Dive Brief:

• Hy-Vee plans to open its first standalone HealthMarket store in its hometown of West Des Moines, Iowa on Tuesday, according to the Des Moines Register. The format is a build-out of the store-within-a-store concept the company launched nearly 20 years ago. The new store will be 15,700 square-feet — three times larger than its in-store HealthMarket sections.

• The new HealthMarket location will offer a pharmacy, medical clinic, sports nutrition center and access to a next-door gym in addition to a lineup of grocery staples, including natural and organic foods, meats and beauty products. There is also a “hydration station” that offers consumers infused water, kombucha, and nitro coffee.

• Customers can order the groceries through the retailer’s Aisles Online program, which offers store pickup as well as home delivery. The grocer expects to open two more standalone HealthMarket stores next year and sees 50 to 60 of them eventually.

Dive Insight:

Hy-Vee has long been a leader in retail health and wellness, and maintaining that lead means experimenting with new concepts.

Launched in 2001, Hy-Vee's HealthMarket sections came of age at a time when separate health departments were all the rage with retailers. As healthy products and lifestyles have grown increasingly popular, more grocers have integrated wellness services and selections into their stores. But there clearly still exists an opportunity to attract health-conscious consumers with dedicated formats, as evidenced by the success of independent and chain specialty stores and the rise of new competitors like Sprouts Farmers Market and Lucky's Market.

With its standalone HealthMarket, Hy-Vee can address these non-traditional competitors. It can also experiment with ways to build loyalty among very health-conscious consumers — including those that visit the OrangeTheory fitness center attached to the store.  

The HealthMarket location will attract those consumers that go to the gym and can walk next door to pick up any dietary or health needs without seeing other indulging foods that can distract them from health goals. The grocer made this even easier by having a connecting doorway between the fitness studio and the market and selling products related to a variety of health concerns.

But Hy-Vee isn't just focused on gym rats. The HealthMarket store also features a hearing station that offers what might be the first grocery store brand hearing aid, Capsure, in partnership with Lucid Technologies. 

Hy-Vee continues to build out new offerings, and is experimenting with new store formats aimed at breaking away from its label as a traditional grocer. Last year, the retailer added a diabetic management program, staffing dietitians in all 244 of its stores and health clinics in almost 60. It has also developed a hybrid grocery-convenience store called “Fast & Fresh” that includes fresh foods, groceries, and an express version of its in-store restaurant, Market Grille. Innovation is imbedded into Hy-Vee’s business model as the company continuously rolls out new products and store additions that merges health and convenience.

Hy-Vee’s new standalone stores won’t be an immediate threat to other grocers, but as Food Dive’s biggest disrupter of 2017, it should continue to shake things up. Competing retailers should take note, then get to work on evolving their own health offerings.