Some Boise pride has inspired me to bring back one of RM's all time great thread titles.

http://business.time.com/2013/08/07/mee ... nightmare/

Retail
Meet the Low-Key, Low-Cost Grocery Chain Being Called ‘Walmart’s Worst Nightmare’
By Brad Tuttle @bradrtuttle
Aug. 07, 2013

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.

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 grocer chain that most Americans have never heard of?

First off, the reason you probably haven’t heard of WinCo is partly because 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.

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.”

While all of 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 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.

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.

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.

that's a nice story. It's amazing how much better you can treat your employees when you aren't answerable to shareholders.

We had Winco when I lived in Sacramento. I love that store.

Does ALDI fit in here also?

I, too, feel conflicted about that concept. I'll try to see if I can find another story years ago on how Costco was getting harassed by stockbrokers for giving "too much" revenue to its employees and "not enough" to its shareholders. That could fit in well with our discussion about force in the other thread.

I also felt distressed when I read that Facebook essentially had to go public because of rules that the SEC has in place once a firm exceeds a certain number of private shareholders.

Yep, it was cited in the article I posted. I've never heard of it, care to describe it for us?

I forget the court case (something involving Ford) but the SCOTUS ruled that shareholder interest legally had to trump the interests of workers and other stakeholders.

ahh, here it is

http://en.wikipedia.org/wiki/Dodge_v._F ... or_Company

apparently some legal scholars contest that interpretation. I have no idea how the court currently interprets it.

The only thing I know about ALDI is that you have to deposit a quarter to use a shopping cart, which you get back when you return the cart.

That says it was a Michigan Supreme Court decision, so would it hold any precedent outside of that state? Also, it dates back to 1916, long before the New Deal and even some of the last Progressive era laws under Woodrow Wilson.

Here's that Costco article that I was talking about:

http://faculty.washington.edu/janegf/co ... lmart.html

BJs does that too.

The only reason I can think that that policy would exist is to thwart shopping cart shoplifting.

Yes. Not to get off topic, but the Riley's in NorCal had wheel locks on each cart. If they went past a magnetic stripe that was painted around their parking lot boundaries, the wheel would lock up. Kept the homeless from ripping off the carts.

there have been similar cases, but they also seem to be at the state level. Maybe the supreme court hasn't ruled on this. Good catch.

Cool. Seems too much of a frill for WinCo, but they are present in NorCal, so who knows. Things haven't gotten anywhere that bad in Boise for stores to resort to those measures.

The Delaware Supreme Court may be of high importance, since so many companies incorporate there.

That's all it's about. Though buying a shopping cart for a quarter is a pretty good bargain.

Unless those costs for restitution and probation happen to kick in.

It's actually so they don't have to hire somebody to walk around the parking lot and bring them back.

also, what are you gonna use it for and where are you gonna store it?

ALDI is basically as the article describes: well organized and basically organized (no flashy displays), basic selection of most everything and very good prices, small square footage but used very well, and if I'm not mistaken no commercials (I think they do Sunday paper inserts). Chocolate and alcohol near the front entrance, and most of the junk food in the first aisle, with a small bit near the checkouts. Oh, and primarily generic brands--generally better priced than generics at Wal Mart or Kroger or somewhere like that.