Hy-Vee Focused on Healthy Growth at Checkouts

Discussion
Jan 04, 2012
George Anderson

In a March 2011 RetailWire discussion of Hy-Vee’s test selling only healthy snack items at a checkout lane in a store in Minnesota, Richard George, Ph.D., professor of food marketing at the Haub School of Business, Saint Joseph’s University, wrote that the concept represented “a real potential upside for retailers who may consider employing it in more than one checkout as a point of positive differentiation.”

Last month, Hy-Vee announced it was expanding a similar concept to over 100 stores across eight states. The lanes offer healthy snacks (such as nuts and baked chips) along with fresh fruit instead of the normal sugary options found at most checkouts.

The chain has increased its health focus in the last year including its participation in the “Healthiest State Initiative,” first announced in August, which is looking to move Iowa from the nineteenth healthiest state to the first by 2016.

Ric Jurgens, CEO of Hy-Vee, told Penton Business Media last month, “We can change an entire state and eventually an entire country.”

Discussion Questions: Will “healthy” checkout lanes become standard in grocery stores in the near future? Do you see what Hy-Vee is doing as a point of differentiation with its grocery competition in the Midwest?

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26 Comments on "Hy-Vee Focused on Healthy Growth at Checkouts"


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Dave Wendland
Guest
9 years 4 months ago

Healthy EVERYWHERE will be the new rule for retail grocers. With the bleak state of our health in the United States and the national spotlight on wellness and prevention, healthy will dominate new store formats, merchandising techniques, and multi-platform messaging. Hats off to Hy-Vee for putting health “front and center!”

Steve Montgomery
Guest
9 years 4 months ago

A successful checkout strategy is one that accomplishes the company’s internal goals. For most companies that includes a balance of specific sales and/or margin targets and perhaps some “soft” benefits such as consumers perception of the company.

If one stocked with healthy foods can accomplish that, then you are likely to see more of them rolled out. I expect most companies’ balance of financial targets versus customers perceptions will tilt towards the profit side and doubt that checkouts stocked solely with healthy foods will achieve that.

Lee Peterson
Guest
9 years 4 months ago

It’s definitely a good idea and shows that Hy-Vee is thinking about their customers AND their business — bravo! And considering their competition out there, it’s definitely a differentiator. Anxious to see what they roll out next — perhaps Hy-Vee will become the Safeway (more innovative) of the Midwest, eh?

Dr. Stephen Needel
Guest
9 years 4 months ago

Interesting to note two things from these articles: no mention of the sales impact and the decision not to promote this lane, in the expansion, with signage. I fall back on the simple question — does it help your business? If they are improving sales or profits or store traffic with this idea, then it’s great and you can bet other retailers will try it too. If it’s not enhancing measurable business results, why bother?

Richard J. George, Ph.D.
Guest
9 years 4 months ago

As I noted in March, the opportunity for positive differentiation by such endeavors is something firms need to explore/test. Obviously, the test has gone well and the connection with the “Healthiest State Initiative” brings additional focus to Hy-Vee. If food retailers are going to wrest the “wellness” business from drug stores, then they need to demonstrate to their target markets their commitment to this differentiating concept even at the expense of margins from candy and snacks at checkout. Hats off to Hy-Vee.

Bill Emerson
Guest
Bill Emerson
9 years 4 months ago

While there should be more presence of “healthy” snacks in the checkout lanes, I’m skeptical that the Hy-Vee approach of healthy-only is going to get much traction. There’s a reason that the sweets are there — people like them and buy them. After productivity drops with “healthy,” expect a return of the sweets.

Mark Heckman
Guest
9 years 4 months ago
I have to admit I am cynical about the consumer’s commitment to eating healthy. During my years on the FMI Consumer Research Committee during the 1990s, nutrition was always ranked as one of the top priorities of consumers vis-a-vis the annual Trends survey. Concurrent with these “self reported” priorities, categories like salty snacks, carbonated beverages and even highly marbled prime beef, all grew in sales and “actual” priority. A decade later, while I see some movement to healthier items due to an influx of nutritional information and more options, I remain skeptical that healthy checkouts will be a wild success. On the other hand, recent surveys tell us that consumers will opt for the more nutritional product IF — yes IF — the taste is the same or better and it is not more expensive than the less healthy choice. Unfortunately, more often than not, healthy items are not promoted with the same regularity as more mainstream choices, and in many cases the taste is not comparable to that of the non-healthy choice. So there… Read more »
Warren Thayer
Guest
9 years 4 months ago

Why not mingle “healthy” with the candy and sweets in every checkout lane, so everyone has a choice? This doesn’t have to be (and should not be) “either/or.”

