Job recruiters at INDYCAR Race Weekend, July 2022 – Photo: Facebook/@HyVeeCareers
Hy-Vee suspends employee discounts after finding fraud and misuse
Hy-Vee has suspended its employee discount program after discovering a significant increase in the number of people using it that did not share the same household or even the same city.
The grocer, which operates stores across eight Midwestern states, said it found a case where one employee’s fuel-saver account was used in five different states in a span of an hour. Another worker was said to have used their discount to make large purchases and then resold the merchandise for a profit.
“The discrepancies found were significant enough to signal a much broader issue that needed to be addressed immediately,” the company said in a statement quoted by several news outlets.
The employee perk, which enabled workers to receive a 10 percent discount on items bought at Hy-Vee’s stores, was first introduced in 2019, according to an Omaha World-Herald report.
Initial reports of Hy-Vee’s action said the company was planning on bringing back its program this summer, but updates have it now targeting mid-April.
Hy-Vee has positioned itself as having no choice in the decision and has emphasized that its pay and benefits package is an indication that it supports its workers.
Some of the chain’s workers, however, still see the action as punitive.
One worker who contacted KAAL-TV/ABC 6 News in Rochester, MN, said, “This feels like penalizing their frontline workers who have continued to work and support Hy-Vee through the COVID-19 pandemic.”
The grocer came under some criticism last year when it asked over 600 corporate employees to move to jobs in stores as part of a broader cost-cutting effort intended “to head off what a growing number of financial experts predict will be a severe economic downturn as early as next year.”
The predicted downturn has not yet taken place, and many economists including the National Retail Federation’s chief economist Jack Kleinheinz now think a recession will be likely averted in 2023 as inflation continues to moderate.
Hy-Vee is not letting concerns about an economic downturn interfere with its plan to expand into new markets. The grocer in 2021 said it planned to open at least 21 new stores in Kentucky, Tennessee, Alabama and Indiana by 2025. The first of the new stores are expected to open this year. Hy-Vee is also opening a distribution center in Nashville to support its growth plans.
- Hy-Vee suspends employee discountings citing ‘significant’ discrepancies, plans to revamp program – Omaha World-Herald
- Hy-Vee to change employee discount program – KAAL-TV
- Is Hy-Vee’s highly public corporate restructuring prescient or something else? – RetailWire
- 2023 could be the year of the recession that never happened – RetailWire
- Hy-Vee plans to go national – RetailWire
- Hy-Vee is coming to Spring Hill: Will be grocery chain’s first store in Tennessee – The Tennessean
- New grocery coming to town: Hy-Vee announces where its first Louisville location will be – Louisville Courier Journal
Discussion Questions
DISCUSSION QUESTIONS: Is it common for retail employees to misuse store discount perks? How do you expect Hy-Vee to deal with the misuse when it restarts the program in April?
Poll
Loading …BrainTrust
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Heidi Sax
Director, Growth Marketing for Wizard
When I worked at John Lewis we received very generous discounts: 25 percent off most things at department stores and 12.5 percent off food at Waitrose. However the rules on using it were made crystal clear from day one: no buying things (other than gifts) for other people, no sharing the discount with people not in your household, etc. The consequences for misuse were also made clear: immediate dismissal if found guilty. The whole system was carefully monitored.
My experience at Target was very similar, with rules and processes in place to monitor compliance and misuse. Employees and their families had discount cards with their names on the card, which were required for any cash transactions. The preferred method was to use a Target credit card — employee discounts were tied to the card. Misuse or sharing discounts carried the exact same penalty — one strike your out, termination. At one time a senior VP in merchandising was dismissed, on the spot, for a violation of the policy. No one at Target ever questioned if the company was serious about this policy.
While Hy-Vee’s discounts were not as large, the same rules Target used should have been stated when their program began. If you misuse the program it is stealing and you will be terminated.
If it is this much fraud for 10 percent off, imagine those retailers who offer 40 percent and 50 percent as a perk. All retailers should look carefully at this as it has been a common problem in retail for years in all categories. It is made worse by the “side hustle” mindset that is everywhere, which encourages people to resell items. I would hope they find the proper guardrails to implement, maybe making it so employees have to scan their badge or only making it available within 10 miles of their store.
