WinCo brings big box with low prices to North Texas
WinCo Foods — the limited assortment, low-price, employee-owned grocery store operator, which has been called "Walmart’s worst nightmare" — has opened its first store in the Dallas-Fort Worth area and there are more on the way.
The Boise-based chain currently operates 93 stores in seven states, including Arizona, California, Idaho, Nevada, Oregon, Texas, Utah and Washington.
WinCo’s newest store in Fort Worth, like its other stores, features a "wall of values" and aisles stacked with pallets in a nearly 95,000-square-foot box. In an August 2013 RetailWire discussion, a number of respondents compared WinCo to the original Cub Foods concept. Others pointed to its cash-only and bag-your-items policies as similar to those that have worked for Aldi.
The chain plans to open another store in McKinney with three others planned in the DFW market over the next year. Michael Read, a company attorney, told the Fort Worth Star-Telegram that the region could eventually support up to 12 WinCo stores.
A long list of competitors awaited WinCo’s moves into North Texas, including Albertsons, Aldi, Brookshire’s, Fiesta Mart, HEB’s Central Market, Minyard Food Stores, Kroger, Tom Thumb, Walmart and others.
Kroger spokesperson Gary Huddleston told the Star-Telegram that it expects to do just fine with a new competitor in the market. "Walmart and Aldi will be affected. We will continue to be the market leader with exceptional customer service, great variety and low price," he said.
Discussion Questions
How likely is WinCo Foods to gain significant market share in the Dallas-Fort Worth market over the next five years? Which grocery competitors in the market have the most to worry about WinCo’s arrival?
Having some experience marketing groceries in the Texas market, I would predict that WinCo will not only impact Walmart and Aldi, but also provide another option for Tom Thumb, Albertsons and Kroger secondary shoppers.
WinCo has created a nice mix of lower prices, fresh perishables, and convenience that propelled them into new markets and put them in an increasingly rare position of actually building new stores in a mature market.
I would also believe that WinCo will be sensitive to the immense pride Texans have about their state and leverage that emotion with a mix of local growers and products that are so important to shoppers in that state.
With only a few stores in a very big market, their impact will be isolated, but as they grow and build more stores, they could very well pressure the weakest retailer of the existing group out of the market.
First, WinCo is not a limited assortment store. They are also not Walmart’s worst nightmare. WinCo is a slow growing and well managed retailer.
I really doubt that WinCo will gain significant market share in DFW. They will do well, but they will never open enough stores to have a high ranking in market share. Thats not Winco’s style. DFW is loaded with ineffectual grocers, so currently it’s an inviting market. At some point, HEB will get into gear and I predict both HEB and WinCo will benefit as Minyard, Tom Thumb, and Albertsons throw in the towel. If HEB had already made a huge push into DFW, I doubt WinCo would have come.
In the end, I believe Walmart, WinCo, Kroger, and HEB will all work in perfect harmony to destroy the ineffectual competitors.
If WinCo can consistently deliver on exceptional customer service, great variety and low price, it will make headway against its competitors like Walmart and Aldi. The key is being able to do all three. With public sentiment, it seems with all things being equal, David can be favored over Goliath.
WinCo rocks. They are less interested in “reinventing” any aisles or sharing corporate missives that don’t resonate with their shoppers than they are at providing a clean, well lit, neighborhood-specific product mix. Texas better have a strategy that appeals to shoppers who are all over the spectrums of HH income, ethnicity, trip type (grab a pizza or fill the massive cart). The secret’s been out in Portland market for years. The parking lot gets more and more dense. If you should need service, it’s there, and it’s knowledgeable and hospitable. Likely you’ll be fine on your own; shelves are rarely spotty, signage is clean, clear and simple.
WinCo will be very successful in Texas on a per store basis. I doubt that a maximum of 12 stores will gain a large share of market, but don’t tell that to the neighboring stores who must compete. WinCo does a good job of site selection and demographic targeting and unless they have changed that formula, they will do well.
WinCo is certainly a story to watch. It is performance oriented, and its in-store environment conveys a clear value message.
I expect it will out-compete the two or three weaker players in the DFW market, as others here have observed. My guess is that Minyard and Tom Thumb are on the bubble, with much depending upon the specific locations that WinCo occupies. Albertsons may have enough corporate scale to survive, but I wonder about its operational challenges.