Hy-Vee Senior Vice President of Communications Tina Potthoff shares how the employee-owned grocery chain has created a trusted brand among its loyal customer base. With a foundation built on serving shoppers with a smile, Hy-Vee continually experiments to find what’s next in grocery, adapting seamlessly to an era of digital transformation.

Hy-Vee has grown throughout the Midwest with more than 285 store locations, and has been named one of America’s top three favorite grocery stores and ranked in the top 10 most trusted brands. From employee empowerment to local community engagement to product experimentation, Hy-Vee doesn’t shy away from an opportunity to enhance the grocery experience for customers.

In this episode

Kane McCord:

Welcome to Fresh Thinking, the video podcast that brings you the latest trends in the grocery retail space and insights that you need to stay ahead of the curve and your competition. I’m your host Kane McCord, and in each episode, I chat with an industry-leading executive to learn about how they are bringing innovation to drive results. In today’s episode, I’m thrilled to be joined by Tina Potthoff, the Senior Vice President of Communications at Hy-Vee. Hy-Vee Has more than 285 stores located in several Midwestern states and is regularly named as a favorite grocery brand. Welcome to Fresh Thinking, Tina, we appreciate you being here.

Tina Potthoff:

Thank you so much for having me on today. I appreciate it. I’ve been looking forward to this for quite some time.

Kane McCord:

Excellent. Well, let’s dive right in. As I mentioned in the introduction, Hy-Vee occupies a very enviable position in the minds of its consumers. You’ve ranked in the top 10 most trusted brands, and you’ve been named one of America’s top three favorite grocery stores. How do you think Hy-Vee has managed to establish this industry-leading position with your consumers?

Tina Potthoff:

Sure. Well, I think a lot of it comes down to just really telling our story, and really what we’ve been focused on over the past year to two years has been taking our brand on more of a national level as more people become ingrained in doing things online and having offerings online. Certainly one of the things that we’ve really been stressing on and really focusing on is taking our name and not just making ourselves a regional grocery store like we’ve been for many, many years, but expanding our footprint, not only beyond eight states, but also throughout the entire country in the digital space.

Kane McCord:

You know, one of the things customers and retail investors and executives talk about all the time is customer service as a way to build this loyalty. And what always interests me is every retailer claims that they provide excellent customer service, but your customers really tout this as one of the reasons that they give you a lot of brand loyalty. What do you think is unique about what you do to reach and serve your customers, either digitally, as you mentioned, or in the stores, that’s really resonated with them?

Tina Potthoff:

Well, I think the first thing is that Hy-Vee is employee owned. So our employees are our owners. We work with them through a 401(k) sharing plan and also a bonus sharing plan. So when the company does better, our employees do better from a financial perspective. And we really strive to make sure that a helpful smile is in every single aisle. That was a jingle that came up back in the sixties. And it was something that we’ve really just built our foundation on is making sure that you’re always providing that helpful smile in every single aisle for every customer. I mean, we even train our employees that when they ask for where the bread is or where a vitamin might be, that we’re putting down what we’re doing in the aisle at that particular moment in time and taking that customer to that particular product, because that’s the right thing to do.

It’s the excellent customer service that maybe you can’t get someplace else. So, there are low-cost leaders that are out there and then there’s others that are innovative and always kind of exploring new spaces and looking to see what’s next on the horizon, and I definitely feel like that’s the category that we fit in because we are looking at different innovations. We are always looking at what’s next to come. We were one of the first retailers to offer clothing in our grocery stores, right? We actually did it back in the eighties and it didn’t work because it was too innovative at the time. But now it’s almost more commonplace.

The other thing is just our autonomous structure. We’re really into giving back to the communities that we live, work, and play in. And a lot of that is there are decisions that are made at the local level. Certainly we have guidelines that come out from the corporate office and we tell our stores, “Hey, this is a campaign that we’re going to do from the corporate level,” but there’s a lot of control and decision making that can occur in the local space. And that is why our customers say, “That’s my Hy-Vee,” right? They don’t usually say that about other retailers like, “Oh, that’s my insert-retailer-name.” But when it comes to Hy-Vee, everyone says, “This is my Hy-Vee. That’s my Waukee Hy-Vee. That’s my Sioux City Hy-Vee.” Because there is an identification there and they grow up on the brand. Everybody knows the jingle. Everybody knows, usually, who the local grocer is too.

