Hy-Vee Delays Minnesota Distribution Center

Midwestern grocery chain Hy-Vee Inc. is putting the brakes on its plans to build a new distribution center in Austin, Minn., to concentrate instead on new store formats, prepared food production facilities and new fulfillment centers for its growing online business.

Originally planned for groundbreaking in 2019, the new distribution center -- Hy-Vee’s first such facility outside its home state of Iowa -- would help better serve the retailer’s stores in the Twin Cities as it continues to expand in that market. Hy-Vee currently operates two distribution centers in Iowa.

“We will now evaluate the need for a third distribution center in Austin within the next several years,” said Tina Pothoff, Hy-Vee’s VP of communications.

“After evaluating recent changes in consumer shopping and lifestyle behaviors, we are adjusting our growth strategy to best meet our customers’ changing wants and needs,” Pothoff continued. “Over the next several years, we will continue to expand our offerings across the Midwest by constructing new smaller-format stores.”

Hy-Vee recently announced its Hy-Vee Fast & Fresh concept, to launch with 10,000-square-foot stores that will soon be constructed in Des Moines and Altoona, Iowa. These stores will include grocery items, fresh prepared foods and a coffee shop.

“We anticipate building more of these stores across our eight-state region over the next few years,” Pothoff said. “In addition, we are also looking at developing larger store formats, larger than our current 90,000-square-foot stores, which would complement our smaller-format locations.”

PREPARED FOODS, ONLINE FULFILLMENT

Meanwhile, to meet the needs of its new store formats, Hy-Vee has several major construction projects underway, including:

• A 240,000-square-foot production facility in Ankeny, Iowa, which will serve as a commissary and central bakery, as Hy-Vee expands its fresh prepared options and meal kits.

• A 48,000-square-foot Short Cuts production facility, located adjacent to Hy-Vee’s current distribution center in Chariton, Iowa. This facility will produce fresh-cut, retail-ready fruits and vegetables beginning in January 2018.

Hy-Vee is also planning to open three new fulfillment centers, located in Kansas City, the Twin Cities and Omaha, in the upcoming years. “These facilities are in addition to the existing fulfillment center in Des Moines and will meet the needs of our growing online ordering services,” Pothoff said.

“Hy-Vee customers are looking for faster, fresher options, and our goal is to constantly bring them the products and experiences they’re looking for – whether that be online or at our retail stores,” she added. “We believe our new store concepts will offer the perfect blend of ready-to-eat meals as well as expanded health food offerings for today’s consumers who are looking for convenience and exceptional customer service.”