Big Grocery Chain Aims To Eat Into Twin Cities Market Share

Hy-Vee, which has 235 stores in eight states, is planning to add several stores in the metro area.

A major grocery store chain announced plans this week for a big push into the Twin Cities market.

Hy-Vee, Inc., which has 235 stores in eight states, said it will “add several new stores to the Twin Cities market per year, over the next several years.”

Each store will span roughly 90,000 square feet and cost up to $16 million, the Des Moines, Iowa-based company said. For perspective on how large those stores will be: John Dean, a Twin Cities grocery industry consultant, told the Star Tribune that the average Cub Foods outlet is about 70,000 square feet.

Cub, one of the existing Twin Cities grocers that will compete with Hy-Vee, is owned by Eden Prairie-based Supervalu, Inc., which became a much smaller company last year after selling off several of its other brands.

Hy-Vee said its new stores will create between 400 and 550 new jobs. The company has maintained a Minnesota presence since 1969 (it currently operates 17 stores in the state) but the recently announced expansion would mark its entrance into the Twin Cities metro market.

The company isn't disclosing all of the locations where it plans to open stores, although it's currently working on one site in New Hope, the Star Tribune reported.

Hy-Vee’s stores typically include the company’s Market Grill or Market Café brands, which include sit-down, wait-staffed service. They also typically have pharmacies with drive-up windows, floral shops, dry cleaning, and other services.

“Our commitment to excellent customer service, health and wellness, and culinary expertise is unlike anything in the market to date,” Hy-Vee Chairman, President, and CEO Randy Edeker said in a statement. “Minnesota and its residents have long been important partners, and we are proud to extend that partnership into the Twin Cities area.”

Hy-Vee is employee-owned and reported $8 billion in sales last year; that ranks it among the top 25 supermarket chains and the top 50 private companies in the United States, the company said.

Cub Foods parent Supervalu had more than $36 billion in annual revenue prior to the divestiture of several brands, a move that cut its sales roughly in half. Last month, the company reported positive results, saying it doubled its third-quarter profits.

Supermarket consultant David Livingston told the Star Tribune that Cub and Rainbow Foods are most susceptible to market share losses from Hy-Vee’s incursion.

In addition to Cub and Rainbow, however, Hy-Vee will compete with local Target and Walmart stores. And its entrance could have an impact on higher-end grocers, such as Lunds, Byerly's, and Whole Foods.