Gene Hoffman
Guest
Gene Hoffman
9 years 4 months ago

Hy-Vee has gained a point of differentiation with their “healthy” checkout lanes. That’s a great first step. Now this question arises: Has it increased Hy-Vee snack sales and profits or is it mostly good PR?

The competition will follow Hy-Vee if “healthy” checkout lanes capture the hearts and/or the pocketbooks of consumers. If that happens, Hy-Vee will further strengthen its reputation for being a tip-top reliable merchant and a standard setter.

David Livingston
Guest
9 years 4 months ago

Good idea, but its just another “me too” press release. In the end, the successful merchandising of the front end will be determined more on how much money was separated from consumer’s pockets rather than what they are purchasing.

Joan Treistman
Guest
9 years 4 months ago

Healthy lanes have more universal appeal than lanes for men or a woman’s section of the grocery store, a RetailWire subject that’s come up before. Focusing on snacks captures the desire for a product of convenience. Once the concept moves into other foods, I’d recommend re-thinking the words used to describe the section. Healthy foods are suspect when it comes to taste. Healthy snacks are known to appeal.

Charles P. Walsh
Guest
Charles P. Walsh
9 years 4 months ago

I am not at all convinced that “healthy” checkout lanes will become the standard in grocery stores. The checkout/impulse area of the store represents significant volume for a retailer and therefore must produce in sales and profits.

Retailers will need to balance their “good works” against their sales and income plans in order to create a balance that works for them.

In the case of Hy-Vee, its customer base appears to be responding very positively and this clearly ties Hy-Vee even more closely to meeting its customers’ needs. That is the most important point of differentiation with its competition.

Hayes Minor
Guest
Hayes Minor
9 years 4 months ago

Healthy is “the new black.” That said, a good product assortment at any point in a store should be based upon shopper behavior and shopper needs. While I personally applaud Hy-Vee’s push towards a healthier differentiation among retailers, I’m interested to learn if this movement was based upon any Hy-Vee shopper research. Or was this simply a retailer making a statement and hoping shoppers climb on board for the ride? Either way, a bold move and one to watch in the months ahead.

Gene Detroyer
Guest
9 years 4 months ago

Most “healthy” snacks are hardly healthy. While I don’t think that the front end “healthy” trend will catch on, I am assured of one thing. If it does, the snack food marketers will find a proliferation of unhealthy “healthy” products to put at the check-out.

Ed Rosenbaum
Guest
9 years 4 months ago

This is an excellent concept and one reminding me of “Not Me.” No, it’s not me selling those delicious candies that generate sales to parents for their children thus keeping dentists in business. The concept is like the green movement. It is something we should do. But money talks loudly and volumes more at the checkout line. If not, why would they continue selling the celebrity “news” trashcan liners?

Bernice Hurst
Guest
9 years 4 months ago

My response was “very rare” purely on the basis that there is generally less margin in “healthy” foods and snacks. It is the sheer process of processing — and adding cheap ingredients to raw ingredients — that makes what is more often available at checkout its excuse for being there.

BUT two other points — Stephen’s observation about a lack of signage is interesting; why is there only one lane/store and why isn’t it promoted? Also, to Warren’s point about either v or, I completely agree and actually feel this is one of the secrets of the universe. Life does not have to be all about either or. Our oft-emphasised belief in personal responsibility could be put into practice here — let the people choose by having both healthy and unhealthy at each and every checkout.

Verlin Youd
Guest
9 years 4 months ago

A great idea that I hope finds success in terms of both customer acceptance/loyalty and real sales/profit results. That said, it can provide a point of differentiation for Hy-Vee in the short term but would seem to be pretty easy to replicate at other retailers should results be positive. Another example of good innovation, but also the need to continue to innovate and not count on one tactic for ongoing differentiation.

Raymond D. Jones
Guest
Raymond D. Jones
9 years 4 months ago

While it is a laudable move, it may prove costly to actual sales performance and even hurt customer satisfaction.

We have conducted extensive studies of the checkout as part of the Front-end Focus research studies. We found that sales are maximized by focusing on key categories and top selling items. Shoppers most often buy at checkout items that have high penetration, high frequency of purchase and impulse appeal.

Most importantly, studies show that shoppers tend to choose the shortest line regardless of the merchandise displayed. They certainly don’t shop the lanes to find healthy items.

If Hy-Vee is attempting to make a statement about health concerns, they should understand they will pay a price. They may also have many shoppers that are disappointed at being forced to choose from “healthy” items.

How would you feel if you unknowingly went into a restaurant and found everything on the menu was tofu and sprouts? Grocery stores are in the business of serving customers, not dictating their diets.

