Hy-Vee Expands Southeast

[veteran+]

Spot on regarding your experience with "fresh" in the southeast.

I lived in Florida for many years and agree!

Walmart's dominance in center store in that region is another strong factor.

[pseudo3d]

Parsing that a little bit, apparently they hadn't faced Costco very much (logical, as Iowa was hardly on Costco's growth path; nor were any of their expansion areas in outstate IL/WI/MO); also they hadn't apparently faced SuperTarget (which is a little odd, as SuperTarget was the expansion means into Kansas City).

Kansas City and M-SP have some similarities around food retailing (large wholesaler locally based--AWG/SuperValu), SuperTarget and Wal-Mart competition (Wal-Mart less prevalent in M-SP than in KC). Wonder if Cub isn't quite as "dead" as it was made out to be.

The problem I saw for Hy-Vee in Minneapolis was they were having to price center store much lower than they typically price it. The stores are very busy, they were literally clobbering Cub when they went head to head. The stores were also well run and well staffed. Typical successful Organic expansion. Cub has center store pricing on groceries that is very similar to the pricing of Target. This is lower than Hy-Vee typically goes. I can say a lot of positive things about Hy-Vee but their pricing (aside from in MSP) I have never exactly considered sharp. But when they have little competition it didn't matter.

I am a little curious about how Hy-Vee will do in these South markets. They are going to need to make some modifications to their offer and perimeter items to move into those markets and be successful. Also if the issue for them in MSP was center store pricing pressure, it is only going to be worse in the South.

I was more expecting Hy-Vee to move in the direction of, say, Wichita and Denver. I am a little surprised by what they are doing (especially given what Publix is doing) but I guess what I thought was a far flung idea before, the concept of Hy Vee and Publix competing, may actually be something that will happen.

Cub and Hy-Vee are only cannibalizing each other as-is, and neither can make headway at this point. At this point, UNFI needs to stop hemming and hawing and make a choice. Either sell as many Cub stores as possible to Hy-Vee, a la Albertsons LLC (as they did in Texas and Florida, notably), or make a bid for Hy-Vee's MSP stores and start shopping the combined chain around.

[storewanderer]

Cub and Hy-Vee are only cannibalizing each other as-is, and neither can make headway at this point. At this point, UNFI needs to stop hemming and hawing and make a choice. Either sell as many Cub stores as possible to Hy-Vee, a la Albertsons LLC (as they did in Texas and Florida, notably), or make a bid for Hy-Vee's MSP stores and start shopping the combined chain around.

It isn't that easy. A number of MSP area Cub Stores are franchised by "Jerry's Foods." Many are corporate. If they dump the corporate stores off, combined marketing, etc. will end up shifting more costs over to Jerry's. Somehow UNFI needs the entire group of Cub Stores in MSP to continue as Cub Stores, in order to keep supporting the franchisees. This and that it is still profitable is part of why Cub is still going.

It is interesting Hy Vee is not being as aggressive in the market. Almost like they are trying to give UNFI some breathing room to unload Cub.....

I don't see Hy Vee purchasing Cub Stores. Hy Vee builds its own stores.

[Knight]

The Des Moines Register needs registration. Here's a Tennessean link via Yahoo: https://news.yahoo.com/grocery-chain-ma ... 39285.html

They've cancelled plans for a DC near the Twin Cities and slowed the pace of their store openings in that areas. They've cancelled at least on planned store and have begun looking at smaller store sizes.

It will be interesting how they do, expanding into so many new markets. They have experience competing with Kroger in some of their markets in Missouri. Indianapolis seems like it should be a good market for them with the demise of Marsh, providing an opening. OTOH, Memphis has been a tough market and outside chains have failed multiple times, over decades. How they compete with Publix in Nashville and Louisville will be interesting. Publix doesn't have a huge number of locations in Nashville, but they are in some key areas.

Publix is increasing new store activity in Tennessee. Most new stores are in the Nashville, Chattanooga, and Clarksville areas. Further expansion in Tennessee should involve entry into the Memphis area.

Hy-Vee and Publix competing in Kentucky could be interesting. One will give Kroger competition.

[BatteryMill]

https://www.kcci.com/article/hy-vee-is- ... e/38584341

Hy-Vee is now doubling down, pulling a Kroger and seeking to take e-commerce nationally.

[arizonaguy]

https://www.kcci.com/article/hy-vee-is- ... e/38584341

Hy-Vee is now doubling down, pulling a Kroger and seeking to take e-commerce nationally.

This actually looks like a competitor to Boxed.com (or Sam's Club, Costco or BJ's) as it's all bulk or club sized non perishables.

[storewanderer]

https://www.kcci.com/article/hy-vee-is- ... e/38584341

Hy-Vee is now doubling down, pulling a Kroger and seeking to take e-commerce nationally.

Hy-Vee excels at running a great store and excellent fresh departments. While Hy-Vee has an extensive center store mix, their center store pricing is not great. Their private label program is a Topco program that is replicated across many regional chains across the US. I am not sure what online ordering of dry goods outside Hy-Vee regions from Hy-Vee brings to the table, vs. what we can already do with Wal Mart, Target, etc.

Kroger I consider to have a top of the line private label mix/program and sharper center store pricing. I feel they do have something to bring to the table on a national level for e-commerce. I have no clue how it will ever be profitable though.

[Mgomrjsurf]

OK has Crest,Homeland,Reasors and one Winco among others. Dillions in KS. Others in MO to. KC has Price Chopper,Hen House,Sun Fresh and so on to. Use to be Albertsons in MO.
Publix Arkansas,Southeastern MO maybe.

[storewanderer]

I think Hy Vee could give some serious competition to Dillons in Wichita, but Hy Vee doesn't seem to have done so great in Topeka (they're busy... but don't exactly appear to be booming, also have not added stores beyond the 1), and Dillons positioning in Topeka is similar to how they are positioned in Wichita (not much competition and a number of larger stores). Hy Vee did seem to be the final blow to Dillons in Springfield, MO but Dillons positioning there was not very good (older stores, only one even updated in the 00's, already had closed a newer build store,).

One thing I notice is Hy Vee does not play the price war game with Kroger. They price generally higher and they do not care. It was interesting Hy Vee played a price war game with Cub and Wal Mart/Target around Minneapolis.