2022 Midwest Retailer of the Year Hy-Vee takes lead on innovation, ventures into new spaces

by Jack R. Jordan / content creator

Hy-Vee operates more than 550 retail locations, including retail, convenience, clinics and wine and spirits stores across eight Midwestern states, with plans to expand farther into and beyond the region.

The Shelby Report of the Midwest’s Retailer of the Year, the West Des Moines, Iowa-based grocer announced in January that it would bring “a smile in every aisle” into Zionsville, Indiana. That was followed later by news the company would also open stores in Louisville, Kentucky, and Spring Hill, Tennessee. The announcements were met with much acclaim from the respective municipalities.

“We are excited that Hy-Vee has chosen Zionsville as a location to put down new roots,” said Mayor Emily Styron. “With their commitment to quality of service, variety of products, selection of healthy food and an in-store pharmacy, Hy-Vee will benefit Zionsville residents, our neighboring communities and visitors. We are grateful for the collaboration with the Hy-Vee team and welcome them to town.”

Spring Hill’s mayor, Jim Hagaman, echoed that sentiment.

“Hy-Vee made a great decision to locate its first Tennessee store in Spring Hill and we welcome them,” Hagaman said. “Having surpassed 50,000 in population, our city continues to be a favored destination for additional specialty and high-end firms. Our residents are in the drivers’ seat and like doing business locally.”

These stores will be some of the company’s first locations in the Southeast. The company also has plans to continue expanding south into Alabama. While this has been announced, the timeline has undergone a slight shift.

“We’ve delayed [construction] a little bit. We’re going to start in the middle of 2023,” said Hy-Vee Chairman and Executive Director Randy Edeker. “With construction costs up about 17 to 20 percent everywhere, we decided to just pause a little bit. But we’ve got at least three locations going up, with more sites under review.”

Edeker explained part of this delay has to do with the massive scope of the projects.

“We’re going to build a 155,000-square-foot store with a fullblown micro-fulfillment center attached to each one,” he said. “We’ll approach e-commerce within each of those markets with a different style store.”

He compared the expansion stores with Hy-Vee’s flagship store in Grimes, Iowa. That store totals 95,000 square feet and includes a full restaurant, deli, bakery, non-grocery retail space, pharmacy, wine and spirits department, Starbucks, butcher shop and grocery store.

“The basic layout of the store is [like Grimes], but you have to add another 60,000 square feet to it,” Edeker said.

As with many large-scale projects, preparation for opening new locations begins long before ground is broken. While the expansion is larger than anything Hy-Vee has previously undertaken, the company has a foundation that helps it understand what the communities they are moving into expect and need.

The company believes the best way to give back is to understand what the needs are in the community. The company says executives have already been living in areas where the retail chain plans to expand to learn the communities they will be in and understand the market, what it has to offer and what customers are looking for.

“To be able to be in the fabric of the community that we want to be a part of is who we are,” Edeker said.

Alongside the additional markets, Hy-Vee is in the process of opening new warehouses, including one for specialty groceries. That facility is set to open in 2024.

The company’s current specialty grocery warehouse has been in operation for a number of years and is at capacity. Hy-Vee’s frozen warehouse in Ankeny, Iowa, recently added 175,000 square feet of space.

Hy-Vee has continued to invest in “back room” retail locations. Perishable Distributors of Iowa is a Hy-Vee subsidiary that handles meats, seafood, bakery and all perishables outside of produce. Expanding warehouses and distribution centers has been necessary to alleviate some of the growing pains of adding more retail.

This same principle applies to Hy-Vee’s micro-fulfillment pharmacy and e-commerce centers, which use AI technology to place prescriptions into bottles that are then transported to pharmacies. Kristin Williams, EVP and Hy-Vee’s chief health officer, helped open the first center in 2013 and continues to oversee their operations.

“We offset the time spent on the manual filling process by utilizing automation to fill the prescriptions,” she said. “Then we actually send it back to our stores. Our pharmacists then confirm the prescription.”

Hy-Vee is in the process of opening five more pharmacy fulfillment centers. And there are plans to continue the foundation of micro-fulfillment centers with e-commerce grocery, according to Jeremy Gosch, CEO and president of Hy-Vee, Inc.

Hy-Vee’s expansion goes well beyond stores and warehouses. It is continuing to boost product offerings and signature brands that surpass grocery. In 2017, the company announced partnerships with Walhburgers and Orangetheory Fitness.

“Hy-Vee has been a great partner for us with our Performance Inspired nutrition line. Their commitment to quality and innovation shows in everything they do,” Mark Wahlberg, actor and founder of Wahlburgers, said in a news release at the time. “I can’t think of a better fit for Wahlburgers to introduce our family’s hospitality to the Midwest.”

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Alongside Wahlberg and his two brothers, Paul and Donnie, Hy-Vee has the opportunity to sell products from other well-known brands and collaborators. Names such as Drew Barrymore, 50 Cent, Kirk Cousins, Lee Greenwood and Moe Cason can be found throughout its retail locations.

These are not the only brands with which Hy-Vee has exclusive partnerships. It also offers an original line of beauty products called Bellissima.

Hy-Vee believes in partnering with many brands for an array of products. The full list of partnerships – exclusive and nonexclusive – is too large to go into great detail, but Edeker said they help “strengthen who Hy-Vee is.”

However, Hy-Vee’s growth doesn’t stop with retail grocery. Gosch oversees all retail – the core of Hy-Vee’s business – but that core expands beyond the traditional banner. While all of Hy-Vee’s subsidiaries would be challenging to completely detail, the grocer does offer four other banners for its customers.

Dollar Fresh Market follows Hy-Vee’s supermarket format but uses the value pricing associated with other stores such as Dollar General. Hy-Vee Fast & Fresh is its convenience store and gas station banner.

Fast & Fresh also partners with outside restaurants, mostly coffee shops, such as Starbucks and local Iowa brand Smokey Row. Hy-Vee also owns and operates six standalone Wahlburgers restaurants and more than 60 Wahlburgers at Hy-Vee locations throughout eight Midwestern states.

Hy-Vee’s most recent addition is its Wall to Wall Wine and Spirits, a standalone banner announced last year.

“At Hy-Vee, we focus on the evolving lifestyles of our customers,” Edeker said at the time of Wall to Wall’s announcement. “With the creation of our Wall to Wall Wine and Spirits division, we are excited to continue to provide the best wine, beer and spirits selection, as well as a customer service experience of the highest caliber.”

Alongside alcoholic and nonalcoholic beverages and sodas and seltzers, the stores feature specialty grocery items such as cheese, charcuterie, chips and crackers.

The concept debuted in West Des Moines, with three other locations in Lincoln, Omaha and Papillion, Nebraska.

“We believe we are the best retailer in the country...as you walk through our halls and speak with our team, I think you realize how diverse we are…and you think about the health and wellness side of our business, the digital side of our business, our marketing teams, the data side, our stores, our people, our layout – we are very diverse. We have a great group of people who work for this company every single day.”

– Jeremy Gosch, CEO and President of Hy-Vee, Inc.