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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465 comments
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!

ScottEvans
ScottEvans

Forget brick and mortar.  Go with Amazon Prime for everything but food.  And Amazon even has some of that.   

hartandhunter
hartandhunter

Too bad they treat their employees like crap and pay them worse than crap. They wouldn't allow me a water bottle while pregnant at my register and made us endure the construction going on with the noise and dust raining down from the roof. Disgusting.

nadellransom
nadellransom

It was renamed WinCo because of the five states it was in at the time.  Washington, Idaho, Nevada, California, and Oregon.


The employees have an awesome medical plan.  It's less than $100 a month to cover a family of four (from what I heard MUCH less.)  Since my husband works for a small business and we pay nearly $1,000 a month for medical coverage, working at WinCo is looking better and better all the time!

KarlKilian
KarlKilian

I hope this company goes nationwide ASAP. Walmart needs a good kick in the complacency!


P.S. - Bagging your own groceries isn't a huge burden when you consider that Walmart NEVER has dedicated baggers either. (At least in all the Walmarts I've shopped at, the cashers do all the bagging at the regular checkouts, and they rarely pack the bags the way I'd like.)

ValerieFinnigan
ValerieFinnigan

My only quibble with WinCo- at least in my location- is accessibility, a problem I noticed when injuries interfered with my ability to walk. Better ADA compliance, wider aisles, and shoppers not clogging aisles or tearing around and colliding with other shoppers will make for a much more pleasant shopping experience.

tanishalynne
tanishalynne

I absolutely love WINCO.  I always shopped there when I lived in Oregon.  Not only was I pleased with the prices, but the quality of the food was good. I haven't shopped at Walmart for years.  I usually stick with the dollar store for some basic needs, till we got a Target. Now I go there and for food, I go to Aldi's since there is no Winco here where I am now. I Wish Winco would open up in more locations :)

TheBigCheese
TheBigCheese

Actually, WalMart prices are not all that great when you compare a whole grocery order.  For example, I was eating out and went into WalMart for milk and a couple of other items because they were next door from the restaurant in SOuth Jersey.  To my surprise, skim milk was $3.94/gal when it was $2.78 in Wegmans.  .

fordoers
fordoers

I shop at Winco and NOT at Walmart. I appreciate a worker owned cooperative business that puts people and community first. Walmart puts top brass and shareholders first and sticks taxpayers with the bill for subsidizing employees that rely on public services to make ends meet. Prices are low on the shelf but high in human costs. It is similar to a healthy GDP and soaring stock market that show no recession and great returns for investors, but upon deeper examination that doesn't equate to a better life for main street and most of us. A jobless recovery, underemployment, a looming retirement crisis, and students saddled with too much debt and too little income doesn't make for a bright future.


It is sad and unacceptable so I vote with my wallet; I wish others did too. If more companies operated like Winco, the economy would be singing along, poverty would be alleviated, and more people would join the ranks of a healthy and growing middle class.  And, that in a twist of fate IS the best path forward to create demand for corporation products and services. If you want to explore more meaningful metric and a world of work that has changed, please check out my book, "The Experience Design BLUEPRINT: Recipes for Creating Happier Customers and Healthier Organizations."



JojoSlots
JojoSlots

Check your other supermarkets in your area.  Here in Florida many people stayed away from Publix as much as they like the stores, service, etc. because of pricing.  No more!  With all the BOGO's being offered nowadays, I often do better at Publix than Walmart.  Also Sav-A-Lot stores were really dumpy at one time and I wouldn't touch their meat - that has changed as well.  They've finally gotten their act together. Aldi's is a bit of a drive for me, but now and then I get there. If it was closer I'd definitely be there more often.

mooper
mooper

Perfect illustration of why the Walmart employees who protest their opportunities should be more careful. Walmart is vulnerable to competition (not just from Winco, but from Amazon, etc.), so if they do a poor job, they'll eventually cede business to others. When the workers protest and demand higher pay, they are demanding higher costs for Walmart, and as the article cites, even a 1% margin can make a big difference with the cutthroat competition out there. Raise costs by another percent and Walmart might really start falling behind, and then you know what happens... closing stores, lost jobs. You can't have it all. Allow competition to thrive and the best model will eventually win. 


As for the consumer debate over which chain is better... you should be mindful that the crowds, the need to do your own bagging, and the lack of credit card payment may matter to some and not to others. There's no right or wrong here. Someone who is busy and is willing to pay a couple extra % to have sparser crowds and less time bagging might prefer Walmart, as might a savvy shopper who uses a 5% rewards credit card to pay (meaning they're actually paying less). But a cash-only shopper with a little more time/patience might prefer Winco. Let the broader market decide.

