Woodman’s Makes a Big Entrance in Milwaukee
Consumers have been asking for a Woodman’s in the Milwaukee market and now they have a 225,000-square-foot megastore in Oak Creek to keep them happy.
Visitors to the new Woodman’s will find that just like the company’s other stores, this one is short on visual merchandising frills but very big on savings.
As a Milwaukee Journal Sentinel piece points out, half of every Woodman’s is warehouse with each of the company’s stores acting as a distribution center for a given category. The store in Appleton, Wisc., for example, distributes cereal to Woodman’s 13 stores.
Woodman’s is totally focused on keeping costs down by eschewing many eye-appealing merchandising elements. For example, fruits and vegetables are simply laid out in their corrugated cartons, as opposed to being neatly stacked on display tables.
The company also keeps costs low by focusing on self-service. There are no full-service bakeries or delis in its stores. The meat counter is used to slice lunch meat and/or cheese.
While the presentation is simple, Woodman’s uses its size to offer a wide range of products not found in many conventional grocery store competitors. A case in point is the 15,000-square-foot liquor department that is stocked with a great selection of wine and beer from around the globe.
Phil Woodman, president of Woodman’s, told the Journal Sentinel, “If there’s a beer for sale, we have it.” At the time, Mr. Woodman, was standing in front of a 96-foot wall of microbrews.
Big stores generate large revenue numbers for Woodman’s. At the end of 2007, estimates put the chain’s sales at $1 billion. As a point of comparison, Wisconsin’s largest supermarket chain, Roundy’s, generated sales of roughly $4 billion at 153 stores.
While Woodman’s has enjoyed great success, the company tempers its growth prospects by only building when it has enough cash on hand to finance construction and support the store. In the past, the company has opened stores at a rate of one every two-and-a-half years.
David Livingston, principal with DJL Research and a member of the RetailWire BrainTrust, said, “They’re going to do real well.”
Mr. Livingston estimated that Woodman’s will grab a three percent share of market with every store it opens in the Milwaukee area. If it opens three stores, it will move into second position behind Roundy’s in the market, he predicted.
Discussion Questions: What is your assessment of Woodman’s? What does its presence mean for the other retailers in markets where it opens stores? With stores now in Wisconsin and Illinois, where do you see Woodman’s looking for future stores and growth?
Just an FYI – in Milwaukee the primary reason a consumer shops at a supermarket in Milwaukee is price. Pick ‘n Save has always held an advantage to an extent because Milwaukee was littered with high price stores run by weak out of state operators such as A&P, Fleming, and Albertsons. Fleming and Albertsons have gone to supermarket heaven and A&P threw in the towel and pulled out. Suddenly Pick ‘n Save looks like the high priced operator due to their monopolistic market share.
As Wal-Mart, Woodman’s, and Costco enter the market, the consumer realizes just how much extra they have been paying all this time. Even the high prices quality and service stores benefit because their prices really don’t seem much higher than Pick ‘n Save’s. Not a good time to be the sterile plain vanilla supermarket in Milwaukee.
Woodman’s has opened their Milwaukee store at the right place at the right time. As the economy gets tighter more and more people are becoming price conscious again. They will give up a few frills for price. Plus Roundy’s needs the competition to make them sharper.
You are right when you indicate the need for Woodman’s in Chicago.
As a Milwaukee area grocery shopper, my grocery shopping routine was turned on its head when Jewel left. I have never been a fan of Pick n Save (Roundy’s) and have had to cobble together a new grocery strategy that’s a combination of Sentry, Target, Aldi, Walgreens and CVS. I’ve only been to Woodman’s once, but did enjoy the experience. I look forward to any inroads they can make into this market.
Milwaukee could use two or three more Woodman’s stores. We are just now getting Wal-Mart Supercenters and Costco. The Madison market is getting their third Woodman’s. In Madison, Woodman’s has gotten about 10% market share for each store, however that is a small metro area compared to Milwaukee. In Milwaukee, they should get about 3% for each store assuming they do about $1.5 million per week, which is normal. They should have no trouble doing that considering the weak, high priced competition in Milwaukee.
When Roundy’s sells out, there could be turmoil as the new owner goes through a learning curve, giving Woodman,s and other price operators even greater opportunity.
I like the fact that Woodman’s is employee owned and they have made 48 millionaires. It’s no secret they shared the wealth when Woodman’s cashed in their Roundy’s stock 5 years ago and split the proceeds with their employees. Some long time employees were very happy.
It’s not easy to open a 225,000 sq. ft. store so I would expect them to continue at the one store every two and a half years. As for the competition, they will need to drop their prices. Typically prices at the competition are about 7% lower when Woodman’s is in the market. I’ve done price checks with Woodman’s and they are always within plus or minus 1% of Wal-Mart. Only Crest in Oklahoma City has been able to run this close to Wal-Mart.
Woodman’s is retail’s triple threat to the competition. Price, selection and convenience is all there and they have built their success on those elements. Expanding only when there is cash on hand slows growth but solidifies the foundation. No one can complain about someone paying cash for something. Congrats on the new store and I look forward to taking a road trip to check it out.
We have shopped at the new Woodman’s in Aurora, IL and it is an amazing store. Outstanding selection and very good prices make it a real winner at our house. We would go more often if it was a little closer to us.
I see Woodman’s as a big threat to the existing retailers in any market that they enter. The Chicago market is an easy target with the prices that Jewel and Dominick’s are able to charge and their lack of variety compared to Woodman’s.
David’s comments are right on. Woodman’s is a destination stop much like an amusement park is for the kids. Woodman’s has something for everyone (except those who will only pay with credit cards). Being employee-owned is a plus and improves customer service. With three new power players in the market, Milwaukee consumers will get more assortments and steadier prices. The days when Milwaukee consumer had to rely on A&P, Kramo, Kohl’s, Kroger, etc, are over. The new “Big Three” will make shopping a little more fun again in Milwaukee.
Woodman’s is smart to expand slowly. Who wants debt these days? And Woodman’s doesn’t take credit cards, only debit, so they preserve their profit margins. They don’t copy everyone else and the public loves them. Great retailers dare to be different.