Dive Brief:
- Hy-Vee has begun leasing its Aisles Online Click-and-Collect Lockers to local businesses, according to Sioux Falls Business and the company’s website. Last week, the grocer began operating the pickup lockers, which hold e-commerce orders for next-day pickup, at the employee parking lot of the Avera McKennan Hospital & University Health Center in Sioux Falls, S.D.
- This is the third locker installation Hy-Vee has placed at a non-store location, the retailer’s vice president of e-commerce development told Sioux Falls Business. Another location opened at St. Luke’s Hospital in Cedar Rapids, Iowa in February. Hy-Vee declined to comment or provide further details when contacted by Grocery Dive.
- Hy-Vee’s Aisles Online Click-and-Collect Lockers also appear in select stores and at the company’s new Fast & Fresh and HealthMarket locations. Customers place their order, specify a location and are then given an access code for the locker to access their groceries. Hy-Vee’s lockers are temperature controlled and support the full assortment of store products. According to the company’s website, it only needs "access to electricity and an internet connection" to install the units.
Dive Insight:
In addition to creating a new revenue stream, placing its Click-and-Collect Lockers off store property helps Hy-Vee reach shoppers closer to where they live and work. The Avera McKennan location is being billed as a convenience for employees, with "a few dozen" orders fulfilled in the first few weeks the lockers showed up on site, a hospital official told Sioux Falls Business.
Hy-Vee isn’t the first U.S. grocer to operate separate grocery pickup points. Peapod has experimented with order pickup in places like Washington, D.C. Metro stations. The e-grocer primarily uses Ahold Delhaize owned stores for pickup orders these days, but still operates a pickup-only location in Palatine, Ill., according to a Peapod spokesperson.
Kroger offers click-and-collect order fulfillment at a handful of Walgreens locations around Cincinnati — part of its store-within-a-store trial that launched late last year — while Amazon and Walmart each operate two grocery pickup depots. Walmart has also piloted large grocery pickup kiosks at stores in Oklahoma and Texas.
Looking abroad, Waitrose in the U.K. offers pickup points — including lockers — while France’s Drive program features hundreds of depots where customers can pick up orders.
Keith Anderson, senior vice president of strategy and insights with Profitero, told Grocery Dive that pickup points like Hy-Vee’s add another layer of convenience to retailers' e-commerce services. But the service "hasn’t taken the world by storm," he said, mainly due to high upfront costs and the cost of scaling the units.
Leasing its Click-and-Collect Lockers, then, would be Hy-Vee’s way of defraying those hefty costs. The question is, will other businesses see the value in offering them? Corporate offices have been providing more services to entice employees lately, including fresh food delivery and smart fridges stocked with meal kits. Hospitals, with their high density of employees, many of them working odd hours, seem to be a natural fit.
Hy-Vee is well-known in the industry for experimenting with new store and e-commerce concepts. CEO Randy Edeker said in a recent interview with Grocery Dive that the company is investing more in Aisles Online, which it rolled out to all stores back in 2015.
"We're reinvesting in Aisles Online," he said. "We think it's just best for us to own it and go that direction and manage it from what we think our brand expectations are."