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 


KathyMartin-Willis
KathyMartin-Willis

@ScottEvans  uh, WinCo is primarily a grocery store. That's the area it's giving Walmart a run for the money, not retail items.

tweetycooks2002
tweetycooks2002

@ScottEvans yes amazon is great! BUT for food items NOT. Example Special K cracker chips are over $6 a box. AT MY HIGH PRICED grocery store they are only $3! NOT worth the free shipping from amazon!


KathyMartin-Willis
KathyMartin-Willis

@hartandhunter  our local store allows water bottles for the employees and starting wage is about $11/hr. Not getting rich off that but they also provide medical at great rates and an amazing retirement plan! Sorry your store didn't measure up. Since they are employee owned, why wasn't the situation resolved?

AnnaBananaWalton
AnnaBananaWalton

@nadellransom  

Yup! When they first changed it to WinCo from Waremart that was what they told people. Not sure where this 'Winning Company' comes from lol 

ChristineGeorge
ChristineGeorge

@JojoSlots Publix came to mind as soon as I read this article.  I am a Publix shopper too.  I love the bogos and coupon policy.  

KateRude
KateRude

@mooper As someone who personally worked at Walmart Farm Fresh and Food Lion large grocery chains all treat their employees like crap.  As it stands know each of those retailers make every single person do the work of at least 3 other people.  Workers should not have to work the job of 4 people with no extra benefit or incentive other then the customers can pay a lower price for items they settle for because the item they want is sitting in the backroom.

MaryJoyceAvery
MaryJoyceAvery

@mooper I won't answer to your first paragraph other than to say I disagree.  I am a Winco shopper and they take all major credit cards. I don't know where you got that.

neko.el.gato
neko.el.gato

@mooper No doubt genius, they should be asking for lower pay, because lower pay will make the cost of living, magically lower!


Lol

TigerFlower
TigerFlower

@mooper

 So you think Wal-Mart employees should be content to exist by supplementing their wages with food stamps and medical charity programs out of fears of putting Wal-Mart out of business? Did it ever occur to you that maybe companies like Wal-Mart and McDonald's SHOULD be out of business if they can't pay sustainable wages and still be competitive? There's nothing to indicate that the demand for their products isn't there, only that they need a model that doesn't rely on keeping workers in poverty to provide them. Companies like Costco and WinCo are doing exactly that.

 It's probably worth noting that to cover the cost of a raise to $15 an hour for front line workers at McDonald's, would require raising menu prices by around .20 per item, not the $10-for-a-burger idiocy that many have been suggesting. Coming from a state that until this year had the highest minimum wage in the nation, I can safely tell you that Wal-Mart and McDonald's are still booming. Shame on you for giving workers who are desperately in need of help such terrible advice.

ZachYoung
ZachYoung

@mooper So, if Wal-Mart has to downsize, because another store is taking their place, why wouldn't the former Wal-Mart employees just get a job at the new store? In terms of the number of jobs, it seems like a wash to me, and in terms of quality of life for the workers, it's a clear win.

ConnieGrounds
ConnieGrounds

@mooper Our Winco is really spacious and although there are many people shopping, it has never felt crowded to me. It is very well staffed so the checkout area is one place it especially feels uncrowded, unlike our local Walmart. Like you said, there's no right or wrong but it's easy to see after shopping at Winco why Walmart feels threatened by them.


There is no reason why employees who have "opportunities" at Walmart won't take advantage of similar opportunities at Winco as Winco grows and expands.

purpleshadow225
purpleshadow225

@KathyMartin-Willis @ValerieFinniganThe mobility carts are a joke. The baskets are so small you can hardly do any amount of shopping with them. I use a wheelchair and wanted to do some major shopping. I asked if someone could assist me in pushing a cart as the mobility carts wouldn't come close to holding enough. They said that it is not something the do. I asked to speak to a manager and got the same answer. I was agitated I had the manager contact corporate and well it is company policy to not assist someone shopping. I ended up pushing my manual wheelchair and a cart at the same time. I did get help with bagging because I wasn't fast enough to get everything bagged. I like that they have low prices and being on a fixed income, I would shop there if they had customer service. 

KateRude
KateRude

@MaryJoyceAvery @mooper The article above says that they do not take credit cards.

KathyMartin-Willis
KathyMartin-Willis

@KateRude It's not universally true. Our Independence, Oregon store doesn't take credit cards but they do accept debit cards and checks.