EXCLUSIVE: UNFI Realigns to Enhance Service and Drive Growth
United Natural Foods Inc. is making a major move to help retailers and suppliers drive profitable growth in an increasingly competitive grocery landscape.
The company announced today that it will restructure its commercial wholesale organization as part of a multi-year strategy launched in October to provide more customized value to customers and suppliers.
UNFI's restructuring effort will organize its wholesale operations into two distinct, product-centered divisions: Conventional Grocery Products, and Natural, Organic, Specialty & Fresh Products. Each division will feature dedicated sales teams aligned to the unique product and service needs of the customers it serves. Supporting these teams will be experts in merchandising, operations, procurement, and supplier services, ensuring that each division has the tools needed to cater to their specific markets effectively.
In an exclusive interview, UNFI CEO Sandy Douglas detailed the reasons behind the company’s realignment and how UNFI is positioning itself to be an even more powerful ally for grocers and suppliers.
Progressive Grocer: Sandy, UNFI announced a new strategy and multiyear plan in October designed to create more value for customers and suppliers, and serve them more efficiently and effectively. How is that going so far?
Sandy Douglas: We're encouraged by the progress that we're making so far, but frankly, like most things, we know the opportunity for improvement is much larger than anything we've accomplished so far. As we seek to serve our customers and our suppliers as efficiently and effectively as possible while creating long-term value for them and for UNFI, we believe that our scale, our heritage in natural, organic and specialty products and our value-added services make us a unique partner suited to help retailers differentiate and compete in what has become an incredibly dynamic and challenging industry for all of them. And we're focused on bringing our customers the broadest range of quality products and value-added programs and services to help them set themselves apart.
Differentiation is so important right now. We've seen some progress over the last few quarters, but we've got a long way to go. And our service promise and our aspiration for the value we add is very high, and so we see a long runway of improvement in our efforts to help our customers and suppliers. UNFI’s strategy is built on its strengths in natural and organic products, a category that continues to grow as consumers prioritize health and wellness. With over 30,000 retail endpoints and partnerships with leading suppliers, UNFI is uniquely positioned to bridge the gap between suppliers and retailers. This dual role is critical as the industry becomes more competitive.
PG: You mentioned value-added services. Can you elaborate on the breadth of these services at UNFI?
SD: Value-added was a long-term focus of the company well before I got here. Whether it's professional and digital services or Brands+ or the UNFI Insights platform for suppliers. We recently launched the UNFI Media Network, which is very early days, but up until now, only the largest retailers really got to participate in that value stream. Having been in a CPG my whole life, I know that a diverse channel base and particularly independent retailers are so important to healthy brand growth. Our diverse customers are a tremendous brand building ecosystem for suppliers, and so why not work a media network into that customer base? Whether it's saving our customers money or helping them compete or creating new platforms, we see services as a really important component for them and a way for us to help them make some more money by adding more value.
PG: Adding value is a key part of your strategy. How are UNFI’s key points of differentiation supporting your customers and suppliers?
SD: We are focused on a couple of things. First, we want to bring them the best and broadest array of high quality products to help them differentiate their assortment based on their strategy, and obviously in our huge customer base, you see everything. I mean, there's the widest range of strategies. We carry over 11,000 supplier brands. We offer our own private label program, and private label continues to be a rapidly growing and important way for customers to differentiate. We talked just a second ago about value-added programs, but our digital and professional services team offers a wide range of services. We see this as a tremendous opportunity to help not only retailers but also suppliers see each other, invest in each other, and take full advantage of the diversity that our channel has in the United States, which is so good for brands and so good for consumer products companies. And you see some of the most incredible innovation from independents. From the Southern California multicultural retailers, to rural retailers in many counties, to some of the bigger regional chains. And we're just lucky as an industry to have that kind of innovation and those kinds of leaders.
PG: Earlier today, you announced a restructuring in your commercial wholesale organization. How does that move support your strategy of adding more value for customers and suppliers?
SD: Our primary focus is adding value and serving customers and suppliers. Our realignment of our wholesale organization is designed to promote that. It sharpens our focus on our products and the scalable capabilities that make the whole engine run. We have re-aligned into two product-centered divisions, conventional grocery products and natural, organic, specialty and fresh products, while continuing to enhance our enterprise commercial and supply chain capabilities because we’ve built strong capabilities with lots of opportunity. We don't want to fragment that, but we want to make sure that our front-facing merchandising and sales focus is very tailored to the strategies of our customers.
Louis Martin will lead our conventional grocery products division as well as be the chief commercial officer of the company for all the enterprise commercial capabilities, and Mark Bushway will lead the natural, organic, specialty and fresh products division, but he will continue to also be the chief supply chain officer. So we've got the executive leaders to bring the focus and the capability forward, and we've built a culture of very seamless collaboration around the customer. And when we look upstream to our suppliers, we think this will work well and make it more efficient. We think it will give our customer experience a step up, but it also clearly affects our efficiency. It will involve some job creation, but also some job losses and some job changes, which is a really tough part of becoming more efficient. But we're in a market where customers cannot afford us to be anything other than the most efficient possible. We have 28,000 employees, whose livelihoods depend on our ability to be sustainable and successful, so we’re always thinking about the bigger picture for UNFI.
