UNFI Looks To eCommerce, Private Label To Drive Future Growth

Food wholesale giant United Natural Foods, Inc. (UNFI) is going digital. Though the company may have seen year-over-year sales declines in the third quarter, UNFI continued to gain in eCommerce. In particular, the company’s new Community Marketplace platform, which launched in April, is gaining steam.

“Within the important e-commerce space, our recently launched community marketplace continues to build as more SKUs get added to this innovative platform,” UNFI president Christopher P. Testa said on an earnings call with analysts. “Although it’s still in its infancy, we remain optimistic about the long-term prospects of this extension of our UNFI Easy Options B2B business.”

The Easy Options site is a wholesale eCommerce platform for retailers and eTailers to stock their physical and virtual shelves. Its Community Marketplace provides brands that already have partnerships with UNFI and those that do not the opportunity to find placement with UNFI’s retail customers with built-in inventory control and fulfillment tools, and it provides retailers with a brand discovery tool and with easy purchasing options.

“As for eCommerce capability that we provide to our brick-and-mortar customers, we’ve now added 215 stores to our platform in the past year, with another 120 in the process of being onboarded,” said Testa. “These customers can now offer online ordering, click-and-collect, and delivery to their shoppers.”

The community marketplace is powered by eCommerce software provider Mirakl. Adrien Nussenbaum, U.S. CEO and co-founder of Mirakl, told PYMNTS in an interview that the partnership allows UNFI to be more agile with its inventory, making it easier to onboard new vendors and making the platform more efficient for internal use.

Nussenbaum added, “And while the surge of grocery eCommerce is unquestionably tied to COVID-19, the popularity and convenience of online grocery are here to stay … market leaders are proactively responding with investments in a comprehensive omnichannel grocery experience.”

On the consumer side, Testa noted that UNFI has benefitted from independent retail partners adding eCommerce capabilities, helping them “to differentiate and adapt to the shifting consumer shopping behavior.” Additionally, he said, UNFI’s “data analytics and cross selling capabilities” enable the company to help its retail customers stay in tune with consumers’ changing desires.

The company has seen eCommerce strength not only with its B2B platforms or indirectly through retail partners’ B2C sales, but also through its own B2C sales. UNFI-owned Midwestern grocer and online grocer Cub has been driving sales through its online platforms. Testa noted that the company is “especially pleased with the traction eCommerce is getting at Cub,” highlighting the grocer’s 27 percent year over year growth in ecommerce sales.

In addition to leaning on eCommerce platforms to drives sales going forward, UNFI also made major investments in its private label products throughout the quarter, keeping pace with the industry-wide trend toward own-brand offerings. According to a presentation shared with analysts, the company added around 100 new products in 15 categories to its Field Day brand. Additionally, its Essential Everyday brand saw record high international sales.

Looking ahead, Testa said, “We will continue to lean in to high growth consumer segments and high margin categories for future owned brands expansion.”

Over all, UNFI net sales fell 5.9 percent year over year, a smaller decline than competitor SpartanNash, which experienced a sales dip of 7.0 percent.

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