A major food distributor delivering more than 250,000 natural, organic, and conventional products to more than 30,000 grocers nationwide just closed the books on a not very successful fiscal 2023. But United Natural Foods sees the path back to business growth beginning with even bigger doses of digital transformation.

“Our transformation focus is enhancing our digital offering, which is another way that we can more effectively connect our customers and suppliers to grow their businesses collectively and profitably,” CEO Sandy Douglas told analysts on a recent year-end earnings call. “Digital transformation is the key enabler to fully activate the commercial opportunities in our ecosystem, opportunities that many of the large retail chains are activating now.”

United Natural Foods makes a digital transformation push

In the past two years, United Natural Foods has hired Louis Martin to the newly created position of chief digital and transformation officer. It also opened Marketplace by UNFI, a B2B marketplace.

But at least in fiscal 2023, the digital efforts have yet to take full effect. United Natural Foods does not break out ecommerce sales. But for the fiscal year ended July 29, the distributor’s other sales were flat at $2.253 billion. That compares with $2.183 billion in fiscal 2022. That includes international customers outside of Canada, foodservice, ecommerce, the military, and other channels.

In comparison, total sales grew to $30.27 billion. That’s up 4.6% in fiscal 2023 from $28.92 billion in fiscal 2022. Net income was $24 million. That compares with $248 million in the prior fiscal year.

In fiscal 2023, United Natural Foods pumped $290 million in overhauling its distribution center operations and other technology, according to the company’s just-filed annual report. In fiscal 2024, United Natural Foods plans to infuse another $400 million into its ongoing digital transformation. It wants to “automate, optimize and expand our distribution network, and finance our technology platform investments,” the company says.

A big part of United Natural Foods’ major spending on better technology and operations is efficiency. It gives its 30,000 grocers faster and easier access to ordering and receiving orders, Douglas told investors.

“Our newest value-added supplier program, UNFI Insights, provides suppliers with granular understanding of sell-through data across natural and conventional channels directly through the myunfi.com supplier portal,” he told analysts, according to a transcript from SeekingAlpha.com.

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