Hy-Vee Reimagines the Future of Grocery

Stephen DeAngelis

November 8, 2021

“The future of food retailing is on display,” writes Marian Zboraj, Digital Editor of Progressive Grocer.[1] This future vision, she reports, can be found “in the outskirts of Des Moines, Iowa, where Hy-Vee opened a long-awaited concept store in which the innovative grocer showcased numerous firsts.” The new store answers one of the big questions raised as a result of the pandemic: Will in-store dining options return? According to Zboraj, “The approximately 93,000-square-foot store … is the first location to offer a new dining experience for customers with a large, open food hall dining area for fast-casual dining, which includes Hy-Vee’s new breakfast menu; a pub with full bar and outdoor patio; mealtime offerings, Mia Italian; HyChi; Nori Sushi; Chowbotics; Long Island Deli; and a Wahlburgers at Hy-Vee.”

 

Change in the Grocery Sector is Accelerating

 

Hy-Vee’s concept store takes its place alongside other efforts to modernize the grocery shopping experience. Food retailing can be traced back to the earliest human marketing experiences. From open bazaars, food retailers moved indoors; however, merchants still played middleman between their goods and consumers. For much of history food retailers were specialized, butchers, bakers, cheesemakers, etc. When dry goods started playing a major role in food-buying, general stores popped up, especially in America’s old west. Even then, however, a friendly shopkeeper would dutifully locate requested items from stocked shelves behind the counter and bring them to the customer.

 

As people became more urbanized and agriculture became more business-like, the general store turned into the grocery store. Over a century ago, Clarence Saunders opened the first Piggly Wiggly in Memphis, TN. Instead of stocking goods behind counters and away from customers, Saunders let consumers do their own choosing and picking. Journalist Jerry Cianciolo explains, “The 35-year-old Saunders … reasoned that shoppers would gladly hand-select their own merchandise, and pay upfront, in exchange for lower prices and faster shopping. … King Piggly Wiggly, as Saunders christened his first store, opened Sept. 6, 1916. It stocked 1,000 products, four times the variety of a typical market. Customers entered through a turnstile and, basket in hand, followed a path through the aisles. Goods were neatly arranged with clearly marked prices, something heretofore unseen. There were even scales for shoppers to weigh sugar and other staples.”[2] With that first Piggly Wiggly, grocery shopping changed forever.

 

Following the Second World War, grocery stores started offering a wider variety of goods. It didn’t take long for grocery stores to become supermarkets. Cash was still king, but checking soon rivalled cash as a method of payment. By the end of the century, credit cards had joined the mix. In 1990, fewer than 1000 grocery stores accepted credit cards. Today, credit cards and other electronic payment methods are ubiquitous. Electronic payments allowed another innovation to get a foothold in the grocery business: self-checkout. In 1992, Dr. Howard Schneider developed and sold a retail self-checkout system he called “the service robot.” It caught on and the self-checkout market is expected to top $4 billion by 2024.

 

In 2017, Amazon introduced Amazon Go, a store that let customers walk in, grab items from the shelves and walk out without ever having to wait in a checkout line. The technology allowing this new concept in grocery shopping included computer vision, sensor fusion, and deep learning. Another innovation that appears to have legs is online grocery shopping. Although on-line grocery shopping was beginning to increase prior to the pandemic, 2020 saw a huge increase in online sales as well as an increase in curbside pickups. The new Hy-Vee store aims at getting shoppers back inside the store.

 

Making Shopping an Experience

 

Prior to the pandemic, supermarkets were joining the growing “experience economy” by remaking stores into places where food and other products could be experienced not just purchased. According to Zboraj, Hy-Vee is trying to reinvigorate that goal. She writes, “The location includes all-digital shelf tags and has more than 100 TVs for digital marketing. Digital kiosks are also available for ordering cakes and fresh prepared foods, as well as banking services from Midwest Heritage. The store features new technology with Scan and Go, as well as self-checkout options available for a contactless shopping experience. Other amenities include DSW shoes and accessories; Joe Fresh clothing; The W Nail Bar; Pair Eyewear kiosk; Johnson Fitness & Wellness showroom; a beauty department; and an expanded Candy Shoppe department with premium, novelty, and nostalgic selections.”

