Will Hy-Vee’s grocerant strategy set it apart from rivals?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
Although it’s in the grocer’s DNA, Hy-Vee recently redoubled its commitment to prepared foods.
Right now, 111 of its 244 stores have either full-service Market Grille restaurants or limited-service Market Grille Expresses. But the plan is to add several dozen new restaurant locations each year. Reports VP of procurement Matt Dougan, “Statistics show that more people are eating out, so our in-store restaurants give them what they’re looking for.”
Sit-down restaurants are just one option. The grocer, which does business primarily in the Upper Midwest, also offers a wide range of grab-and-go offerings including five new programs that debuted at Hy-Vee stores opened in the Twin Cities last year: a Sweet Shoppe, a Hibachi Asian Grill, a juice and smoothie island, a made-to-order Cocina Mexicana and a Hickory House Comfort Foods area. This year, Dia Pida Italian Street Food and Long Island Deli are being added in new stores.
“We want Hy-Vee to be the best when it comes to offering quality meals that are fresh, customized and convenient,” said Mr. Dougan.
The goal, it seems, is to capture all of consumers’ food dollars, whether they’re preparing a meal at home, eating on the go or dining out. Says Don Stuart, managing partner at Cadent Consulting. “It’s aiming to become consumers’ total food solution.”
The idea has merit. Foodservice is a more attractive target because it’s growing more than 50 percent faster than the supermarket business (4.8 percent versus three percent).
The two businesses also tend to be symbiotic. For example, a restaurant in the store means it’s often busy until 8:00 or 9:00 — even on a Saturday night — as diners wander over after dinner or drinks to pick up a gallon of milk or something for breakfast rather than stopping at a c-store.
In addition, “Hy-Vee recognizes that foodservice can successfully differentiate them against all other competitors selling food,” says Jon Hauptman, senior director at Willard Bishop. “While it’s difficult to differentiate in center store on identical packaged goods, Hy-Vee can stand apart and attract shoppers with a refreshed foodservice program.”
DISCUSSION QUESTIONS: Is the combination of sit-down restaurants and grab-and-go prepared foods a viable positioning strategy for supermarkets? Where do you see the biggest opportunities and challenges for stores pursuing this approach?