Dive Brief:
- Hy-Vee has announced the locations of two Fast & Fresh hybrid convenience stores, according to stories appearing in The De Moines Register. One will be located in Des Moines, the city where Hy-Vee is based, while the other will be just to the east in Altoona, Iowa.
- The stores will be around 10,000 feet feet and include fresh foods, an assortment of groceries and a Market Grille Express restaurant in addition to fuel pumps.
- Hy-Vee officials told the Register they are planning to build Fast & Fresh stores in additional markets where the company operates.
Dive Insight:
In addition to the Des Moines locations, Hy-Vee also plans to build a Fast & Fresh store in the Twin Cities market, where it’s currently battling Cub Foods and Target for market share. Considering the chain is winning over customers in the region with its superior fresh and prepared foods offerings, the new format, which zeroes in on these categories, could be a potent weapon.
Looking at the broader picture, the Midwestern chain is showing it isn't afraid to experiment with its retail store model as it seeks solutions to match consumers’ shifting preferences. In June, news reports showed the grocer is also building a 17,000-square-foot health-focused store that includes grocery aisles, a medical clinic and a gym. Over the past year, Hy-Vee has also dabbled in fashion assortments and unveiled plans to build an e-commerce fulfillment center as well as an $86 million production facility dedicated to making prepared foods and meal kits.
With these moves, Hy-Vee is aggressively pursuing consumer trends around fresh foods, convenience and the growing demand for online grocery shopping. These are opportunities that many grocers recognize, but few are willing to invest to the degree Hy-Vee has in such a low-margin industry.
Considering Hy-Vee operates 142 gas stations, building a larger convenience store isn't a stretch for the company. But the significance of the move can't be understated. Consumers are increasingly looking for quicker, more convenient shopping destinations. They also want to perform fill-in trips rather than large weekly shopping excursions. Tailor-made for these desires are places combining the on-the-go convenience of c-stores along with the fresh, high quality food of a supermarket.
Across the country, retailers are building slimmed-down stores and similar c-store hybrids. Kroger, which has its own army of convenience stores, unveiled a Fresh Eats MKT concept in Ohio that offers a pared-down grocery experience with an emphasis on prepared foods. Giant Eagle, meanwhile, is rebranding its GetGo gas stations at GetGo Café + Market locations, adding plenty of grab-and-go sandwiches, salads and fresh produce to boot.
Success for Hy-Vee will likely come down to location — that is, are there enough commuters, office workers and other potential drop-in customers who will visit the store? The retailer will also need to replicate the grab-and-go convenience of its c-stores on a larger scale, while also selling customers on numerous grocery items.
