Midwest grocery chain Hy-Vee is moving fulfillment of online orders from a network of four fulfillment centers back to its retail stores.
Its Aisles Online fulfillment centers in Eagan, MN, Des Moines, IA, Omaha, NE and Kansas City, MO, will be closed later this month when the transfer takes place, the Minneapolis Star Tribune reported.
“We are listening to our customers and they are wanting a full assortment of products, personalized shoppers and same-day pickup at the store, which we are unable to fully provide when we process orders at a fulfillment center,” Hy-Vee spokeswoman Christina Gayman told the Newton Daily News.
Hy-Vee’s news contrasts with Amazon’s recent move to use a micro-fulfillment center solution from Dematic at its first grocery store not named Whole Foods outside Los Angeles, signaling that an MFC capability is critical to success and maintaining market share in the red-hot e-grocery sector.
E-grocery drove positive Q4 results for Walmart, and Target’s 2020 initiatives include enhancing same-day services by offering fresh grocery and adult beverage items via pickup and drive up.
Grocery Dive reported Hy-Vee online orders were initially fulfilled in local stores when Aisles Online launched in 2015. Hy-Vee created its dedicated ecommerce fulfillment centers to service a high volume of orders near major metropolitan areas, but demand may not have matched its forecast, making the cost of the fulfillment centers untenable.
More than 300 employees could lose their jobs at the Eagan facility, according to the Star Tribune, which reported other fulfillment centers have more than 500 employees. Hy-Vee said some employees may be offered other positions.
Hy-Vee operates more than 240 retail stores in eight Midwestern states, including Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. An employee-owned corporation, Hy-Vee has operating sales of $10 billion annually.