Staying relevant as consumer needs change

WEST DES MOINES, Iowa — Hy-Vee Inc. has never been afraid to try new things, and the past year and a half the retailer has seen a parade of fresh ideas, products and services that have helped the company extend its reach, address changing customer needs and grow its business.

A few highlights:

• In June 2021, the retailer launched Hy-Vee Financial Services, fueled by its Midwest Heritage bank subsidiary, offering customers everything from checking and savings accounts to home mortgages and auto ­insurance.

• In August 2021, Hy-Vee launched Wall to Wall Wine and Spirits, a new division focused on offering a best-in-class assortment of wine, spirits and beer in a modern, stand-alone format.

• The following month the company debuted what it described as an entirely reimagined grocery store format in Grimes, Iowa. The approximately 93,000-square-foot store offered a new fast-casual dining experience via a large, open Food Hall dining area, as well as a merchandise assortment that included everything from shoes and apparel to beauty products, along with all-digital shelf labels, more than 100 TVs, and digital kiosks customers can use to buy everything from eyewear to cakes and freshly prepared food.

• In January 2022, the retailer launched a ship-to-home e-commerce site called WholeLotta Good that offers customers a full range of dietitian-approved health and specialty products that can be purchased online and shipped directly to homes across the U.S. The company also announced a new site called PetShip, which provides pet products to those around the country.

• That same month the company released details about a planned southeastern expansion beyond its current eight-state operating region with planned store openings in Indiana, Kentucky, Tennessee and Alabama.

• In July 2022, the retailer hosted its inaugural Hy-Vee IndyCar Race Weekend at Iowa Speedway, drawing one of the largest crowds in the racetrack’s history and entertaining music fans with concerts.

• At a White House Conference on Hunger, Nutrition and Health in September 2022, Hy-Vee chairman and executive director Randy Edeker said that the company would deliver 30 million meals to vulnerable communities by 2025, as well as deploy its registered dietitian team to educate 100,000 Americans in areas of low food access on healthy eating and nutrition by 2026.

• In October and November 2022, Hy-Vee opened additional “reimagined grocery stores” in La Crosse and Ashwaubenon, Wis.

That isn’t even an exhaustive list. In the past year Hy-Vee also announced a succession plan and a new leadership structure, continued to evolve its store format, and expanded its digital and health and wellness offerings. In recognition of these and other initiatives, the editors of MMR have named Hy-Vee the publication’s Innovator of the Year for 2022.

Hy-Vee, which celebrated its 92nd anniversary in 2022, is determined to stay relevant as consumer lifestyles and preferences continue to change. Edeker, who became the company’s fourth CEO in 2012 and recently transitioned to chairman and executive director, noted in a 2017 interview that the percentage of companies that reach 100 years in the same business is 0.000897. Edeker is confident that Hy-Vee will be one of those rare companies that makes it.

Part of the answer lies in diversification. The employee-owned company describes its brand as “synonymous with quality, variety, convenience, healthy lifestyles, culinary expertise and superior customer service.” And while all the elements of its brand promise apply to its core grocery store business, Hy-Vee is applying them to new areas and opportunities as well.

Hy-Vee’s devotion to quality and culinary expertise applies to all the grocery products and perishables it sells to consumers who want to cook their own meals at home. The retailer takes that commitment seriously, boasting, for example, of a beef vetting process so strict that only an average of six out of 100 cows meet the tight specifications for Hy-Vee Choice Reserve and Hy-Vee Prime Reserve Beef. But Hy-Vee recognizes that its customers also want options like prepared food that they can take home to heat and eat, or a fast casual dining experience in a store or even in a restaurant.

Which is why Hy-Vee’s latest store prototype in Ashwaubenon has a large, open Food Hall dining area that includes Hy-Vee’s expanded breakfast menu; a pub with full sit-down bar, 32 taps and outdoor patio; Mealtime offerings; Mia Italian; HyChi and Hibachi; Nori Sushi; Market Grille Express; Long Island Deli; and a Wahlburgers at Hy-Vee. (Hy-Vee’s partnership with Wahlburgers includes owning a stake in the chain.)

The dedication to supporting “healthy lifestyles” is another example of a business opportunity that has grown beyond the markets where Hy-Vee has physical stores.

