Hy-Vee enlists Takeoff Technologies to build micro-fulfillment centers

Midwestern grocer Hy-Vee has partnered with Takeoff Technologies to build automated micro-fulfillment centers (MFCs) to help process rising online grocery orders.

Waltham, Massachusetts-based Takeoff said Thursday that Hy-Vee aims to deploy MFCs in “select metro locations” to make order fulfillment for the retailer’s Aisles Online grocery shopping service more efficient. The compact automated facilities are designed to fill online orders faster and more accurately plus bring expanded order capacity and a lower cost-to-fill.

“A network of micro-fulfillment centers powered by Takeoff’s technology will help create new competitive advantages for Hy-Vee and enhanced online services for Hy-Vee customers,” Jose Aguerrevere, CEO and co-founder at Takeoff Technologies, said in a statement.

West Des Moines, Iowa-based Hy-Vee confirmed its partnership with Takeoff but declined to provide details about its MFC strategy.

“We haven’t publicly announced any future [MFC] locations at this time or number that will be launched to assist our Aisles Online employees,” a Hy-Vee spokesperson told Winsight Grocery Business in an email. “Today’s announcement from Takeover was to announce the technology we intend to use in limited locations that continue to see a significant increase in online ordering.”

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According to Takeoff, grocery retailers using its micro-fulfillment technology can fulfill an average order of 25 items with five minutes of labor. One MFC is able to fill more than 1,800 orders per day, with orders of up to 60 grocery items assembled in minutes, Takeoff reported on its website. The company pegged its automated MFC fulfillment as 20 times faster than manual in-store fulfillment, with the technology boosting overall online fulfillment productivity—in tandem with retailer staff—by up to 10 times via a combination of speed, accuracy and reliability.

Takeoff’s grocery automation can accommodate pickup and delivery times of less than 30 minutes to next-day, and one of its MFCs can bring in $25 million to $30 million in gross merchandise value (GMV) annually, “with a cost-to-serve that is lower than your traditional brick-and-mortar supermarket,” the company said on its website.

“We anticipate a very successful partnership between our two organizations, founded on Takeoff’s deep e-grocery expertise combined with Hy-Vee’s industry-leading grocery capabilities,” Takeoff President Mitch Freeman commented.

Overall, Hy-Vee operates more than 285 stores in Iowa, Illinois, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin and generates sales of more than $13 billion annually.

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Takeoff and Hy-Vee share a key technology partner: Google. In June 2021, Hy-Vee unveiled a sweeping partnership with the online technology and services giant to enhance its omnichannel shopping experience. Under the multiyear agreement, Hy-Vee will tap Google’s suite of solutions and services—powered by the Google Cloud platform—to “stay on the cutting edge of digital technology” by bringing “new and unique innovation” to in-store and online customers. Other Takeoff tech partners include Knapp (robotics) and Hussman (refrigeration).

Built inside or attached to existing stores or as stand-alone facilities, MFCs typically offer a lower cost-to-build, faster rollout timetable and quicker time to serve (being located closer to shoppers) than centralized fulfillment centers. The micro-fulfillment model has drawn increased attention from grocers in recent years as they look to trim online grocery costs, improve service metrics and achieve e-grocery profitability.

Other grocery retailers that use or have piloted Takeoff’s MFC and/or automation solutions include Albertsons Cos. (Safeway), Wakefern Food Corp. (ShopRite), Ahold Delhaize USA (Stop & Shop), Big Y Foods, Sedano’s Supermarkets and Loblaw Cos. (Real Canadian Superstore), as well as distributor Associated Wholesale Grocers.

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“Hy-Vee is one of the most innovative grocery retailers worldwide, which is why we are so excited to work hand in hand with them to introduce this technology,” stated Curt Avallone, chief business officer at Takeoff.