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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539 comments
BenWA
BenWA

As much as I like WinCo, they do need more cashiers!  The lines are sometimes 15 minutes long, with people having entire carts filled to the top. I end up not buying much so I can go through self checkout. Sometimes I still go through it with a little more than I probably should, simply out of not wanting to spend 20 minutes or more in checkout including my own checkout and bagging time. Even self checkout lines can be long though!

ConnieChicasJohnson
ConnieChicasJohnson

I LOVE WinCO.  I used to drive 90 miles round trip just to do my monthly shopping there. Now we live in a city that has one and it is right behind a Walmart.  LOL  I would NEVER drive 90 miles or even 10 for Walmart. I am so sick of the lack of customer service, empty shelves and just the crap they sell.  I hope WinCo continues in its success. The  bin aisle i amazing!

elaine939
elaine939

I shop at winco in Nevada  there prices are so much better then Walmart and I love going there. the store is always clean and the staff are helpful and friendly

JonesKen
JonesKen

It is just amazing to see how WinCo is breaking through the market that is largely dominated by Wallmart. WinCo is attracting people with a wink and winning http://hcl.link/wink/

casper
casper

I cant wait for Winco to open here in G.P. TOMORROW!!!!!!! I will shop there because of the way they treat their employees!!!!! Walmart is right across the street from where they are opening and I hope they feel the pinch!!!!!

MaureenRethwisch
MaureenRethwisch

I live in a city about 60 miles north of Los Angeles and we have a Winco. I have been there a few times and my store doesn't have the variety of products that Wal-Mart and other grocery stores have. They are very limited on the brands they sell at Winco. I find that produce is less expensive at Food 4 Less. I don't care for the Winco here.

DonaldLeeWalter
DonaldLeeWalter

This how exact model that Sam Walton used to start Walmart , and  like every other company it works good on a small scale how ever when it gets real big that all changes it just not possible to keep it working like that on that large a scale.

BrajbihariG
BrajbihariG

I am not an regular readers but I really appreciate your work.

JohnNevettie
JohnNevettie

Meanwhile a 102 years ago: Where is the law that United States "actually passed in 1913" requiring Americans to pay income taxes? Point to the page where it's at (date & time) in the US law book statutes or IRS code showing that the 16th amendment (the income tax law) was actually "legally ratified by ALL the REQUIRED states." Research former IRS criminal investigator (turned IRS whistle blower) Joe Banister, HE FOUND NO LAW HAS EVER EXISTED!!! http://youtu.be/dOgJcA1wUtI


All of your/our "income" taxes goes straight over to Europe into banksters pockets. Schools, roads, military, Medicare and other regular services here are paid for out of local and corporate taxes NOT income taxes... CHASE THE EVIL…

JohnJohnson12
JohnJohnson12

I went to WinCo for the first time today after reading this article.  WinCo was epic and had lots of bulk healthy foods for cheap. I will not be going back to Walmart. 

Tford
Tford

My cousin wife works in the bakery and last time i heard makes 27 an hr. Granted she has to be there at like 4 in the morning to get the bakery going that is a decent wage for some one with only a high school education

JulianReizeMoey
JulianReizeMoey

@KristofferPetersen @Tford In fact, that's like the average salary of a Mid level Manager with a Bachelor's Degree in many countries. Assuming its 27 per hour, 8 hour a day, 20 days a month.

KimJones
KimJones

@Tford wow..  $27.00/hr?  That's more that I made as a RN with a BSN degree and 19 yrs experience here in southwest virginia.  What city and state does your cousin work in, I want to work there, and only have to work about whether the icing is the right color, and not whether someone lives or dies... and make a lot more money.  


obalangku
obalangku

I did enjoy reading articles posted on this site. They are impressive and has a lot of useful information. 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 obat pelangsing herbal aman that more than 400 nonexecutive workers (cashiers, produce clerks and such) currently have pensions worth over $1 million apiece.

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/

RaySchmoke
RaySchmoke

@marco5811 WinCo is employee owned and profit sharing goes right into their retirement.

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

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?

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.

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

aioniosfilos
aioniosfilos

Costco doesnt do cc bucko. So are they trashy too? Get over yourself.

threadtangler
threadtangler

@donewithit You're a moron. I bought groceries at WinCo with my credit card (in debit mode) LAST NIGHT. 

RobertCoates
RobertCoates

@donewithit there are signs about not accepting credit cards, there are also ATM machines where you can draw out cash.  You just did not pay attention.

aioniosfilos
aioniosfilos

Aw someones just butt hurt he forgot to carry cash or a debit card (real liquid assets not borrowed credit)

MBG19
MBG19

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

msjanj62
msjanj62

No. You have got it twisted. Walmart is the one who pays their ees so low they have to go get welfare and medi-cal to survive. I like Winco because they invest in their ees; and do not double dip the system. Walmart stradles the fence 1/2 welfare and 1/2 working citizen. Who picks up the difference?......we do the working tax payer. And the employees that work there look like professionals, unlike those that work at Walmart who look like they just got released from prison with tattoos all over their neck and face...looking like gang bangers. It almost makes you afraid to shop there because if how the employee and stocking staff look.

LibertyChic
LibertyChic

@donewithit There's an ATM there you could have taken a cash advance on your CC. Not having to pay CC processing fees allows them to sell products to you and everyone else for less. 

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

gfd8520
gfd8520

@phronesis1 Sorry to hit on an old comment but...you are not compounding your interest. (Major Mistake). If you made $25,000 your first year they would contribute 20% which is $5000 dollars. Current press releases state an average of 21% a year in stock growth. After 40 years just your first years $5000 would be worth over $7 million dollars.  If you never got a pay increase and added 5k a year for 40 years and the stock price held to the 20% that would be $44 million dollars for you to retire on.

RaySchmoke
RaySchmoke

@phronesis1 I know personally a man who worked at Winco most of his life was a store manager when he retired with 4 million.

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.

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.

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.....

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.

LibertyChic
LibertyChic

@phronesis1 I know several people that work at WinCo. There are a number of WinCo stores in our area. They love working there, and yes, they do pay great and have good benefits. I know students that work there and the store is very accommodating to their school schedules. 

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!

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

@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!

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!