FD Buyer: WinCo Foods – Below the Radar
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
WinCo Foods doesn’t have a loyalty card or gas savings program. Clerks don’t bag your groceries. Outside of some direct mail to support openings, the stores don’t advertise. Heck, WinCo doesn’t even have an in-store flier.
But there’s one thing WinCo does, and does well. It sells a ginormous amount of groceries. Cheap. Its 78 stores in the northwest easily average well over $1 million a week, observers say. Most estimates put annual sales of the employee-owned company at around $5 billion.
Says one industry observer who shops regularly at WinCo, “Price is the driving factor here. When you can get things $1 or $2 cheaper at a WinCo, and save $30 to $50 a week, it gets your attention.”
The chain follows an everyday-low-price format, taking a standard mark-up to cover costs of its four distribution centers. Supply chain efficiencies give it a leg up to support its pricing structure where it competes. WinCo passes along deals it gets straight to consumers, and wants vendors to put everything into the cost of goods, with no extras or frills. And as with Walmart, you can’t so much as pay for a cup of coffee for a WinCo buyer. When a new WinCo store opens, I’m told, “a big chunk of the senior management helps with the pre-opening. You’ll see senior vps and directors in the stores, getting them stocked and making sure things are done right.”
Last month, I spent two days watching people fill Home Depot-sized shopping carts in WinCo stores in and around Boise, Idaho. At one point, I was dumb enough to ask a clerk if there were any smaller carts or express lanes. She was pleasantly amused.”No, there aren’t,” she said with a laugh. “We want you to buy a lot here!”
The company originally ran stores under the Waremart and Cub Foods banners, but changed its name to WinCo Foods in 1999. The Cub roots are clear as soon as you steer your cart down the Wall of Values by the main entrance. Everything is stacked high and sold cheap, including in the five-foot open multi-decks, one for refrigerated, one for frozen.
The counter-clockwise traffic flow along the perimeter of these big (generally about 90,000 square feet with noticeably wide aisles), boxy stores always starts with that Wall of Values, followed by produce, bulk items in bins and barrels, service deli, seafood, meat, dairy lineups, and frozen.
Here and there, signs point out the savings WinCo offers versus its competitors. For example, WinCo was offering 48-ounce packs of Kraft American Singles for $8.97, versus $12.99 at Fred Meyer and $12.38 at Walmart. “Extra Savings” and “Bag a Lot of Savings” signs are everywhere.
A few things surprised me a little. There’s a well-shopped olive bar, and some specialty gourmet items, neither of which I had expected to find in a discount supermarket. There are also many strong regional brands, giving the stores good variety and differentiation.
What can other supermarkets learn from WinCo? Can a regional grocer compete effectively with national chains – in the long run – with a focus on price and bulk buying?