What to know about Hy-Vee's plans for the Indianapolis metro. Can expansion succeed there?

Will Hy-Vee's IndyCar sponsorships boost its expansion into Indianapolis?

Here is what we know about its plans.

What are Hy-Vee's plans for the Indianapolis metro?

Indianapolis, the second-fastest-growing major metro in the Midwest after Des Moines, is part of a plan to expand the West Des Moines-based chain into Indiana, Kentucky and Tennessee. The push already has begun with Hy-Vee's acquisition of the Strack & Van Til supermarket chain in northeastern Indiana, which was completed in early May.

Where and when will Hy-Vee enter the Indianapolis market?

Hy-Vee planned to start construction of stores in the Indianapolis suburbs of Fishers and Zionsville this year. But it said construction may be delayed after the Strack & Van Til purchase. The new stores will bear the Hy-Vee name, said company spokesperson Tina Potthoff.

"We still plan to build," Potthoff said. "We don't have a final construction timeline at this time for those locations."

Which supermarket chains already are in Indianapolis?

Indianapolis is one of the most competitive grocery markets in the country, dominated by Walmart, Cincinnati-based Kroger, and Grand Rapids, Michigan-based Meijer, said Matthew Caito, a lecturer in operations management at Butler University in Indianapolis and a grocery analyst.

Hy-Vee is a sizable regional grocer, with about 300 stores, more than 75,000 employees and sales of more than $13 billion. But Kroger is the biggest supermarket chain in the country and is known for beating other companies in grocery wars. It has 1,279 Kroger stores and about 1,000 other supermarkets under various brands, and is seeking to merge with the Albertsons chain, based in Boise, Idaho, which has 378 stores extending from Louisiana to California.

Can Hy-Vee compete in the Indianapolis metro?

Meijer, which also sells a wide variety of general merchandise, has 11 stores in the Indianapolis metro. Kroger has more than 20.

Caito sees Hy-Vee's competition as stiff.

"You’re going against probably the toughest retailers in the United States," he said. "These are companies that are not going to give up anything. So if you don’t have a significant presence, your cost of advertising is not going to be commensurate with your sales. Which means you’re going to be spending a lot more money than you’re potentially bringing in."

What does Hy-Vee say?

Any grocer faces "a headwind of a competitor" as it enter new markets, said Anna Stoermer, executive vice president and chief marketing officer for Hy-Vee. But Hy-Vee is confident its strategy will work, she said.

"Our offering is a little bit different than what's in the market today," she said. "We have a little bit different story that we're telling there."

How will Hy-Vee set itself apart from Kroger, Meijer, other competitors?

Sports-based marketing alone won't distinguish Hy-Vee, as Kroger and Meijer also have sports sponsorships. But it can play a role, especially if Hy-Vee takes a page from its Iowa playbook and offers clothing and merchandise bearing the logos of local college and high school teams, Caito said..

"Connect with the families because sports is a big deal here," he said.

Among other possible distinctions: Hy-Vee is a leader in its prepared food offerings, such as its Asian cuisine and partnership with Wahlburgers. Typically, new Hy-Vee stores have food courts, large candy aisles and supersized bakeries.

What is Hy-Vee's strategy as it enters the Indianapolis market?

Hy-Vee plans to begin with stores in two fast-growing, affluent suburbs with an abundance of young families ― prime targets for supermarkets. Caito pointed out that Pittsburgh's Giant Eagle has recently moved into metro Indianapolis with one of its upscale Market District stores, also on the north side, so Hy-Vee isn't the only challenger who sees an opportunity there.

The Fishers store, planned near Interstate 69, will serve a fast-growing residential area where residents have long said that they need a grocery store. And, Caito said, "That spot in Zionsville is primo. ... It was a cornfield 10 or 15 years ago, and it's surrounded by nice neighborhoods. They've opened a couple new interchanges there on the interstate."

"Indianapolis is a lot like Des Moines. It’s a Midwestern city. It’s got Midwestern values, family-centric," he added. "I don’t think Hy-Vee will have any problem with their ideals and their traditions in this market. It’s a good fit."

What challenges will Hy-Vee face in the Indianapolis area?

Getting customers to enter stores for the first time will be the toughest part, said Phil Lempert, a grocery industry analyst in Santa Monica, California. The company likely will struggle to turn a profit for as long as six months after entering Indianapolis, and finding 300 to 400 qualified employees per store also could be challenging, he said.

But Lempert expressed confidence that if Hy-Vee can get customers through it doors, it will thrive.

"Once someone goes into a Hy-Vee store, they are a customer for life," he said. "Between the prices, between the service, the assortment, between the cool things that they do."

Hy-Vee's expansion to Indiana and the South begins. Here's what we know about the plan.

How does Hy-Vee's IndyCar sponsorship factor in?

Indianapolis traditionally leads U.S. markets in IndyCar TV ratings. Knoxville, Tennessee, had the second-highest IndyCar ratings in 2023, according to NBC Sports. Hy-Vee plans to build at least four stores in Tennessee —three in the Nashville area and one in the Memphis area, and has looked at Knoxville, as well. Louisville, Kentucky, where Hy-Vee in 2022 bought 12 acres for a store, had the third-highest IndyCar ratings last year, according to NBC.

In these new markets, its IndyCar sponsorship builds name recognition, Lempert said.

"Going into a market like Indianapolis where you’ve got recognition is certainly easier and less-expensive than going into a market that has never heard the term ‘Hy-Vee,'" Lempert said.

Where else could Hy-Vee expand?

Lempert said he thinks Hy-Vee could be laying the groundwork for further expansion in Wisconsin, where it has stores in cities including Madison, La Crosse, Eau Claire and Janesville, but not in the state's largest metro, Milwaukee. Hy-Vee has signed up as the title sponsor of IndyCar races at the Milwaukee Mile track, which Lempert called a shrewd move, saying race fans are loyal shoppers.

"Wisconsin could be a terrific market for Hy-Vee," he said. "Its proximity is a plus to their other stores, and I believe their stores would outshine the competition there. Adding more races is a brilliant move."

Stoermer would not rule out a Milwaukee store, but said that if Hy-Vee has looked at the market, she is unaware of it.

"It's not out of reason," she said.

Philip Joens covers retail and real estate for the Des Moines Register. He can be reached at 515-284-8184, pjoens@registermedia.com or on Twitter @Philip_Joens.

This article originally appeared on Des Moines Register: Hy-Vee plans expansion to the Indianapolis metro. Here's what to know.