Hy-Vee to Close Online Fulfillment Centers

Is Hy-Vee ready to adopt a micro fulfillment model for online grocery orders?

The West Des Moines, Iowa-based grocery chain will permanently discontinue filling orders at its four Aisles Online fulfillment centers the week of March 23, the retailer disclosed Friday.

“We are listening to our customers, and they are wanting a full assortment of products, personalized shoppers and same-day pickup at the store, which we are unable to fully provide when we process orders at a fulfillment center,” Christina Gayman, Hy-Vee’s director of public relations, told Progressive Grocer.

Fulfillment center operations will be transferred to Hy-Vee’s retail stores later this month. “That means customers’ orders will once again be fulfilled at their local Hy-Vee store,” Gayman said.

Aisles Online launched in 2015. Hy-Vee maintains online fulfillment centers in Des Moines; Eagan, Minn., a Twin Cities suburb; Kansas City; and Omaha. The Kansas City location opened last fall, part of a $90 million investment in KC-area operations that also included store renovations.

The company had stopped construction of a traditional distribution center in Austin, Minn., to focus on its online fulfillment centers. Hy-Vee also partners with Instacart and Shipt for grocery delivery.

Hy-Vee human resources members will be assisting employees at the shuttered facilities in finding other job opportunities at Hy-Vee or another business, according to Gayman. Meanwhile, Hy-Vee is undergoing a reorganization that includes some staff reductions.

A growing number of retailers are opting for micro fulfillment models, which fill online orders out of existing store locations, including Albertsons, ShopRite, Loblaws, Stop & Shop, Sedano's, and, reportedly, Amazon’s new grocery store chain, whose first location is expected to open soon near Los Angeles.

Employee-owned Hy-Vee operates more than 260 retail stores across eight Midwestern states. The company is No. 12 on Progressive Grocer’s 2019 Super 50 list of the top grocers in the United States.