This is one of those lose/lose issues for retailers. Employee discounts are a helpful enticement for workers. At the same time there is almost always going to be some misuse, but it’s especially amplified by work environments where staff feel under-appreciated, underpaid or overworked — in short, pretty much anywhere in retail these days. Retailers can help minimize misuse by working to make staff feel heard and valued in other ways, and helping staff understand how discounts impact the ability to offer future raises or improve working conditions. Technology is also an important tool, but it’s essential to make the oversight technology clear and obvious so staff don’t feel secretly spied upon.
It sounds like Hy-Vee made it too easy for employees to misuse store discounts. They did their due diligence in monitoring the program. It may feel punitive, but grocery profit margins are just too narrow to allow for abuse of the policy. Here’s to hoping Hy-Vee can adjust and relaunch the program so that that store employees can still get perks.
Seriously? Over a 10 percent discount? I could see if we were talking about 25 percent off and a gift with purchase at a friends and family sale, but you can get 10 percent off at almost any retailer by searching for coupons online.
Hy-Vee is penalizing all employees for friendly fraud from a few. I see this as a potential recruitment issue. We saw the value of frontline grocery workers during the height of the pandemic. It seems that Hy-Vee has forgotten this and is treating frontline workers like children to be penalized. I’d love to see the employee retention stats from this one.
Cancelling the program seems like an over-reaction. Suspend the offending employee’s access after a warning you can’t share your account. As for the re-seller, just fire them because there’s no excuse. But don’t punish everyone for the actions of a bad few.
Employee discounts for store purchases is a highly valued perk, but it has to be monitored like any other key metric within the enterprise and if misuse is found, then perpetrators ought to be found, warned, fined, and/or fired. Plain and simple, it’s stealing, and that goes against every retailer’s corporate policy and the values of every law-abiding citizen. I’m sure Hy-Vee will reinstate the program with added, perhaps even more severe guardrails.
They should eliminate the people who know they are violating the policy on the discount. If the retailer does not do this, it will be a growing nightmare. Start with a warning to everyone and demand immediate adherence to the policy. The last thing said in this announcement should be that dismissal will be enforced.
The first law of retail is Murphy’s, and this is a perfect example. Cheating Iowans? That can’t be! But yep, Murphy’s Law kicked in eventually. Any time you create any policy at any retail company, you’d better be prepared to outline in detail what will happen if people abuse said policy. Human nature + Murphy’s Law = retail in a nutshell for more than 1,000 years. If you know that, you can prepare and stuff like this shouldn’t come as such a surprise. Plus, conversely, you can sell a lot of goods. 🙂
I don’t imagine misuse is widespread, but I may be naive.
Rather than cancel a program that has value to employees, it strikes me that the fastest way to minimize misuse is to terminate the employees who abuse the benefit and announce to the employees that the offenders have been terminated.
I do not believe monitoring the program would be difficult. If Hy-Vee does not, then misuse will be encouraged.
Punish the employees at fault for abusing the discount program, not the majority of associates who probably use the privilege as it was intended. (And find a tech solution for addressing obvious loopholes in the system.) This doesn’t feel like a decision meant to endear Hy-Vee to its workers, even if the suspension is for a short time.
“…discrepancies found were significant…” “Significant” being the key word here; I’m sure by perfectionist standards every program sees some degree of misuse. And not to blame the victim here — that is if you view the company itself as the victim — but it sounds rather sloppily run: several states … within an hour? Weren’t there any controls at all?
Like many in the discussion, I’ve received many employee discounts over time. Despite many significant guardrails these programs primarily relied on the honor system. “Where there’s a will there’s a way.” With the ability to track so much data these days, one would think that tracking by employee number with $/unit parameters assumed could flag potential abusers. If a 10% discount is a margin killer for a business, there are probably bigger problems.
This is a classic issue when a company does not understand the impact of the system that their employees use as a perk. Hy-Vee should have better tested their program, and have the vendor whom they purchased this software from, test it and be held accountable for any abuse that the software allowed to occur. The employees should not be the ones being punished here, since it was the company that gave this power to the employees, without proper testing, training, and robust program security.