Matthew Keylock
Guest
Matthew Keylock
9 years 4 months ago

It’s hard not to admire the pro-health stance, but it will take more than one retailer and Jamie Oliver to help change a nation. Consumers will continue to be tempted to buy the tasty unhealthy stuff that we are predisposed to like.

At least in my view there is still greater social conditioning and influence in the wrong direction than the right direction, and many tough hurdles to cross (like freedom of choice) that make this a very slow burn or wean in my opinion (sorry about the puns).

W. Frank Dell II
Guest
9 years 4 months ago

The issue of what to display at checkout has been around for years. Every checkout had razor blades, cigarettes and candy. First razor blades were moved to a single shelf section. Then cigarettes were pulled from every lane to every other lane. The candy was pulled from select lanes. The checkout has always been an issue. Every customer travels down the lane which provides the highest exposure in the store. For this reason, higher margin and higher impulse items were selected. The fact is, the retailer is there to service the customer. Retailers should display what customers want to buy in this most valuable space and forget about moral judgments.

Herb Sorensen
Guest
9 years 4 months ago

Several years ago we discussed this concept as it was implemented at Super Quinn in Ireland. If memory serves me (not an idle question), Super Quinn disappeared into bankruptcy?

Anyway, in the last couple of years, Walmart has tested the same idea in a store in the Redding, California area. And there are lots of NGOs working on and promoting ideas like this, the Robert Woods Johnson Foundation among others.

There is an old saying, he that goes to battle should not celebrate like he that is returning. It seems like a good idea, but it’s not new, and NOT a proven success. But it IS great PR at this point for Hy-Vee, an excellent chain otherwise, as well.

Tim Henderson
Guest
Tim Henderson
9 years 4 months ago

Healthy checkout lanes will probably become quite common in the future. But that’s both good and bad news. On the positive side, such lanes will obviously present healthier impulse purchase items for consumers. But on the downside, the ubiquity of such lanes means there’s no brand differentiation.

As I alluded to in the March 2011 discussion of Hy-Vee’s checkout lane, the winning formula here isn’t just opening a healthy checkout lane. It’s opening a healthy checkout lane as part of the brand’s broader health and wellness offering, wherein the brand offers health-motivated shoppers a package of solutions, such as the checkout lane, cooking/exercise tips online, in-store classes, walking clubs that meet at the store, etc. Hy-Vee’s participation in Iowa’s Healthiest State Initiative appears to indicate such a broader effort.

The healthy checkout lane is a good idea. But it’s easily copied. That good idea can be made better — and add brand differentiation — by launching the lane as part of the retailer’s overall offering for the health-motivated consumer.

Craig Sundstrom
Guest
9 years 4 months ago

The execution of this confuses me a bit. Carrots? Isn’t that a perishable, and does it mean they will offer a refrigerated case? Most possible comments have already been offered here (the peril of being on the Left Coast). It may not make money, or if it does, it’s only because of the novelty, and hence can never become standard. But do I wish them well (anyway)? You betcha.

Anne Bieler
Guest
Anne Bieler
9 years 4 months ago

The strength of this trend will vary by location, of course, but there is significant room to grow in several directions. It is a great option for many types of shoppers and is a good way to capture more impulse purchases. It can be a good point of differentiation; part of a retailer’s profile in healthier eating strategies and promotions.

Some retailers have refrigerated, reach-in coolers for soft drinks, water and juices at the checkout counter (double sided so it serves two aisles) and it seems to be working for a number of chains. This seem to be an opportunity; consider packaging that’s appropriate for grab and go, portion control packs — all can add to basket ring in these uncertain economic times.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 4 months ago

As someone who enjoys a healthy snake every now and then, I think it is a great idea. The question becomes how that model works with a retailer’s consumer demographics. As the saying goes, “too much of anything can be bad.” This applies to checkout lanes. An appropriate assortment is the key to optimizing any retail space. Over time, the assortment may change and lean more heavily towards nutritious snacks, but to think checkout lanes won’t carry Snickers is tough to swallow.

John Karolefski
Guest
9 years 4 months ago

Why would a supermarket remove “unhealthy” candy from the checkout lane and put in “healthy” snacks? Because either adults can’t control themselves, or parents can’t control their children. What a sad commentary on Americans! How weak we have become.

What about encouraging self-discipline and taking responsibility? What about choice? I vote for the poster who suggested mixing in healthy snacks with candy. And by the way, an occasional candy bar as a treat won’t kill you. Isn’t dark chocolate supposed to be good for the heart?

Another poster suggested that candy would return if lack of it in the checkout lane hurt sales. You think? But maybe the supermarket would continue to sustain lost sales in order to maintain its self-appointed position as guardian of shopper health. Yeah, right.

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