WinCo Eyes Eastward Expansion

ELLIOT ZWIEBACH

BOISE, Idaho — WinCo Foods here said last week it has delayed plans for an aggressive push into Southern California and instead will move east into Arizona and southern Nevada.

It still plans to open its 14th Southern California location in Lakewood in October, but it will not open the Southern California distribution center it had previously contemplated.

WinCo last year purchased 130 acres on which it planned to build a warehouse to support its volume in Southern California and elsewhere — property that is now for sale, a WinCo spokesman told SN.

“We thought it makes more sense right now for WinCo to expand east — into Arizona and the Las Vegas area — and continue to deliver product to Southern California from our Modesto distribution center [in Northern California],” he explained.

WinCo's first two stores in southern Nevada — one in Las Vegas, one in nearby Henderson — are set to open simultaneously next spring, he added. He declined to indicate when or where WinCo would open its first Arizona locations.

WinCo is a $5 billion discount operator whose new stores are around 92,000 square feet. It operates 83 stores in six states, including two in Reno in northern Nevada.

Delaying a major push into Southern California is likely to be temporary, an industry source told SN. “Operators in California can breathe a sigh of relief, but it will only be short-term relief,” he said.

“WinCo opened a distribution center in Boise late in 2009, and it said at the time it needed 10 stores in Utah to make that facility efficient. It has opened five of those stores already, so it seems it is looking to capitalize on the move into Utah and then go into other areas before refocusing its efforts on Southern California.”

The five Utah stores have shaken up the Salt Lake City market, the source said. “WinCo's stores there operate as regional sites that draw from a wide area.”

The source estimated each WinCo in Utah is doing about $800,000 a week in volume.

“They are having enough impact to make life miserable for everybody,” another industry source said.

With prices that already rival Wal-Mart's, WinCo's Utah stores are running coupons offering up to five free items a week — including bread, orange juice and hot dogs — with no minimum purchase required, the source added.

One Southern California operator said WinCo's decision to grow elsewhere is a good one. “I don't see much opportunity in this area to build a new supermarket company, and there are probably more opportunities east of here.”