A Fireside Chat on Health & Wellness with Randy Edeker, Hy-Vee Chairman

Randy Edeker is one of the grocery industry’s true visionaries  and is obsessed with his customers’ health and wellness. At the recent Category Management Association’s annual conference, I had the opportunity to chat with him in front of 900 retail and CPG executives and ask about the future of grocery.

By Phil Lempert

Hy-Vee will turn 100 years old in 2030, and today it is an employee-owned chain with more than 280 locations in a dozen Midwestern states. Randy Edeker is one of the grocery industry’s true visionaries  and is obsessed with his customers’ health and wellness. At the recent Category Management Association’s annual conference, I had the opportunity to chat with him in front of 900 retail and CPG executives and ask about the future of grocery. His comments are edited for clarity below.

In the past three years we have experienced a lot of changes. What are the biggest challenges for the grocery industry in particular?

We still have supply chain issues that we're fighting through. You have out of stocks that we're dealing with. You have work shortages. You have kind of the quiet quitting and the great resignation. We were a company of 95,000 people: now we're a company of 80,000 people, not by choice. You have credit card debt. There's 930 billion up 18% in one month. You have savings rates that are as low as they've been since 2005. Those are the things that we must focus on.

We have shoppers that range from very minimal incomes to incredibly wealthy shoppers. We really cater to upscale in a lot of ways, but we also focus on value. We're also rated by Greenpeace number two for the most sustainable seafood company. So we focus on sustainability where it makes sense and it delivers to our customers.

The reality is we are in a position to be our shoppers’ advocates, and that's how I think our role is long term.

You have really spearheaded the health & wellness initiative in grocery. Why is health and wellness so important for a grocer?

Health and wellness is just good business. We've focused as we've continued to morph and grow; we're focused on food as medicine as a part of helping develop our brands and serve the customer in a better way. Pharmacy is the core of what we do, always has been, and retail dietetics has been a huge part of that. Our health markets, which kind of fly underneath the radar screens, are eight to 12,000 square foot sections in [our] stores that focus on natural, organic, supplements and more. That's a huge part of our business. We have a specialty pharmacy, Amber Pharmaceutical, which is in 21 locations around the country. We're focused on orphan drugs with limited distribution, and so our health initiative is broad. We have a company called Redbox Pharmacy, which is a digital pharmacy that we've launched.

We have a PBM (pharmacy benefit manager) called Vivid Clear Rx, which is kind of the anti-PBM. We are very broadly spread in health and wellness. It's a real key part of what we do on a daily basis and how we go about the business. We continually look to figure out how we morph and infuse that into more of the daily business and drive more of our core - like produce. We have 20 mobile immunization trailers, and we have seven fully skilled buses that go out and do clinical screenings, immunizations and more. Then beyond that, it has morphed into another area that people ask me why. It's just because we can. We have a whole disaster recovery fleet with eight full scale semis and one command center. They've been in Kentucky and Alabama…and we don't have stores there. We have 20 units that we oversee that go out and help cities recover from disaster. We see that as a part of health and wellness and a part of our broader brand. So that's us in health and wellness.

What’s Hy-Vee’s position on its communities?

We have an Indy car, and we've partnered with Feeding America. We're going to feed 100 million meals this Indy season as a part of our strategy. We've built 700 inner city gardens for people that don't know about fresh produce. Food insecurity has been an issue for me for a long time that I've focused on. I feel like we have the responsibility as a grocer to help figure that out. I don't think we should have hungry people in our space; so we're working every day.

As a result of the pandemic, we started Food Bank Friday, and we started delivering food every Fridays to every food bank in our trade territory. Those are things that are just kind of secondary for us. They're part of our community. That's just a sign of a good company. And I think with a company, if you bless people, they'll bless you back in the long haul, which takes me to Kids Fit.

Kids Fit is a program that we launched with a trainer for eight-year-old kids. I wanted to launch a program that would help kids focus on eating healthy. I targeted the kid who never gets picked. Not the kid that does get picked. The last kid on the basketball team is the kid that we're doing Kids Fit for. So that's some of our efforts. It's the fun stuff that makes the rest of the other stuff you have to deal with worthwhile.

You are at the White House, you're advising them and you're telling FDA what they should be doing coming out of the pandemic. What's that one learning [coming out of the pandemic] that you didn't have before that you'd never really thought about?

I think the pandemic for me, aside from all of the health concerns and the screenings and the immunizations and mobilizing and all of those things, was that I walked away from it seeing the resiliency of our people. The toughness of our industry. You know, when everyone else was going home and locking themselves into the basement, we were sending our people into work, and there was really no option. Just the toughness, their dedication, coupled with the way these jobs are devalued - these people really cared. They went to work every day. And if I would've been clairvoyant, I would've been the guy that invested in plexiglass before the pandemic.

You are one of these great thinkers and planners. And thinking about strategy long-term, how has the pandemic shifted your thought about long-term strategy? You probably used to have five year strategic plans. What do you have now?

We're working in about a week and a half now. We used to have a five-year strategy, and [then] we had a year strategy, and we would have strategy quarterly meetings. And it's like, we're down to about three weeks. Agile is the word of the day. So if I were to look down, the road looks much different than it did pre-pandemic.

I think the shopper has become tougher to find, tougher to get, tougher to keep. I think they're definitely a value focused shopper right now. I think value today is not always lowest price, but there's value added. They are time starved, they're challenged. They have all of the problems that I listed off that we're facing, they're dealing with every single day. They're just trying to get through the day. Most shoppers I find are trying to figure out how to make ends meet. They're trying to take care of their families. They're trying to keep everybody safe in a post covid world that you're still not sure about.  The shopper that just simply wants to be treated nicely and just treated well. And so we're really hunkering down and really returning to our roots and focused on service and bringing ours back into the peak hours of service and upping the amount of checkers that are available. I think at the core, the customer is just under all kinds of pressure and just needs our help to just get through the day. And I think if you figure out how to communicate that we'll help you, and we care. If you can communicate that to the customer somehow, then you're going to win long term.