Kane McCord:

Very cool. I love the community aspect of giving your employees autonomy and ownership. The other topic that’s really top of mind is a labor shortage that’s going on and the disruptions, obviously, coming out of a pandemic. One, how has Hy-Vee managed its way through that? And two, how do you think your employee ownership and autonomy has perhaps provided an advantage, frankly, when it comes to things like employee retention, employee empowerment?

Tina Potthoff:

Right now, what we’ve been doing is trying to implement as many employee benefits as we possibly can to attract people to want to come to work at Hy-Vee. We have a goal of being the best place to work and shop in America. That’s something that our CEO, Randy Edeker, has put out there. It’s a goal, and it is something that we strive for each and every single day. So whether it comes down to tuition assistance, or it comes down to childcare, or if it comes down to increased medical benefits or insurance benefits, those are things that we all have in place. And we’ve really continued to expand that as time goes on.

I will be honest, for the longest time, everyone would always even ask me as a Hy-Vee employee, “So how much do you get off on your groceries?,” right? “What’s the percentage?” And so now we actually have implemented a 10% off your grocery bill at Hy-Vee if you work for Hy-Vee. And that has attracted, I’ll be honest, a lot of teenagers because their parents are interested in wanting their kids to go work for Hy-Vee so they of course can take advantage of the employee discount, because it’s the employee plus one additional person in their family that can take advantage of that.

And one of the things we’ve also discovered that’s actually been very good for us, is just making an ask or doing a referral bonus, right? So sometimes the best employees are those that you know, or it might be your family members. We’ve also targeted not only those that are younger on the scale, but those that may have even retired from the company, too. So going back out to our retirees, maybe they were a store director back in the past and it’s like, “Hey, would you like to come back and maybe be a greeter?”

There’s also technology that we are putting into place to lessen that, if you will, lessen the stress on the company and also our employees so that they can be there for the customer. One in particular would be, we’ve implemented some scan and go technology. And everybody who is brave enough to try it has really seemed to enjoy it. We have a lot more self checkouts in our stores and those have been wildly successful. You always have your critics every time you implement something that might be different, but especially in today’s inflationary time period, I will tell you that the scan and gos and also the self checkouts have become very, very popular. A lot of times because if someone’s operating on a strict budget, especially in today’s society, they don’t want to have to tell a person, “Can you please put back that item for me? Can you please put back that piece of candy or can you please put this back for me because I’ve reached my hundred dollar limit?” So when they’re actually scanning their own groceries, they have the ability to control that and actually see that pop up on the screen right in front of them.

The biggest thing is, we’ve really been focused on offering deals, doing as much as we can to buy in bulk, have bulk offerings, because we know that people right now are looking for deals.

Kane McCord:

But on your last response, you talked about the balance between moving quickly and innovating, and that can come with failures. Can you share an example where you tried to implement something that maybe was too fast, too soon, or the receptivity to it by your employees and consumers wasn’t what you wanted it to be? And how was that a learning opportunity or how do you maintain that culture of innovation when you know it comes with, at times, failure?

Tina Potthoff:

Yeah, absolutely. I can definitely talk about one that stands out in my mind because I was heavily involved with it. I would say it was our Aisles Online and our online grocery platform. So before COVID hit, we started to test out some fulfillment centers where we would take the orders—and they weren’t fulfilled at the local stores any longer, they were actually all going to a larger fulfillment center. You don’t have that autonomy. You don’t have some of those personalized offerings that you might have in one neighborhood versus another. So that was one of the problems that we came across. The other one was when you had weather and you needed to get a lot of people out of that exact same fulfillment center in one particular location, that can cause problems and it can create issues.

And so what we discovered is that it really kind of created a backlog and we were actually going backwards when we implemented our four fulfillment centers: We had Omaha, Kansas city, Des Moines, and also had one in the Twin Cities. And we’ve since either sold off those properties or we’ve actually transitioned them into something different. It’s one thing to have a baker manufacturing facility that can actually bake for your stores, but to really fulfill the online offerings that each store has, because some can each be unique, we moved it back to the stores and that has been probably one of the most successful things that we did.

Kane McCord:

To follow up, the employee-owned nature of your corporation perhaps allows for a little bit more experimentation, meaning it might feel less risky to fail when not beholden to a large amount of public investors. Is that assumption accurate?

