Hy-Vee thinks smaller, offers no update on five proposed large format stores

Hy-Vee's expansion in the Twin Cities is changing to focus on smaller-format stores as it extends timelines of construction on large ones.

A Fast & Fresh store that opened in Lakeville this week became Hy-Vee's 11th Twin Cities metro location. It combines groceries, grab-and-go meals and a gas station in an 8,700-square-foot space that is slightly smaller than a typical Aldi.

The store at 17380 Cedar Av. is several miles southwest of the Lakeville Hy-Vee store that opened in 2016.

Meanwhile, Hy-Vee's initial plan to open three new stores in the region this year has been cut to two, including this week's Fast & Fresh.

A store at 18755 N. 70th Way in Maple Grove that has been planned since 2016 will open this fall. It will be 92,000 square feet and also include a separate Fast & Fresh Express.

Next year Hy-Vee will add one large store in the Twin Cities, in Spring Lake Park, that will be 74,000 square feet. It will also begin construction next year on a large store in Blaine, at the southwest corner of NE. 125th Avenue and Jefferson Street. That is slated to open in 2021.

When it entered the market in 2015, Hy-Vee CEO Randy Edeker said the Iowa-based chain aimed to roll out four new stores a year in the Twin Cities. Its eventual goal was to make the Twin Cities its largest market, surpassing Kansas City.

But Hy-Vee now has several proposed stores for which it has no updates, including in Maple Grove at 14901 N. 101st Av., Columbia Heights, Chaska, Farmington and West St. Paul. And earlier this year, Hy-Vee dropped plans for a distribution center in Austin, Minn.

The new Lakeville location, chosen because of its high-traffic density, bridges the divide between a convenience store and smaller-format grocery store. It is designed for consumers who want to be able to get in and out of a store quickly while having more meal options than at a supersized gas station. Besides the Lakeville store, three other Fast & Fresh locations are in Iowa.

The Robbinsdale Hy-Vee that opened a year ago includes a separate 4,500-square-foot Fast & Fresh Express, a smaller version of the newest Lakeville store. "[It's] more along the lines of a Hy-Vee convenience store," said Hy-Vee spokeswoman Christina Gayman.

The Express stores include fountain drinks, brewed coffee, grab-and-go meals and cut fruits and veggies. The larger Fast & Fresh in Lakeville also has made-to-order meals for dine-in or takeout, sushi, doughnuts, a Mia Pizza wood-oven pizza station, and a full-service Starbucks with a drive-through. It includes a pickup spot for online ordering via Hy-Vee's Aisles Online program and 12 gas pumps.

Other supermarket and discount retailers such as Target, Publix and Meijer are experimenting with smaller-format stores. Walmart has struggled with the concept. It closed Express stores in 2016 but attempted a new concept called Walmart Fuel Station last year in Texas.

One reason for the footprint downsizing is that grocery transactions have declined by 5.8% since 2016 while the average price per square foot for commercial real estate has spiked by about 8% or more across the United States, according to JLL Commercial Real Estate Services. For that reason, the trend toward small-format stores is expected to grow.

Hy-Vee has another smaller store concept, HealthMarket, in West Des Moines.

At about 15,000 square feet, Hy-Vee's HealthMarkets offer healthy and organic products, a pharmacy, medical clinic, sports nutrition and Orangetheory Fitness. Hy-Vee's Shakopee location includes an Orangetheory. In 2017, the company canceled plans to build a store in White Bear Lake that included the fitness club.

Hours at the Lakeville Fast & Fresh are 5 a.m. to 11 p.m. daily except for Starbucks, which closes at 8 p.m.

John Ewoldt • 612-673-7633