Consumers are growing more conscious about the food choices they make and are seeking greater access to more healthy items. A report by Hexa Research forecasts that increasing demand from consumers will grow the U.S. organic food market to $70 billion by 2025, and noted organic products are now available in more than 20,000 natural food stores and conventional grocery stores across the country.
Grocers are responding with new concepts that offer more fresh foods and health-related amenities. Shoppers are not only demanding more healthy selections, they also want them in a convenient format. Many grocers are expanding their organic and natural offerings to serve the growing market, including Midwestern grocer Hy-Vee, which introduced a new concept this summer that puts healthy foods, amenities and a fitness center all in one location.
Hy-Vee has 245 retail stores in eight midwestern states and annual sales of more than $10 billion. In August, the grocer opened its first health and fitness concept store in West Des Moines, Iowa, a stand-alone version of its HealthMarket in-store shops in some larger Hy-Vee locations.
HealthMarket features more than 11,000 items, including things like organic foods, pre-cut fruits and vegetables, supplements, vitamins and high-quality organic meats. There’s also a nutrition area, a “hydration station” with nitro coffee, kombucha and infused water. In addition, there’s a full-service pharmacy, a health clinic and a hearing aid center.
ONE-STOP HEALTH SHOP
Hy-Vee created the concept to provide even more health and wellness products and services beyond what was in their traditional grocery locations, says Tina Potthoff, vice president of communications for Hy-Vee Inc. At 18,000 square feet, it’s more compact than a typical 90,000-square-foot Hy-Vee store, and the residential location makes it more convenient for consumers seeking to grab a healthy meal on the way home.
“We know many of our customers are looking to live healthier lifestyles while also having more convenience, so they can spend time on the things they truly enjoy,” Potthoff says.
Hy-Vee also partnered with an Orangetheory Fitness franchise to build a 3,000-square-foot studio adjacent to the store. Orangetheory Fitness offers high intensity strength training and cardio routines that last an hour. The rapidly growing company has more than 1,000 studios nationwide and is on track to open another 260 stores by the end of this year.
“We’re getting a lot of feedback from customers who appreciate that they can now meet their health and wellness needs in one stop versus multiple stops to a grocery store, health store and gym,” Potthoff says.
Hy-Vee currently has two HealthMarkets in the works, Potthoff says. CEO Randy Edeker told the Des Moines Register in an interview in August that the company investigated the concept due to rising competition from grocers like Fresh Thyme and Spouts, and said he envisions “having 50 or 60 of these.”
Competition in fresh food is on the rise in the Midwest. Fresh Thyme Farmers Market has grown to nearly 70 locations in 11 states since it was founded five years ago. The grocery moved its headquarters from Phoenix to Downers Grove, Ill., in 2016 and plans to open 100 new stores by 2020. Sprouts Farmers Market is also expanding in the region with more than 300 stores in 19 states. CEO Amin Maredia said at the Goldman Sachs Global Retailing Conference in New York in September that fresh items are the fastest-growing category and now constitute 60 percent of the chain’s sales.
In the next two stores, Hy-Vee is planning to expand perishables and put a greater emphasis on ready-to-eat meals. The grocery also is launching another small-format concept later this year called Hy-Vee Fast & Fresh; Potthoff says these stores are intended to serve busy customers who need a more convenient grocery and meal experience.
Potthoff says they will be smaller-scale grocery stores of less than 10,000 square feet and will include grocery items such as pantry and frozen items along with fresh produce, dairy, meat and bakery items.
“We listen closely to what our customers are telling us,” Potthoff says. “In different areas of our eight-state region that we are located in, there is a need for different concept stores, and we work hard to target the right stores to the right areas — based on what customers are asking for.”
Craig Guillot is based in New Orleans and writes about retail, real estate, business and personal finance. Read more of his work at www.craigdguillot.com.
Making Healthy Choices Easier
Hy-Vee is hardly alone in offering more health-related amenities. In July, The Kroger Co. debuted its OptUP app to help customers make more informed, healthier purchase decisions. Free to anyone who shops at Kroger stores, the app is separate from Kroger’s main app and provides immediate nutrition feedback based on purchases the user has made.
Users can see nutrition information for the past eight weeks’ worth of purchases they have made. The app’s ratings are based on a scale of 1-100 — the higher the number, the healthier the product is.
It “is transformational for the food retail industry,” says Colleen Lindholz, Kroger’s president of pharmacy and The Little Clinic. “The app puts nutritional information at your fingertips and makes finding and buying better-for-you products easier and simpler.”
The scoring system OptUP uses to rate food items is based on the UK Nutrient Profiling Model developed by the Food Standards Agency. The ratings plug into the app, allowing customers to tailor their choices, suggesting substitutions and tracking purchases. In selected locations, the app can also connect users with a registered dietician.
Retailers in the Ahold Delhaize USA chain, including Stop & Shop, Giant Food and Peapod, began using a program called Guiding Stars last spring, which places nutrition labels on store shelves. Developed more than a decade ago, the program uses an algorithm to rate products in what the company calls a “good, better, best” hierarchy.