EXCLUSIVE: Inside Hy-Vee’s Next Evolution, Part 1
The past year has been a busy one for popular Iowa grocery chain Hy-Vee. In January 2023, Hy-Vee announced that Jeremy Gosch would become CEO of the company, taking the reins from iconic leader Randy Edeker, who led the company more than 10 years and remains executive chairman of the board of directors until July 31. In an exclusive interview, Progressive Grocer sat down with Gosch (Part 1) and Edeker (Part 2) to talk expansion strategies, succession planning, and the price of the pandemic.
Progressive Grocer: Talk to me about Randy [Edeker] as a mentor, and how it's been over the past year since the announcement.
Jeremy Gosch: Randy's been really the person that put faith, trust and confidence in me. He brought me to the corporate office to handle various leadership positions after being a store director and took a shot. Randy is by far the reason that I'm here and in this position.
PG: How has the transition been going?
JG: If you want to snapshot the last year, he's really been there to help guide, direct, answer questions. I called him recently because we had a situation. I always start off with, "Hey, sorry. I never call you with great things. ..." Those are the things that he's really there for. It’s helpful to get feedback from a guy that sat in the seat for a long time and has been there. Randy just helps and guides with his thoughts and ideas.
PG: How would you describe Randy?
JG: As a leader, Randy's intense. He's driven, he's focused, he's always pushing the envelope, he's always pushing the boundaries, always pushing change, innovation, and I think those things are good for Hy-Vee, because sometimes it can be slow to innovate, slow to change. We're not afraid to try new things to stay ahead. We anticipate that culture continuing and moving forward. We've always prided ourselves in being ahead of the customer's lifestyle, and we'll continue to do that as we move forward.
PG: How are you thinking about expansion this year and in the future?
JG: With all that's going on with inflation, construction costs, frankly, inventory-carrying costs, we've been really going a bit slower. But we're building a massive warehouse right now in Cumming, which is right outside of Des Moines. We've got to get that finished up, and once we get that done, we will get going in the Southeast. We'll expand. We've already talked about having a presence in Tennessee, Indiana and Kentucky. We will get going on those plans this summer.
PG: Do you think your stores in those states might be a little smaller?
JG: We've got a prototype design when we go into new states, and new markets that we'll adhere to. We've opened all over Wisconsin in the last year. We've opened in Green Bay, we've opened in La Crosse, Eau Claire, with really a very similar format, and I don't see that changing.
PG: What's the square footage of those new stores?
JG: It depends. These were buildings that we bought, so we converted them over. They were anywhere between 105,000 to 120,000 square feet, and the store we built in Gretna is 135,000 square feet. That was a ground-up building just outside of Omaha that we opened in June 2023.
PG: You see a path for Hy-Vee being a coast-to-coast, national grocer?
JG: We're privately held, so our growth is very calculated. I don't know that you'll see us being a national grocer brick-and-mortar in my time, but I think you'll see us continue to be a national grocer that ships to home. We have WholeLotta Good, which ships organic and natural foods out of our HealthMarket nationwide. You'll see us continue to expand on a nationwide ship-to-home program without a doubt. That'll be really how we have a national presence is through digital commerce. With brick-and-mortar, in my tenure, we won't hit every one of the 50 states, but we will hit quite a few as we continue to expand into new markets.
PG: What are some of the innovations that have paid off for Hy-Vee in terms of shopper response and feedback?
JG: We have morphed our foodservice with our partnership in Wahlburgers, which is made-to-order food that's high quality and has a celebrity name behind it, with Mark and Donnie and Paul owning it. We own part of it as well. Also, our bakery redesign with artisan bread, cake and patisserie cases has been good for us. We have also focused on our seasonal departments, with us putting a massive toy aisle and housewares department in many of our stores.
We also are adding sports shops that carry authentic gear from teams like the Kansas City Chiefs and Minnesota Vikings as well as local high schools and colleges. That's been very successful for us. Also, beauty is a huge win for our stores, so we will continue to roll beauty shops out wherever we can.
PG: What about behind-the-scenes initiatives?
JG: We have rolled out pharmacy fulfillment centers in eight states. Approximately 75% of our prescriptions are filled through a machine, making us better positioned to be able to take care of the customer on a one-on-one basis. We offer many services in our pharmacy – from vaccines to test-and-treat services. Our ultimate goal is to have our pharmacists operating at the top of their license and focusing on patient care versus counting pills.
PG: Any plans to expand private label in grocery?
JG: Yes, private label continues to be a driving force. We actually moved one of our leaders into a senior vice president of private label position. Nate Stewart used to oversee perishables for our company. He's done a great job in his new position. He'll continue to drive our private label products going forward.
PG: Hy-Vee’s IndyCar Race Weekend has been such a huge hit with consumers. What’s next with that?
JG: This year is going to be huge. We've got Luke Combs, Post Malone, Eric Church and Kelsea Ballerini coming in to perform as our musical acts. For our brand, it's a great experience for our customers. Obviously we're on national TV, which gives us really good exposure, and we couldn't do it without our employees and vendor and supplier partners.
