No-frills grocery chain aims low: WinCo's bag is all about the price

When many grocery stores are luring shoppers with loyalty cards and premium services, a warehouse-style chain is trying to gain a foothold in the Puget Sound area by skipping the extras and zeroing in on customers' pocketbooks.

WinCo Foods, a Boise-based chain of no-frills grocery stores, plans a 93,000-square-foot store in Kent that will open next year just east of Highway 167 off Southeast 212th Street.

The chain, which has had a store in Federal Way since 2000, also could be the major tenant of a new shopping center on 116th Street Northeast in Marysville, the developer has said.

While the Seattle area has an abundance of service- and gourmet-focused grocery outlets, industry observers say it has fewer options for shoppers willing to give up perks to get lower prices.

"WinCo is definitely entering a niche that is vastly underserved," said Bert Hambleton of Hambleton Resources, an Issaquah consulting firm focused on the grocery industry. "There just aren't any (stores) in Seattle that are really serving the low-price-oriented shopper."

WinCo aims to help fill that void. An informal comparison last week found that WinCo beat competitors' prices by more than $1 on some items, including a 1-pound package of Oscar Mayer bologna ($1.68), a jar of Ragu pasta sauce ($1.28) and 12-packs of Coke products ($2.98).

"We try to be the area's low-price leader wherever we operate," said Michael Read, WinCo's vice president for public and legal affairs.

WinCo, an employee-owned company with 41 stores in five Western states, can offer low prices because it keeps its overhead costs to a minimum, Read said. Shoppers bag and carry their own groceries. The company distributes most of its own goods and doesn't advertise much.

Each sparsely decorated WinCo store has a "wall of values" evocative of a Costco Wholesale warehouse, with cartons of goods stacked on top of each other while extra supplies sit on wooden pallets on racks above.

Federal Way resident Edward Paik said his motivation for shopping at WinCo is simple.

"The main reason is, the price is really low," said Paik, 50. "That's it. It's cheaper, almost the same prices as Costco."

Costco, the Issaquah-based chain of warehouse clubs, has become a larger player in the grocery arena by offering more fresh foods at bulk prices.

But part of Costco's business model is to limit its product selection to a handful of brands. WinCo, Paik said, offers a wider array of grocery items.

Another price-focused grocery chain, Top Food & Drug, has been increasing its Puget Sound presence, too. Top Foods, owned by Bellingham-based Haggen, now has 11 stores in King, Snohomish and Pierce counties and soon will open a store in Shoreline.

"What we've found in the Puget Sound area is (shoppers) want their quality, but they want some value added to the equation," said Top Foods spokeswoman Becky Skaggs.

While Top Foods targets the price-conscious customer — its slogan is "Quality in the bag, savings in the bill" — its stores offer more services than the typical WinCo. Top Foods clerks bag groceries but don't carry them to customers' cars. All stores have pharmacies, and some have floral shops and Starbucks outlets.

WinCo's stores are more Spartan though they do offer standard services including a deli, bakery and pizzeria, as well as meat and fish departments and an expansive produce section.

Read said WinCo is eyeing more locations in the Puget Sound region, but finding the right site is challenging because the company's stores are so big. New stores range between 92,000 and 96,000 square feet, nearly twice the size of a typical major grocery store.

WinCo does not release specific sales and profit figures. Read said sales at stores open at least a year were up 9.6 percent in the past fiscal year, which ended in March.

"I'm sure we've been helped to some extent by the downturn in the economy," Read said. "But I think a lot of it is, for the customer we serve, we've got the answer for them."

Jake Batsell: 206-464-2718 or jbatsell@seattletimes.com