Partnerships / Acquisitions

Hy-Vee Kicks Into Hy-Gear With Wahlburgers, OrangeTheory Partnerships

Could the secret to winning the grocery wars lie not in groceries, but in adjacent brands and services? That’s the strategy Hy-Vee is investing in, and the latest move along the trajectory has been a partnership between the Iowa-based supermarket chain and two unlikely comrades: OrangeTheory Fitness and Wahlburgers restaurants.

According to Supermarket News, Hy-Vee ranked 24th among North American grocery retail providers in 2016. It serves eight Midwestern states out of 240 supermarkets and does $9.8 billion in annual sales.

“We are adapting to customers’ changing lifestyles and to meet their needs,” said Tara Deering-Hansen, group vice president of communications for Hy-Vee, when the retailer announced its new health-focused retail format in July.

She said the new concept would include a health food store, groceries, pharmacy, clinic and fitness studio. At the time, no mention was made of adopting a burger chain, but hold it up against the mission and the move makes sense, even if burgers and tater tots can’t exactly be called “healthy” (although, to be fair, Wahlburgers does pride itself on using fresh, local ingredients – “never frozen!”).

The Bureau of Labor Statistics says spending on meals outside the home surpassed spending on meals at home last year, with millennials especially pushing that dial, so teaming up with actor Mark Wahlburg’s popular burger chain definitely counts as adapting to changing lifestyles and needs.

Wahlburgers, a family-friendly, fast-casual establishment serving signature burgers and drinks, currently operates 17 locations in nine states. The partnership with Hy-Vee will add 26 new stores in seven Midwest states, while also listing Wahlburgers-branded items on Hy-Vee’s in-store restaurant menu. That will make Hy-Vee the largest single Wahlburgers franchisee.

Meanwhile, the OrangeTheory Fitness partnership makes a little more obvious sense. The companies are working together to provide a fitness experience in or near Hy-Vee stores – so all those yoga moms can finish their exercise and their errands in one fell swoop.

The grocer also plans to make its dietitians available to OrangeTheory members seeking nutrition services and guidance on their healthy eating journey. Yes, Hy-Vee has its own dietitians, and it even sends them around in its eight Hy-Vee Healthy You Mobiles to bring health and wellness services to the masses. With this new initiative, it will also send them around the grocery store aisles to showcase products that will serve individuals on their journeys.

OrangeTheory is in growth mode, with 750 fitness studios nationwide today and plans for 1,500 in the next two years.

“[Orangetheory], combined with Hy-Vee’s health offerings, creates a one-stop shop for wellness,” said Kevin Keith, Orangetheory Fitness’ chief brand officer. “Like our members, we know that many Hy-Vee customers are looking for more convenient ways to access fitness and healthy eating options in one location, and this partnership solves that need.”

On top of these partnerships, Hy-Vee has recently made efforts to distinguish itself in terms of food sourcing. This, again, answers the mission-centric concern of responding to changing lifestyles and needs. Today’s consumers place a lot more emphasis on where their food came from and how it got to the supermarket shelf.

Produce Retailer notes that local sourcing isn’t actually a new strategy for Hy-Vee, which has been sending out trucks to collect local produce for almost 90 years now. But it has nonetheless seen more emphasis and investment as of late, as consumers demand transparency in the supply chain.

Therefore, the grocer has been tending grower relationships in the communities surrounding its stores. Ideally, the distribution center never even sees most of the produce. Hy-Vee currently works with around 260 growers in eight states.

Randy Edeker, Hy-Vee’s chairman and CEO, said in a statement, “These unprecedented collaborations reinforce our company’s longstanding commitment to health and wellness, culinary expertise and customer experience. However, they also represent a bold step to deliberately evolve our business to meet the change in our customers’ lifestyles and spending habits. These partnerships keep us on the leading edge as the retail grocery industry evolves.”

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