Recognizing that good nutrition is an important part of a healthy lifestyle, Hy-Vee was one of the first chains to deploy dietitians in its stores. During the pandemic the company launched virtual dietitian services, allowing its dietitians to reach customers both in-store and at home — and even people in other states.

The company continues to diversify by expanding its health and wellness business beyond its eight-state territory in various ways.

Hy-Vee owns Amber Specialty Pharmacy, which operates 19 locations from coast to coast and services patients across the country. Another subsidiary, Vivid Clear Rx, is a national pharmacy benefit management company that recently introduced the VCRx discount prescription card, which offers discounts of as much as 80% on prescription medications.

Vitamine, another Hy-Vee e-commerce site, is a national vitamin and supplement service that specializes in personalized vitamins that can be shipped directly to customers’ doors across the U.S. Vitamine is powered by a team of registered dietitians who are available to answer customers’ questions and help develop a vitamin or supplement regimen tailored for each individual’s needs and health goals.

RedBox Rx, another Hy-Vee subsidiary, provides low-cost telehealth and online pharmacy services and ships treatments directly to patients’ homes. To keep prices low, RedBox Rx does not accept insurance, although patients can use their HSA or FSA cards to pay for services or prescriptions.

Hy-Vee‘s ship-to-home e-commerce site WholeLotta Good allows consumers across the country to buy dietitian-approved health and specialty products online and have them shipped directly to their homes. Products available via the site include groceries, vitamins and supplements, health and beauty products, household supplies, and fitness items. The site also has a blog written by Hy-Vee registered dietitians, with posts that include ideas for meals and snacks, and tips for health and wellness, mindfulness and stress reduction.

Hy-Vee is projecting its brand across the country in other ways, too, while also reaching out to communities in need whether or not Hy-Vee has a store located in the area.

In December 2021, Hy-Vee deployed a team of 37 employees in a caravan of 19 vehicles carrying 327,000 bottles of water and more than 220,000 snack bars and breakfast items to help victims of tornadoes that ripped through Kentucky and Tennessee. The team partnered with local emergency operations centers and nonprofits to distribute the snacks and water, and help with relief efforts. The caravan consisted of 10 Hy-Vee semitrailers, Hy-Vee’s mobile disaster command center, six disaster recovery pickup trucks and two SUVs.

In October 2022, the retailer dispatched its disaster relief fleet to southwestern Florida in the wake of Hurricane Ian, providing food, snacks, water and ice to residents and first responders impacted by the major disaster.

The inaugural Hy-Vee IndyCar Race Weekend, held July 22 to July 24 in 2022 at Iowa Speedway in Newton, Iowa, was another source of national exposure for the Midwestern retailer. The three-day race weekend drew a total of 80,000 fans to see three races, as well as concerts by Tim McGraw, Gwen Stefani, Blake Shelton and the country music duo Florida Georgia Line. The two NTT IndyCar Series races were televised live on NBC, with strong viewership numbers, and Edeker said the media and social media response were bigger than anything Hy-Vee has experienced before.

Hy-Vee’s higher profile outside the eight Midwestern states where it currently operates stores should help as it expands into new markets, as the company is doing. In early 2022, Hy-Vee revealed that it had bought properties for store sites in Indiana, Kentucky and Tennessee, and also plans to expand into ­Alabama.

“As Hy-Vee continues to grow and evolve, we have so much to offer consumers across the U.S. that we knew it was time to expand our footprint even further,” Edeker said when announcing those initial store-opening plans. Edeker added that “as customers’ shopping habits change and their needs evolve, we have services and offerings that we believe will bring an entirely new retail experience to customers in those states.”

Hy-Vee is taking an innovative and targeted approach to that effort as well. Edeker explained at an MMR breakfast session at the National Association of Chain Drug Stores’ Total Store Expo in August that Hy-Vee is not aiming to conquer the Nashville market by opening 20 or so stores. Instead, the plan is to open several stores in the greater Nashville area.

Each store will be about 155,000 square feet, including a 25,000-square-foot automated e-commerce facility. The idea is to dominate in a 10-mile radius around each of these hub stores.

“We think it’s a pretty smart way to go into those communities,” Edeker said. “Kick the door open, become known, and then decide on the next place we should build. We’re not going in with a strategy that says we have to build 20 stores here. We think that time is over now in retail.”