual year over year rate of return that puts you somewhere between 255k and 300k.  Even if you're at top end hourly $17 you would be at 380k after 13 years.  And that's without a single raise, and starting at $17 an hour.

How I did the math:  $17/hr * 40 * 52 weeks in a year = $35,360.00.


WinCo provides 20% of an employees salary annually to the ESOP which is $7,072.00.


Take that value, mutiply it by .2151 (annual year over year growth).


Add 7072 + 1st year's growth (1521.19) giving 8593.19.  Then add 7072 to 8593.19 x .2151 etc. etc.


Things not included.  Overtime.  But if you average 5 hours overtime a week that puts the annual contribution to 8598, which gets you closer, but still does not put you quite at half a million.


With all of that being said...


This sounds like a great company to work for and would like to see this be the prevailing business model where everyone is winning.  And the fact that even at the lowest estimate you're at over 250k in retirement funds is fantastic.  Heck after 13 years at a company if you're over 200k in retirement savings you're well ahead of 95% of the populace.  So good for you.


Lastly this is not a dig at you, I enjoy figuring out numbers games even if I'm WAY off :) .  Congratulations and I hope you have a fantastic retirement when you get there.  Just remember that cashing out an ESOP is exceptionally expensive when it comes to taxes!

RandySullivanSeck
RandySullivanSeck

@AnneWilsonDonaldson The only reason I support unions os for the bad companies like Walmart. Good companies that do right by their employees and take them seriously dont need a union. Usually those companies are employee owned though like WinCo and Publix. Just my 2 cents!

phronesis1
phronesis1

@AnneWilsonDonaldson Hi, I am really glad to hear you already have a half million dollars in a pension/retirement.


How did that work? I just read that Winco puts in only 20 percent of employees salaries. This means that your retirement grew more than $30,000 a year! Did you put in the rest? Is your salary over $150,000 a year? It just seems incredible. Please help me understand this. And again, I am sincerely happy for you! 


   EDC

RandySullivanSeck
RandySullivanSeck

@therain Actually, if all companies could decide they would pay 0. Remember slavery? It happened for centuries. The fact is certain companies, like Walmart, are the very reasons why we need unions and government wage laws to begin with. Simple put, supply and demand should play a role in wages, but there should be a living wage floor in the United States. Either that or if we are all going o live in poverty, or go back to the days of slavery than we should stop claiming to be number one. lol

MatthewWilliams
MatthewWilliams

I've worked there 5 years and make $22/Hr. Great company with endless growth possibilities.

MerrittOlsen
MerrittOlsen

@applebarrellady funny thing is Wal-Mart actually tells their employees to get food stamps and medicaid because their wages are so low they are eligible..While many think Wal-Marts prices are so low the owners (6 of them) are worth 20 billion each and you the tax payer picks up their health insurance..

DavidKirkWest
DavidKirkWest

@NOtoGMO  The science simply does not agree with you here. There is a scientific consensus about GMO crops that has been forged over decades of research and through hundreds, even thousands, of peer reviewed studies, and that consensus is that GMOs are completely safe for human consumption. They aren't unhealthy.


And "no quality"? Give me a break! Look, I know a lot of people that grow their own fruit and vegetables. They can be incredibly delicious! But, you know what? You also generally have a small window to actually eat them in, and they often don't have anywhere near the quality control of the produce you'd buy at the grocery store. Have fun eating your "all natural" apples... I'll stick have fun not worrying about worms in mine, thank you very much!

Saying that GM crops have, "no nutrition," is utterly moronic. Just because their DNA is slightly modified they don't suddenly become comprised of fat and air, genius. They're still built of more or less all the same nutrients as their non-GM counterparts. Possibly even more.

Also, I don't even think there's any GM meat on the market, and if there is, it certainly doesn't involve the use of pesticides. You're just a gullible alarmist throwing around hot-button words.

NathanStarr
NathanStarr

@NOtoGMO  Please tell me what's wrong with GMOs. Most people don't even know what the acronym means, what it is, or effects of GMOs. It's 9th grade biology, yet so many people stand on their soapbox and preach about what they *think* it is.

KathyMartin-Willis
KathyMartin-Willis

@NOtoGMO  Fortunately we have several Farmer's Markets nearby and very responsive management at our WinCo. We are seeing rapidly expanding selections of organics, non-GMO, and hormone free meats.

KennethNathanCole
KennethNathanCole

@NOtoGMO  some ppl really dont have a choice theres no farmers markets around them and or dont have the time and the money to start the own farm or little garden thems the brakes 


mhwsa1
mhwsa1

@MatthewWilliams I am not an expert on stocks. If WinCo is a privately-held company, how did you get the information you have? I couldn't find any reports on their stock since they are privately held.

RandySullivanSeck
RandySullivanSeck

@mhwsa1 @MatthewWilliams While privately held or employee owned companies are harder to understand they generally do offer better pay or better benefits to employees. If not WinCo than please study Publix, another example of a company where employees can proposer in a field that generally sucks the life out of our nations people.