WinCo Expands In California

Boise, ID-based WinCo, which competes against warehouse stores on price but does not require membership and is open 24 hours a day, already has 14 locations in California as part of a chain-wide store count of discount groceries in California, Idaho, Oregon, Washington and Nevada that is in the mid-40s and growing. Now, says spokesman and VP of legal affairs Mike Read, the company thinks the time is right to expand into Southern California and to add more locations in other parts of the state.

"California is going to be a market where a good bit of our growth occurs during the next several years, and we are definitely looking in a variety of Southern California markets," Read tells GSR. "There is only a handful of sites that we actually have control over and know for certain that we will develop, but we are continuing to look and have a number of places we're interested in." Read says the company doesn't like to talk about new locations until it has the sites under control, but he says that besides the Vacaville store that will open Monday, WinCo plans a Southern California store in Pomona, another new location in the Greater Sacramento market in addition to the new Vacaville store and a new store to replace an existing WinCo in Redding. "We The Temecula store is a 128,000-sf former Costco location that Costco vacated four years ago when it moved to a new, 152,000-sf building nearby. The 128,000-sf size is larger than WinCo's typical stores, which are usually more like the 92,000-sf grocery in Vacaville, which it built from the ground up.

"We think Temecula is a great market for us, and with Costco moving to another building, we saw an opportunity for a good location with good demographics," Ready says. "We have converted a couple of their stores in the past and have had good success with them." Also, Read adds, WinCo sees "a good bit of growth in the market yet" in Temecula, one of the most densely developed areas of Southwestern Riverside County, which is one of the fastest growing parts of the US. He says WinCo is not bothered by the presence of Ralphs and the Costco nearby. "We are a discount grocer and what we focus on is trying to offer the lowest possible pricing that we can, whereas Ralphs is more a conventional supermarket with a different niche and a different customer," Read says. He says WinCo's customer base overlaps with Costco's a good bit, but he notes, "We've historically done very well when located near a Costco, so it doesn't particularly concern us."

The company's new Temecula store occupies one of the busiest corners in the city, at the intersection of Winchester and Margarita roads. The former Costco building remained mostly vacant after Costco moved out, except for a time when Crown Books rented it. WinCo's stores include a fresh bakery, a pizza shop with made-to-order pizza, bulk foods, a large delicatessen and seafood department, a fresh meat department, a large produce department, a variety of organic products and an extensive stock of health and beauty products.

WinCo Foods is an employee-owned company where employees participate in an ESOP, or Employee Stock Ownership Plan, which allows them to acquire an ownership stake in the company by owning shares of common stock in WinCo. About 72% of the company is owned by the employee ESOP pension plan, and another 8% is owned privately by current and past employees.