Hy-Vee's CEO on growing and experimenting in the Midwest

 

Hy-Vee's CEO on growing and experimenting in the Midwest

Randy Edeker talks e-commerce, the company's latest store formats and the pricing pressure Walmart and Aldi are putting on its small-town locations.

Jeff Wells

Hy-Vee has a reputation for trying new things and staying ahead of the curve. It was one of the first chains to put dietitians in its aisles and now has nearly one in each of its 245 stores. The chain also built out its own e-commerce platform, Aisles Online, and made it available to all stores two years before Amazon bought Whole Foods.

These days, the Midwestern grocer is dabbling in everything from meal kits to clothing aisles and new store concepts. Last year, Hy-Vee opened not one but two different scaled-down store formats — HealthMarket and the new-look convenience store Fast & Fresh. The former features a sports nutrition station and what might be the first grocery store brand hearing aid. The latter is a meal stop where shoppers can fuel up, grab a box of sushi and a growler of beer.  

Randy Edeker, Hy-Vee's straight-talking CEO, doesn't see the company as a major innovator or risk taker. To him, it's continuing to build on its legacy strengths and defending its turf in communities ranging from large metros to small towns with just 2,000 people. Grocery Dive sat down with Edeker recently and had a wide-ranging discussion on everything from the growth of Hy-Vee's Market Grille restaurants to the company’s struggles to hold on to workers.

This interview has been edited for length and clarity.

Grocery Dive: Hy-Vee's HealthMarket and Fast & Fresh stores are brand new, with just one location each. But there seems to be high hopes for expansion here. Starting with HealthMarket, which opened last summer in Des Moines — what led to the development of that concept and how have shoppers responded?

Edeker: There's a lot of talk over what the store of the future is going to look like. I don't think anybody knows, but we know we have to experiment a little bit. Those formats are coming just [by] looking at what works in our big stores. HealthMarket is our natural and organic section that we've had for 25 years. That's been very successful, so what we wanted to do was pull that out of the store and partner that with an overall health view, from Orangetheory Fitness to pharmacy to hearing aids to the walk-in clinic, sports nutrition, vitamins and supplements, and put that all in one place.

If you look at drugstores right now ... I don’t think the drugstore format is necessarily working. So can we reinvent the drugstore format for certain markets? It's really an alternative store, and we're going to see if it can work.

What's the runway for growth with HealthMarket? Is it still 50 to 60 stores?

Edeker: I don't know. I want to do one right now to see how that goes. If I look at Omaha, Minneapolis, Des Moines and Kansas City, I think there could be eight or 10 of those in each one of those big markets. We're going to test it for a while. I have two other locations where we're thinking about building one. 

There are some things we would do different, for sure. It might be slightly bigger. We would re-engineer the front end. We're going to move to a self-checkout only front end there in the next few months. The core customer, the customer that loves HealthMarket is the person that's going to …

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Source: https://www.grocerydive.com