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UNFI unlikely to pursue retail acquisitions: CEO

Wholesaler would instead support retail customers that seek to buy divested stores

Mark Hamstra

January 9, 2023

2 Min Read
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Having better visibility into product supply conditions, and better collaboration around product availability, is the top priority for UNFI’s retail customers, Douglas said.UNFI

United Natural Foods Inc. would not likely be interested in making any retail acquisitions that might arise as a result of the pending Kroger-Albertsons merger, Sandy Douglas, CEO of UNFI, suggested at an investor conference on Monday.

UNFI has considerable opportunities to expand its growth as a wholesaler, and the company plans to continue to focus on its retail business as a learning opportunity rather than expanding its retail holdings, he said at the 2023 ICR Conference.

Although he declined to comment specifically on the store divestitures that could arise as a result of antitrust concerns around the Kroger-Albertsons deal, Douglas said UNFI would probably support the retail customers of its own wholesale operations if they decided to purchase any stores that may become available.

“We more than likely would be by the side of an acquirer in a situation like that as opposed to being an acquirer ourselves,” he said.

Douglas said the company was focused on driving sales growth by providing products — and, increasingly, services — to existing retail customers, an extension of its goals when it acquired Supervalu in 2018. Although the company had originally planned to sell off its retail holdings, which consist of the Cub Foods and Shoppers chains, it has since said it plans to continue to operate them.

Douglas did say that UNFI could be open to other merger and acquisition opportunities, however.

“We are going to look at M&A from two very important criteria,” he said. “First, that it helps us build capability to run our core strategy, and second, that it provides excellent financial return. If it does not do both of those things, it is unlikely we would proceed.”

As previously reported, Kroger and Albertsons are expected to divest hundreds of retail locations to meet antitrust concerns in markets where both companies have considerable overlap. The proposed $24.6 billion merger is expected to close next year following what is expected to be a careful review by regulators.

In other statements from the ICR conference, Douglas said that the company is making progress on improving its supply chain performance, which he said has been in “survival” mode during the past three years because of pandemic disruptions.

“The biggest opportunity is the supply chain,” he said.

He said the company has an opportunity to improve execution across its supply chain operations, which he described as an “amalgam of supply chains” formed through previous acquisitions and serving a diverse array of retail customers.

Having better visibility into product supply conditions, and better collaboration around product availability, is the top priority for UNFI’s retail customers, Douglas said.

“Fill rates are improving, but they’re still below pre-pandemic levels,” he said. “Running a retail store with uncertain assortment is hard.”

About the Author

Mark Hamstra

Mark Hamstra is a freelance business writer with experience covering a range of topics and industries, including food and mass retailing, the restaurant industry, direct/mobile marketing, and technology. Before becoming a freelance business journalist, Mark spent 13 years at Supermarket News, most recently as Content Director, where he was involved in all areas of editorial planning and production for print and online. Earlier in his career he also worked as a reporter and editor at other business publications, including Financial Technology, Direct Marketing News, Nation’s Restaurant News and Drug Store News.

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