Hy-Vee Expands Southeast

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Hy-Vee Expands Southeast

Post by BatteryMill »

https://www.desmoinesregister.com/story ... 910253002/

In addition to Indiana, Hy-Vee is settling into some rather unusual territory - that being the states of Kentucky, Tennessee, and Alabama. Nashville is to be the home to their new distribution center serving these states. How will this fare?
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Re: Hy-Vee Expands Southeast

Post by Romr123 »

Thought it interesting that they acknowledged less than successful expansion to the Twin Cities...didn't know things had gone astray there. They definitely seem to be surrounding Schnucks and DIerbergs but not a whisper of competing with them.
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Re: Hy-Vee Expands Southeast

Post by arizonaguy »

BatteryMill wrote: December 18th, 2021, 9:13 am https://www.desmoinesregister.com/story ... 910253002/

In addition to Indiana, Hy-Vee is settling into some rather unusual territory - that being the states of Kentucky, Tennessee, and Alabama. Nashville is to be the home to their new distribution center serving these states. How will this fare?
Are they sensing blood in the water with Kroger? These are all markets where Kroger is #1 or #2 and their current store base doesn't have a lot of overlap with Kroger.

Louisville is especially interesting as Publix is also just now entering that market (Publix is already in Tennessee and Alabama).

If they're having trouble with Minneapolis, how will they fare taking Kroger and Publix head on?
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Re: Hy-Vee Expands Southeast

Post by BatteryMill »

Romr123 wrote: December 18th, 2021, 9:56 am Thought it interesting that they acknowledged less than successful expansion to the Twin Cities...didn't know things had gone astray there. They definitely seem to be surrounding Schnucks and DIerbergs but not a whisper of competing with them.
How is Hy-Vee failing the Twin Cities? I had believed they were doing quite good.
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Re: Hy-Vee Expands Southeast

Post by buckguy »

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.
Last edited by buckguy on December 18th, 2021, 8:46 pm, edited 1 time in total.
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Re: Hy-Vee Expands Southeast

Post by bayford »

BatteryMill wrote: December 18th, 2021, 1:45 pm How is Hy-Vee failing the Twin Cities? I had believed they were doing quite good.
According to the consultant quoted in the article, "[Hy-Vee] never reached the size and scale in the state of Minnesota that they had hoped for because they just weren't able to compete head-to-head with a high volume of food operators in Minneapolis, most notably Costco and Target."
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Re: Hy-Vee Expands Southeast

Post by Romr123 »

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.
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Re: Hy-Vee Expands Southeast

Post by storewanderer »

Romr123 wrote: December 18th, 2021, 7:15 pm 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.
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Re: Hy-Vee Expands Southeast

Post by retailfanmitchell019 »

storewanderer wrote: December 18th, 2021, 9:51 pm
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.
I'm surprised too that they aren't moving west and talking about expansion into Colorado and Oklahoma. Denver probably has room for a third traditional chain after the demise of Albertsons there. In Oklahoma, there is very little traditional competition.
If they were to expand into Colorado and build a distribution center there, they could probably have stores stretching to Billings, Montana (where Albertsons is the only traditional chain). They have been moving in that direction somewhat, with a Dollar Fresh store in Lexington, NE.
As the South is a price-sensitive area (Walmart's strongest region) they will need to make price adjustments. Who knows if Hy-Vee will eventually have a national presence.
Not surprising that they are entering Indianapolis. Could use a second traditional chain after the Marsh collapse.

Maybe we'll have Hy-Vee on the West Coast by 2050...
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Re: Hy-Vee Expands Southeast

Post by buckguy »

Some random thoughts, having lived in the Southeast and Indiana.....

The Southeast lacks really strong fresh foods operations. Publix and H-T fill that gap but are not exceptional when you compare them to what's available in other regions. Wegman's may have sensed that in their decision to enter NC. Still, demand may be part of the equation, along with the weakness of what's available in local wholesale markets.

Walmart as a market leader means that you can't lead with center store pricing--you have to do something else well and even a mediocre chain like Kroger has come up with a way to do that. Selection may be part of it and so may be exceeding the very low bar for fresh foods. But if there isn't a demand for something much better (i.e., better than Publix) you may have a problem. Whole Foods has not become the factor in Atlanta that I would have expected even though the stores do good volumes. There was a small local chain, Harry's, that filled the quality niche for awhile--it had small stores with a lot of prepared foods--I think Whole Foods took over a couple stores, at least one became Trader Joe's. The owner's brother owned Your Dekalb Famer's Market which wasn't a real farmers market but was good for cheese, wine and imported food. ironically, the produce was never good and the exotics always looked like they'd spent too much time on a boat somewhere.

Indy had a small "quality" chain O'Malia's that Marsh bought. Marsh was, otherwise, the better alternative to Kroger. The local Preston-Safeway chain held on trying to appeal to different tastes with a grab-bag of stores---old Standard/Del Farms and their own. Outsiders have not done well in Indy---Jewel/Eisner lasted a short time even though they would have been superior to anything in the market. Cub did well initially but Kroger offered a strong defense. Hoosier insularity will be a significant barrier for Hy-Vee.
Last edited by buckguy on December 19th, 2021, 12:28 pm, edited 1 time in total.
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