Tina Potthoff:

Yeah, I would definitely say so. I mean, there’s also been a lot of, I would say, food innovation and retail innovation that’s happened that way, too. We sell something called a Chicken Griller that’s in our meat case, and it’s one of the most popular items that we sell. And that was actually created by an employee at one of our store locations and it just simply caught on. We had other stores start to order it, start to learn how to make it, and then from there now the entire company carries it. So the autonomy certainly helps. So that allows our employees to have more free rein. But it’s not just the managers that have that or the store directors, it is actually the employee, too. What we always say is, “Make the customer happy, right? If a customer’s in front of you and they have an issue, then it’s your responsibility to solve that and move forward.”

Kane McCord:

Makes a ton of sense. One of the things that a lot of customers want is convenience. Can you give our listeners a sense of your latest innovations that are specific to making a trip more convenient for consumers?

Tina Potthoff:

We are implementing more experiences that a customer can have when they actually come into our stores. For example, we just opened up a new location in Grimes, Iowa and Eau Claire, Wisconsin, and inside these stores, when you walk in, it’s very much a digital experience. If you’re looking for a vitamin, you can type in, kind of, what your ailment might be or what type of condition you might be having, and then it pops up all the vitamins that might be helpful for you after you go through a bio of sorts to talk about your health and wellness. Therefore, it kind of still keeps it private, but provides you the same service.

The other thing that we have is a digital ordering kiosk. Again, you can still go face-to-face, but as we’ve discovered with COVID, some people don’t want to go face-to-face anymore, to be honest, and they’re perfectly fine doing it the digital way and going in and placing their order. Not necessarily wanting to talk to anybody, wanting to get in and out a little bit quicker. And so we have a digital ordering kiosk for all of our different food options that we have, and what is basically a food hall.

Our executive team went to Eataly, actually, and some of the locations throughout the United States and visited some food halls in different communities and cities. And that’s really what we tried to recreate with some of our offerings was, we’ve got Mexican, we have Asian, we have  sushi, you know, we’ve got a New York Deli. And so we wanted it to almost be like a streetscape, if you will, so it looks like you’re walking down the streets of New York, where you can actually have those offerings available. We also have worked with many states to have bars inside of our stores, too. So you can grab a drink with friends before or after you shop.

And also one of my favorites is, certainly, we’ve teamed up with DSW. So if you’re looking for a particular shoe, I know usually at least with my children, it’s like, “Oh yeah, I need this at the last minute.” Right? So at least we have that offering available. 

The bakers and also the cake designers even have microphones in our new stores where they can actually be doing displays and talking to people about, “This is how you actually create that perfect flower on your cake if you’re trying to decorate at home.” And then our dieticians are there as well to walk customers through the aisles and take them to where they need to be.

Kane McCord:

I think one of the things that’s most impressive listening to you talk about innovation is that you just rattled off about a dozen different examples, at least, of things that are genuinely innovative, right? Things that Hy-Vee is uniquely doing and positioning in the market and either there’s nobody else doing it or very few others. How do you balance planning for this? And what I mean is, you have to react real-time to customer needs, that requires action, but I’ve got to imagine a lot of the things that you just described weren’t conceived overnight. So how do you balance the need to long-term plan with taking action immediately to drive innovation?

Tina Potthoff:

Right. Well, actually I was a part of a group that, about two years or so, when we were envisioning this new format of a store, we said, “If we could develop the perfect store, what exactly would it look like?” And we divided up into teams and one team took the Aisles Online section. What would that look like? How many drive ups would we have? Another person took health and wellness. Another team actually took bakery and another one took fresh goods and also seafood and meat. What would that look like? And then when we came together, oddly enough, the store actually kind of fit into pieces. And that’s really how our new stores have been formulated.

But you know, not everything works all the time and that’s … sometimes we get dinged for that, but the best part is when it does work, it really works. And when it doesn’t, we’re okay to say, “Hey, that wasn’t our best idea,” and go ahead and remove it from the store and take it out. Another thing that has gone really well for us is we used to have, in some locations, outside banks that would be leasing the space in our stores, and just through COVID and maybe consolidation efforts, they have since decided to depart from the stores—the banking efforts. And so we had some open space in some of our stores and decided, “What should we actually be doing with that?” And what we ended up doing is doing sports shops. So in Kansas City, you can actually walk in and get your Chiefs gear there. In Minnesota, you can get your Vikings gear there because we are partners with those sports teams. And so the local high schools are in there and that’s been very personalized to the area again, but it’s also very successful.

