Dive Brief:

• Midwestern grocer Hy-Vee plans to build an 8,880 square foot convenience store that will offer groceries, produce, prepared foods and a Starbucks Coffee location, as well as fuel service, according to the St Paul Pioneer-Press.
• The location will be twice the size of a typical c-store and will be the first of this format for Hy-Vee.
• Hy-Vee currently operates 16 convenience stores and 23 supermarkets in Minnesota. The company entered the Twin Cities market two years ago and currently has eight locations in the area. 

Dive Insight:

Give Hy-Vee a lot of credit: In an industry that's seeing unprecedented disruption, 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 April, the company announced it would build a small grocery and convenience store that would also serve as a pickup location for orders made through its Aisles Online platform. Then last month, 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 shops. 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 slimmed-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.

Hy-Vee could very well have a hit on its hands. A spokeswoman for the chain told the Pioneer Press that it's evaluating other potential sites in the Twin Cities. Success 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? Hy-Vee 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. Will shoppers buy produce and shelf-stable products at a store designed for get-in, get-out convenience? That remains to be seen.