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United Natural Foods Whisper

Research Question: Will UNFI’s upgraded warehouse systems improve its margins?

Companies: United Natural Foods (UNFI)

 

Blueshift’s initial research on UNFI indicates company initiatives to improve efficiencies are receiving mixed reviews, making it questionable whether it will improve margins.

 

Observations
  1. To improve gross margin and performance with both supplier and retail customers, UNFI is altering its warehouse system to include a revamped management structure, better labor schedule, improved systems/technology, simplified ordering system, and capacity to handle higher volumes. UNFI is also implementing a new product identification program to increase and promote new products while dropping weak ones.
  2. A Blueshift primary interview with a co-op ordering manager for a Wisconsin food company revealed that recent improvements to UNFI’s online ordering software have made his buying experience easier and more time efficient. He does caution that UNFI’s administrative reshuffling has made receiving delivery information more complicated, and also mentioned that UNFI’s shortened ordering cycle presents problems in maintaining consistent buying patterns and is concerned he will miss out on larger order discounts moving forward.
  3. UNFI is also attempting to shift its customer base to expand service to larger chain retailers, with the company’s recently re-designed website aimed at improving supplier support and transportation management. Thus far in 2012, UNFI has been successfully expanding its volume through increased distribution to traditional supermarkets, none more advantageous than its business with Safeway, the main driver behind the company’s Q2 sales boost.

To gauge whether UNFI’s new initiatives will help improve margins, Blueshift will gather data and issue a market research report from sources in the following areas: UNFI customers (including co-ops, specialty chains, and large conventional supermarkets), UNFI product suppliers, grocery industry specialists, software developers and system integrators, and software/ERP industry specialists.