Hy-Vee gets ready for a new era

In 2021, former Hy-Vee CEO Randy Edeker announced his formal retirement. Since then current CEO Jeremy Gosch has been at the helm, with Edeker still close by to advise. But in January, Edeker announced he would officially step down in July, with Gosch taking over as chairman of the board at that time.

Supermarket News Executive Editor Chloe Riley sat down with Edeker and Gosch at the recent FMI Midwinter Executive Conference in Marco Island, Fla. to talk about health care, the rise of AI, and Edeker’s retirement plans.

Supermarket News: What’s the latest in terms of health care strategy at Hy-Vee? 

Jeremy Gosch: Something that we’re really focused on right now is “Food Is Medicine,” which you’re kind of hearing. I already heard it this morning in a meeting here, a buzzword. But we’ve made an announcement with a Soda Health partnership.

We’re working on how that’s going to really drive us long-term as a point of difference, especially as you see states that are pulling EBT federal funding out. I mean, this is an opportunity for us to where we can really control what different providers want to have their insured that want to be healthier, we can really help them navigate different healthier options that they know that they’re buying, because it’s the only thing that’s really relevant with that card, and with our partnership on data. So we think that’ll be a real game changer in health and wellness. And then you couple that with dietitians, so one of the pieces of “Food Is Medicine” that we’re working on as well, and really helping people be healthier, is dieticians. So you’ll see us add dietitians on in waves, to really take care of each store, each area, and then also be able to tie in with all of our healthcare properties, a solution for customers to really understand and know how to eat healthier, and be able to manage their health through what they eat versus what they take.

Related:Hy-Vee partners with Soda Health to launch new health and wellness benefits program

SN: Your two health infusion clinics, the first one in April, most recent one, Chicago in August. Just how have those been going? Any lessons? Any challenges? 

JG: It’s really working with providers in healthcare to have them navigate or really send folks our way. I mean, so it’s really just, right now, we’re in the growth stage, where we don’t have anything we didn’t expect. I mean, we’re really just working with providers to give the patients an option. It’s much more convenient and easy without going to the hospital, as well as the insurers to really help them steer for a better cost option for their patients. 

Related:Video: Why Hy-Vee is our Supermarket News 2023 Retailer of the Year

And we’ll continue to look, we’ve got a few more on the horizon, so we’ll continue to open these in areas that make sense for us. 

Randy Edeker: You think about everything Jeremy just said, the future of healthcare, it’s all intertwined. I think the infusion clinics are part of it, especially pharmacies are part of it, Food Is Medicine is part of it, and then the clinical services that are going to continue to evolve. Clinical services are going to change, how people go to the doctor, how they care for themselves. And so all those things are all intertwined together. I think Jeremy and the group have done a fabulous job of really putting us in a position to grow in a significant way in healthcare.

SN: I know when we talked before, you were saying the biggest growth opportunity was maybe in the prescription business, or had been. Are you still seeing that as the case? And how has that been going?

JG: Our largest department is the pharmacy. So our end game, we want to grow scripts, we want to grow traffic count to the store, but it’s also being a full solution for our customers in healthcare. I mean, that’s what all of this is about. To Randy’s point, it all is connected. So, I mean, we continue to drive pharmacy growth, and we’ll continue to. You’re seeing us roll out, and we’ve talked about it, that our prescriptions, 75% of them are filled through automation, because we want our pharmacists to focus on what they can do to practice at the top of their license, which is consult, which is to help customers be healthier, understand their medications.

I mean, MTM medication management with our customers. And frankly, that’s also why we’re working legislatively, to continue to work on test and treat, and all of the beneficial parts of the pharmacist license, that, frankly, they’re held back in many areas today. We’re working with the states, we’re working with the federal government to really continue to expand that scope of practice, because that’s where we see the pharmacy really growing long-term.

SN: Have you had any issues with staffing within pharmacy? 

RE: We haven’t had any issues with staffing. And we’ve focused on our pharmacists for years, making sure that they’re cared for. We don’t push the numbers beyond a reasonable rate, and I think that’s kind of what some of the pharmacists have pushed back. They’re just so busy, and we’ve monitored that. I think our automation has really helped take all the pressure off of the pharmacists, because with the percentage that we are fulfilling through automation, pushing 75%, that takes the busy work off of the pharmacist, and allows them to do patient care. And that’s what they really want to do.

SN: Switching over to RedMedia, just how has that rollout been going? Plans for RedMedia in 2024? 

JG: Yeah, it’s going. We were just talking about it before you came out here.

For us, the strategy is there. We’ve been working with supplier partners for a long time, as far as the store assets piece. So for us, it’s really figuring out how we continue to structure long-term in, really figuring out... We’ve rolled out 10,000 digital screens into our stores, to have advertising at the customer’s decision point, at the point of sale. So they’re literally standing above the candy aisle, a partner can reach the customer as they’re making a decision. That’s the point. Pharmacy is a good example. We’ve got partners like Pfizer that are advertising on our screens in the pharmacy. So those things have gone very well. I think the part for us that we’re working on now is, how do we get, really, the global dollars to have off site advertising in the network? So that’s really our next challenge. So that’s kind of where we’re at.

