Retailer has cultivated a mindset of 'agile change'
WEST DES MOINES, Iowa — Sweeping changes in the ways Americans live and shop are rattling the retail sector, driving some businesses into bankruptcy while providing those who are anticipating consumer trends with opportunities for success.
Hy-Vee Inc., based here in West Des Moines, is among a select group of retailers with a seeming knack for staying ahead of the curve.
Leaders at the employee-owned company credit their culture and autonomy with being able to encourage experimentation and pursue solutions to consumers’ evolving needs. For exhibiting these qualities, Hy-Vee was named Retail Innovator of the Year by Mass Market Retailers.
Cultivating a culture that is agile in adapting to change is a big part of the job for Randy Edeker, who has spent his entire career at Hy-Vee and was named chairman and chief executive officer in 2012.
“By nature, I’m very inquisitive, and I drive those around me to be very inquisitive,” Edeker said last month in an interview. Edeker said he’s constantly studying where society is moving, how people’s lives are changing, and how they are choosing where to shop and eat. “The other part is constantly looking for — within that lifestyle change — what is the coup? What is the thing that [Hy-Vee] can get to first? I’m a big believer in understanding what is really driving the change.”
In a recent presentation to company stakeholders, Edeker identified 20 coups, or successful moves made by Hy-Vee in recent months to improve the company’s competitive position.
To an outsider, some might look like trivial moves, he said, but each represents an advance of the company’s mission in ways worth noting and celebrating.
One accomplishment to note was getting Oprah Winfrey to agree to appear on the cover of Balance, Hy-Vee’s health and wellness magazine that offers shoppers nutrition and fitness information, beauty and fashion tips, celebrity features, and recipes.
“That’s pretty amazing for a Midwest retailer to get that done,” Edeker said of the Oprah issue, which includes an inside spread with details about Winfrey’s “O That’s Good” line of healthy comfort food available at the company’s 246 stores in the Midwest. “I’m also proud of the cosmetics lines, bath and beauty lines, and baby offerings that we’ve landed that have never been in a grocery retailer before,” Edeker said. “That speaks volumes as to what our team has done this past year to position us as someone to partner with.”
Not every partnership works as planned, of course, and some new lines of business prove to be ahead of their time or out of step with what customers want, said Donna Tweeten, executive vice president for brand experience and Hy-Vee’s chief customer officer. “We are not afraid to fail,” she said. “That’s the key to success.”
Hy-Vee is also distinguished by a willingness to redefine what it means to be a supermarket operator, Tweeten said.
“Grocery retail is where our roots are, but we more broadly look at retail, period. And more importantly, we look at innovative ways to be problem solvers for people,” she said. “That takes the thinking and the innovations to another level, because you are no longer thinking in terms of brick-and-mortar. You no longer think of your business with the guardrails in place that are supposed to keep you in one lane. We have no lanes. We have no guardrails. That does not mean that we’re reckless, by any means. Rather, it allows us to explore. We constantly talk about the need to be agile. In today’s retail age, that’s more important now than ever before.”
Partnerships with companies whose products or services complement its own are a favored way for Hy-Vee to diversify its business, said Jeremy Gosch, executive vice president for strategy and innovation and Hy-Vee’s chief marketing officer.
Gosch has been Hy-Vee’s point person on several recent partnerships, including a deal with actor Mark Wahlberg and his brothers Donnie and Paul that gives Hy-Vee the franchise rights in its eight-state region to Wahlburgers, the brothers’ restaurant concept.
Other notable deals have led to the creation of an in-store department selling Basin bath and beauty products; expanded pet food offerings from Blue Buffalo and fresh-baked pet treats from Three Dog Bakery; and a collaboration that gives Hy-Vee customers access to Orangetheory Fitness programs.
“In November, we opened our first store in Shakopee, Minn., that has an Orangetheory Fitness center built beside it,” Gosch said. “What we’re doing is fulfilling the health and wellness triangle. We have dietitians in our stores to help our customers with nutrition, we have pharmacists to assist with one’s overall health, and now we have Orangetheory Fitness to help with the physical, workout aspect. We believe we are providing the full realm of health and wellness better than anyone else in our industry.”
Hy-Vee is stretching its business into nontraditional areas in response to “real and lasting” societal change, Edeker said. “We’ve cultivated a mindset of agile change. It’s become necessary to have a culture that can respond rapidly to a customer’s wants and needs.”
Edeker has long tracked statistics comparing food eaten away from home versus food eaten at home. “For years, we saw the gap narrow between the two, and in 2016, we saw meals eaten away from home finally surpass meals eaten at home,” he said. “We were already deeply invested in food service, but we saw this huge investment that had worked for us for 60 years start to erode because people’s choices were different. At that time, we recognized that our customers wanted new food offerings — offerings that were convenient and quick as well as healthy, so we adjusted.”
Edeker is also monitoring a trend, sometimes referred to as the “retail apocalypse,” that contributed to the shuttering of more than 6,800 retail stores in 2017. “We take that very seriously,” he said. “The other thing we take seriously is that we’re 87 years old, and the percentage of companies that reach 100 years in the same business is .000897. You have to stay focused. You don’t get to just win. You have to work at it every day.”