WinCo -- a low-cost grocery store chain from Idaho -- is being described as Walmart's 'worst nightmare' in a recent Time Article:
Retail analysts say that 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.
“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.
This is a privately-held retailer (i.e. it does not answer to Wall Street shareholders) that is beating -- sometimes, crushing -- Walmart on prices. Remember, folks, Walmart stores are, generally speaking, dirty, understocked, understaffed and unpleasant places in which to shop -- Walmart only survives because it creates a perception among consumers that it has the lowest prices. WinCo, however, beats Walmart on price. That's part one
of the nightmare.
Prices are kept low through a variety of strategies, the main one being that it often cuts out distributors and other middle men 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. Similarly 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.”
The second part
of Walmart's nightmare is that WinCo does all this, and treats its employees really, really well. In addition to decent health care benefits, some employees -- including
cashiers and produce clerks -- have pensions worth over $1 Million. (What white collar workers in America today have $1 Million pensions? A declining percentage, but, here, we're talking grocery store 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 worker 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.
WinCo destroys the Walmart-inspired myth -- well, Trader Joe's and Costco do this as well -- that low prices necessarily mean low labor standards.
And, guess what, WinCo is coming to the state so big it's like a whole other country: Texas.
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.
Be afraid, Walmart, be afraid. Karma, you know, is, well...