This chain of stores operates in communities that look like set pieces from Napoleon Dynamite, and the company as a whole isn't large enough to out-buy Walmart on quantities. So how are they able to offer low prices?
Direct purchasing and supplier management.
The company acquires the majority of its products directly from the end product manufacturers or, when it comes to produce and certain other goods, from the farms themselves. Private label sales in WinCo stores are reportedly less than 5%.
It's important to note that Winco doesn't rely on traditional big box bulk buying tactics -- using their purchasing power as leverage to bend suppliers to their will. The company maintains a very efficient supply chain and its procurement personnel are well-schooled in Supplier Relationship Management. Their job descriptions for purchasing specialists have this in the requirements: "Develop strong partnerships with key wholesale provider personnel including regular ongoing telephone, face-to-face and email communication". For WinCo, working with suppliers goes far beyond plugging their name in a database and blindly filling out orders. Additional language in the purchasing job descriptions use phrases like "primary liaison with supplier" and "maximize vendor relationship".
It is these strengthened and maximized relationships -- along with reduced overhead via retail tactics like not accepting credit cards, customer bagging, and minimal merchandising -- that allow WinCo to take on Walmart and win on the pricing front.
Oh, and the article goes on to list other ways WinCo trumps Walmart: benefits for anyone working over 24 hours a week, and a 20%-of-annual-salary pension paid for by the company. If there's not a store near you -- gotta get those bulk spaghetti noodles --
there may soon be. WinCo's growth projections include regional expansion and a doubling store count every five to seven years.