PG: How does this new operating model reduce complexity within UNFI’s business?
SD: One of the largest and most powerful objectives in our business is our ability to make processes simpler. We're a very complex company and that's a function of our history and how we came together and the many acquisitions that existed and the breadth of our customer base. We're not serving one strategy as a captive retailer would. We're serving thousands of strategies, but we believe that the new structure will empower our sales teams to spend the majority of their time with their clients, serving their unique strategies by building customized plans, assortments, product and service bundles. We think the account manager becomes the center of the universe there, and the merchandising manager looking upstream to suppliers and downstream.
We're on an ongoing journey of continuous improvement. Some of what we do won't work right away, and if that’s the case, and we'll change it. That's been a dynamic part of the last few years, and I think ultimately, if we keep our collective focus on the customer and the supplier, we will win, but it won't necessarily be perfect, as change never is.
PG: What are the biggest opportunities you see with this new model?
SD: I really see three big ones. First, it gives our sales team more time to spend with their customers. Having grown up in sales and in the consumer products and food industry, I think the more time you spend with your customers, the better. It allows us to listen, understand, configure, customize and help ensure their success — because without their success, we fail. Our business counts on growth, it counts on full DCs, and efficiency... So our sales people spending time with their customers and figuring out what we can do to help them be different, better, and special in the marketplace is the key.
The second opportunity is it allows us to scale and leverage our enterprise-wide expertise, whether it's supply chain or retail media or private brands, pricing, merchandising — all of these are capabilities that the more scale we can bring to them, the better. And then lastly, I believe it opens us up to new and interesting opportunities for associates to develop and deepen expertise in our customers and suppliers so that we're seeing opportunities faster and acting in a more agile way. And I think ultimately that creates a win-win for associates, for customers and suppliers, and if that happens, UNFI will prosper long into the future.
PG: Post-pandemic, are your sales teams engaging more face-to-face, or is it a mix of in-person and virtual interactions?
SD: It’s a mix, and that’s reflective of the changing nature of work. Flexibility is critical for attracting and retaining top talent, especially in functions like IT where remote work is highly valued. For our sales teams, the focus is on being outward-facing. Whether that means in-person meetings, store visits, or virtual calls depends on the customer’s preferences. We recognize that face-to-face interactions are invaluable for building relationships and trust, but we also understand the importance of adapting to new ways of working. Ultimately, it’s about meeting our customers where they are.
PG: What challenges do you foresee for UNFI and its partners in the coming years?
SD: The No. 1 challenge in our customer base is how can we help them effectively differentiate, compete and grow profitably and sustainably. I know of no time in my 40, almost 41 years in the food industry that it's been more challenging for retailers. Since 2000, the top four retailers have gained over 40 share points from the rest of the market. And it's getting to a point where they are becoming so strong and so powerful, with their R&D budgets and their automation budgets and the way that they can scale. You know, in my previous life we operated in 207 countries, and I saw presentations about business plans in all those countries for years. And the characteristic that was most correlated with profitable growth in the beverage business was diversity of the channel.
So, we as wholesalers and independent suppliers have an extraordinary responsibility to help all of our customers compete and succeed. If you do a good job on adding value and you do it efficiently — we're never gonna be a high margin business, we're always going to be very low. But if you do it right, you can achieve it. But I think my customer's challenge is existential and my challenge is existential, but working with very, very talented people, I think there is a way, and I've watched lots of retailers do it in brilliant ways over the years, and I'm inspired by them.
PG: What are the greatest challenges for grocers today?
SD: As you know, the environment with inflation looks like it’s kind of stabilizing, although it's not really clear. Grocery prices still are high, and it's challenged the value proposition, and that's impacting the choices that consumers are making across the socioeconomic spectrum. It's no secret that the mass market retailers are taking a lot of share. We have to really figure out in support of our customers how to ensure that they have the products, the programs and services, and the efficiency, the costs that will allow them to differentiate, compete and win, and that's really the big thing. I mean, it's not more complicated. It's hard to do, but it's not complicated. One of the access points is data, and making sure that we, as a fragmented value chain competing against captive value chains, are able to make data visible, clear, clean, and actionable, so that insight can be derived and action taken that, in fact, reflects the strength. So working together with our customers with data, with suppliers. We've got the tools, but we've got to be awfully good to compete against the scale retailers, and that's the biggest challenge.
PG: Any final thoughts on UNFI’s role in addressing these challenges?
SD: UNFI is uniquely positioned to help grocers navigate this complex environment. Our scale, expertise, and commitment to innovation enables us to deliver the products, programs, and services our customers need to succeed. By fostering collaboration across the supply chain and investing in our people, we’re building a stronger, more resilient industry for the future. And I’m really excited about the talented team we’ve recruited and built to take the company forward.