Kane McCord:

The one thing I do want to hit on, speaking of sports and local teams, is community. And you’ve highlighted that you think a lot about your employer community and of course your consumer community. One of the initiatives I know you’ve done is you’ve invited local small businesses owned by women and people of color to submit product for sales consideration. How has that gone and how has that program been received?

Tina Potthoff:

It’s been phenomenal. We have a great team that’s been working on those efforts. We just held our first, they’re called Opportunity Summits. And we really reached out to businesses, small businesses that were owned by women or minorities to be able to come out and get the resources that we have available or that the community has available and set up almost a mini fair, if you will, to be able to say, “We have these, here’s our offerings at Hy-Vee,” because we ourselves own a bank. We own an area that can help out with insurance. And also we team up with local and also state government officials to say, “What are some of the loans that you might have out there? What are some of the other resources that can really help a company out?”

But the most exciting part, in my mind, that we were actually able to be a part of is selecting three businesses to receive grants from Hy-Vee. So an outright payment of money or funding— not like it’s Shark Tank or anything where we actually get a portion of their business, that’s not how it worked. But we were able to fund three businesses through a pitch competition and figure out more information about their business and also provide some more PR behind their business saying that we were able to select them, and then also raising awareness. One in particular that I absolutely loved that was selected, it was a young woman from Iowa who actually had stitches that would turn colors based on the recovery process that was happening with the stitch, and so that was a great one.

Kane McCord:

One of the questions I also wanted to ask you about, and this may be a little bit pandemic-related, but just in general, people are preparing a lot more food at home and fresh food has been seen as a necessity/trip driver in physical retail. Can you talk a little bit about anything that you’ve done recently or seen success with in regards to either prepared food or fresh food items that is really resonating with your consumer?

Tina Potthoff:

You know, that’s a great point too. And we have certainly seen that: That more people want to learn the recipes of the past that were passed on to their families, right? They’re a little bit, maybe, less prone to going out to eat or they want to recreate that experience. One of the things that we’ve really been focusing in on is having the best beef in the Midwest. That’s been a marketing campaign of ours. We actually just teamed up with Forrie Smith. If you’re not familiar with who Forrie Smith is, he plays one of the ranchers on Yellowstone and he, himself, is an actual rancher. So he is now in our commercials and we’re using him as a spokesperson. It’s been a really fun campaign to work on. But we’re really trying to tout the fact that we do have some of the best standards in beef when it comes to those offerings throughout the Midwest. And you don’t necessarily need to go to a steakhouse in order to get the best beef. You can actually prepare it right at home with some of the recipes that we have to offer and then our chefs can help out in that space.

The other thing that we’re also seeing when you talk about fresh foods is our convenience stores, which are actually called Hy-Vee Fast & Fresh locations, have really taken a turn. No longer is it just candy and lottery tickets and soda pop anymore. I mean, there’s way more inside our convenience stores as well, including fresh prepared foods. So you can actually find sushi from the store that’s freshly made and then actually brought to the convenient store, freshly baked donuts. And I mean, some convenience stores have always had that as an option, but when you look at some of our competitors that are out there, the ones that are doing really well, and we’ve taken a page out of their book too, are the ones that are offering those quick stops, where you can get fresh fruit, where you can get fresh items before you head off to a baseball game with your family or your friends.

Kane McCord:

Tina, this has been fantastic. I really appreciate your time. Is there anything else around any other current initiatives that I should have asked you that you want to talk to our listeners about?

Tina Potthoff:

One of the ways that we’re taking our brand on a national scale and making sure people know about, not only our community involvement, but also really who we are, is we’re one of the only retailers, at least grocery stores, that’s actually sponsoring an IndyCar race. And with this, we’ve actually been able to not only partner with our local communities to invite kids that can come to the IndyCar race that we’re hosting. And also on the second day that we’re there, we’re going to be hosting a variety of farmers that can get in for free, it’s called the Salute to Farmers Race. But it’s allowed us to become closer with our partners and suppliers so that they too can also be a part of this big event that’s going to be nationally televised.

Kane McCord:

And so another example of you guys being very much at the forefront of consumer trends. I know you are incredibly busy running an excellent retail operation. I again, on behalf of all of our listeners, want to thank you for making the time today. Very, very insightful. And we really appreciate it.

Tina Potthoff:

Thank you so much. I appreciate you having me on today.

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