But as far as advancements, as far as where we’re going, as far as partnerships goes, we’re in really good shape. I mean, we were scored by The Mars Agency, and we did very, very well against all of the big players. So for us, we’re just continuing to focus on what we’re doing. I think we’ve got a good strategy. We’ve been at it for two years. I mean, frankly, we got a good head start. 

RE: I think that’s right. I think it’s all, again, intertwined. I think that e-commerce omnichannel shopping is all going to intertwine with RedMedia, with our retail media. And I think the good thing for us, we’ve had the vision for several years, and we’ve started working on it. We’re a mid-major in a regional, and that’s just reality. So we’re not national, and so we’re working on strategies, how do we hit the nation as a whole? And so that’s really our next step. I think we’ve got a really good start. But it’s complicated, and I will tell you that I don’t think anybody has it figured out, everybody’s trying to figure it out. But it is real, and it’s not going to go away.

JG: Yeah. One of the challenges we’re going to have, I think, and so is the industry, is really the reporting metric. Because one of the big keys they all want to know is, they want to know if the dollar spend has an ROI, and I think everybody’s measuring that very differently. So that’s going to be somewhat of a challenge for retail media networks in general, is how do we consistently measure the ROI across all retail media networks on.

SN: How does Hy-Vee measure ROI right now?

JG: Well, we basically measure sales increase based on promotion, if they’re partnered with us. And we’ve got a pretty good backend right now. I mean, a number of partners that we’re able to have insights into the results of the campaigns that they put out there, but the campaigns are going to get larger and more global with more retailers engaged, and I think that’s going to be the challenge.

SN: AI is such a big focus right now, including at the show we’re at right now. How is Hy-Vee thinking about this?

JG: It’s a massive undertaking, and we’ve had some discussions around it…but it’s a concern in terms of how and what the competitive advantage can be with AI, and what makes sense. I mean, you’ve got a lot of conjecture, but I don’t know that anybody’s got it completely nailed. Obviously, it can sort data in record amounts of time, and you talk about even engineering, and software programs, and data development. So I don’t know, I don’t know that I have the solution, but...

RE: So Jody, Jody Gosch, is our chief technology officer, and he’s a brilliant guy that we recruited. We’ve had him working on it. I think AI will have applications very soon. If you look at the ability for AI to write software, to speed up programming.

I mean, to me, those are some of the things that maybe aren’t as cool, or as sexy, but they’re going to make a real difference, and really help us go quicker.

I think app development is going to be a huge part as we have them writing code for us, and those things, I think that’s going to be very important. There’s some automated applications that I think could apply. I think with a lot of care and testing to make sure that the answers are right. I think there’s some easy things that will come fairly quickly. Some of the big stuff that is more sci-fi, I don’t know if I see a lot of those things happening very quickly. And the adoption rate for a consumer I think is going to really measure a lot of those things, are they up for it or not?

SN: And in terms of market expansion, are you on track there?

JG: Yeah, we’re still on pace. This summer, we break ground in Nashville.

We’re still looking at Nashville, Indy, Louisville. I mean, we’ll be in the Southeast. So to Randy’s point, that’s still on pace. I mean, on the other side of expansion is, too, we’ll continue to work on e-commerce and ship to home. I mean, that’s a huge piece. And he mentioned it with RedMedia, but that’s also a big part of the growth strategy, is figuring out how we really continue to connect outside of our eight states, outside of the new five states we’re going to add. But that’s where we’re focused on.

SN: Randy, in terms of retirement, how’s that transition going? How are you feeling? What are your goals?

RE: I mean, I announced Jeremy last July, and I’ve kind of measured, and so I announced in January that I’m going to be done at the end of July. I feel really good about it. I feel good about Jeremy, he’s doing a great job. I made a good pick. And so that was my last big decision, who’s taken over. And so I got that one right.

I’m totally at ease. I mean, it’s been a great run. I love Hy-Vee with all my heart, but I’m old enough to retire, but I’m not old enough to not do anything. Just turned 61, so I’m in good shape. I’m excited to get on with the next thing. I’m going to do a little bit of consulting. I’m going to do a little bit of board work afterwards. I’ve already said yes to a few requests, and so I’ll stay active, and stay involved. But beyond that, once you run a company like Hy-Vee, you’re not going to go help somebody else win. So I’m not going to go help anybody else win, I’m going to just stick here and help Jeremy win with Hy-Vee, and that’s the goal for us. So it’s all good.

SN: And Jeremy, what about you? What are your biggest goals as chairman of the board, as you step into those shoes?

JG: Well, I mean, honestly, it’s to just continue with what the folks before me have started. I mean, Randy has really changed the culture to really a growth mindset, to really push boundaries, to really innovate. I think we just have to continue doing that. The customer continues to evolve, but for 95 years, to his earlier comment, we’ve stayed two or three years ahead of them. To be honest, the pharmacy is a good example. I mean, we built out automation when nobody else was, and now it’s paying massive dividends, because we were three years ahead. I mean, if you rewind back probably three or four years ago, we started down that path. So that’s the goal, is to continue to build on our 95 years of history for Hy-Vee, and continue to build on the things that have been set into motion, and what we’ve always done, and continue, frankly, building upon what Randy’s start. So it’ll be great.