Is Hy-Vee’s highly public corporate restructuring prescient or something else?
Hy-Vee in full-page ads last week in the Des Moines Register, Cedar Rapids Gazette and other newspapers announced that it will ask up to 500 corporate-level employees to switch to retail jobs at its 285 stores as it battles macroeconomic pressures.
In the 1,400-word advertorial entitled, “Economic and Retail Industry Challenges Lead to a Shift In Strategy for Hy-Vee,” the Midwest grocer wrote that it is taking steps to shrink operational costs as it faces a “number of obstacles” including escalating inflation, fuel and labor costs, supply chain disruptions and slow-to-increase pharmacy reimbursement rates.
In particular, the steps are being taken, however, “to head off what a growing number of financial experts predict will be a severe economic downturn as early as next year.”
The advertorial notes that Goldman Sachs recently set the odds at 35 percent for a recession within the next two years and a recent Bloomberg survey shows half of investors expect a recession by mid-to-late 2023.
Hy-Vee noted that steps have already been taken to lower costs in recent years, but those measures were “not enough for what they predict lies ahead.”
As a result, the company is asking up to 500 corporate employees to take on selling floor jobs. The company had already eliminated 121 positions across marketing, communications and technology in March with more than 100 of those employees offered retail positions.
According to internal documents obtained by KCCI, Hy-Vee will pay a bonus of $2,500 to those taking on retail jobs outside of central Iowa and $7,500 to those taking retail positions in Madison, WI, Minneapolis/St. Paul, MN, or the Quad Cities.
The retailer is also putting several projects, including a new warehouse, on pause.
Hy-Vee’s stated goal is to be “as lean as possible” to continue to keep prices down without sacrificing customer service.
Randy Edeker, Hy-Vee CEO, said in the advertorial, “Retail has always been a sprint to get to where customers want us to be before they get there. And Hy-Vee’s next step is doing what’s best for the customer, specifically regarding price and value.”
- Economic and Retail Industry Challenges Lead to a Shift in Strategy for Hy-Vee advertorial – The Gazette
- Citing economic and retail industry challenges, Hy-Vee asks 500 corporate employees to switch to retail – KCCI
- Hy-Vee wants 500 corporate employees to move to retail jobs, citing ‘economic challenges’ – Des Moines Register
- Hy-Vee looks to shift corporate staff to retail positions – Supermarket News
- Hy-Vee to drop up to 500 more corporate-level jobs – The Gazette
DISCUSSION QUESTIONS: What do you think of Hy-Vee’s decision to publish an advertorial disclosing the details behind its restructuring? Does a 35 percent chance of a recession over the next two years provide a plausible explanation for the move?