 

To enhance the shopping experience, Hy-Vee is also going big with QR codes. Jeff Wells (@JeffWellsWH), Lead Editor of Grocery Dive, reports, “[QR codes are] emblazoned on cart corrals and exterior signage. Walk inside, and they call out from shelf tags and hang down from banners. Many of the codes appear in the shape of a scannable ‘H’ and link to Hy-Vee’s digital circular. There are other codes shoppers can snap to learn more about Hy-Vee’s membership program, order a meal online or buy shoes from partner retailer DSW.”[3] As noted above, the store also features digital price tags that can be quickly updated to help centralize store pricing operations. Wells notes, “After a year and a half of battling health risks, supply disruptions and other immediate concerns, it would be understandable if Hy-Vee’s signature drive to test out new innovations had slowed a bit. But the spirit of experimentation is still very much alive and well in Des Moines.”

 

Grocery industry journalist Sam Silverstein (@SilversteinSam) reports that Hy-Vee’s spirit of experimentation is further reflected by introducing robotic aisle-scanning technology into five of its stores.[4] According to Silverstein, “The devices, supplied by Simbe Robotics and known as Tally, traverse aisles autonomously, using high-resolution cameras to track items on shelves. … Simbe’s robots can roll around a grocery store up to three times a day, recording data about items on shelves faster and more accurately than human workers. That ability enables them to help retailers cut down on the incidence of sold-out items by up to 30% and frees up store staff for other tasks, like working with customers.”

 

Hy-Vee is also trying to make customer receipts more profitable. Russell Redman, Senior Editor at Supermarket News, reports, “Hy-Vee sees more potential dollars coming its way after customer purchases using flexEngage’s receipt and transactional communication platform. The technology will enable the Midwestern grocer to offer personalized CPG advertising and marketing messages on paper and digital receipts. … In tandem with Hy-Vee content providers Catalina, Citrus Ad and Quotient, flexEngage will place targeted marketing content and manufacturer offers to shoppers on Hy-Vee in-store receipts and e-commerce notifications, allowing the retailer to generate incremental revenue from receipt space. “[5]

 

Concluding Thoughts

 

Even though Hy-Vee is pro-actively trying to improve the grocery shopping experience, Hy-Vee’s CEO Randy Edeker told Wells, “If there’s anything I wish we could do, it is just to stoke that fire more, to have our people thinking more and trying more and taking risks, because they can come up with amazing stuff. So, you’ll continue to see us try new things.” It’s clear, however, that Edeker is proud of the new Iowa store. He states, “The Grimes Hy-Vee is our most innovative store to-date with state-of-the-art technology integrated into every department. From unique lifestyle company partnerships to a world-class food hall and everything in between, this store was designed to provide customers with every offering, amenity and convenience to make their lives easier, healthier and happier.”[6]

 

Footnotes
[1] Marian Zboraj, “Hy-Vee Dazzles Iowans With New Prototype,” Progressive Grocer, 14 September 2021.
[2] Jerry Cianciolo, “The Man Who Invented the Grocery Store,” The Wall Street Journal, 7 September 2016.
[3] Jeff Wells, “Inside Hy-Vee’s ‘reimagined’ physical-meets-digital store,” Grocery Dive, 15 September 2021.
[4] Sam Silverstein, “Hy-Vee is bringing inventory robots to 5 stores,” Grocery Dive, 24 September 2021.
[5] Russell Redman, “Hy-Vee looks to monetize customer receipts,” Supermarket News, 21 September 2021.
[6] Staff, “Hy-Vee Opens ‘Most Innovative Store To-Date’ In Grimes On Sept. 14,” The Shelby Report, 15 September 2021.