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UNFI Looking to Expand Specialty Business

NEW YORK — United Natural Foods Inc. hopes to continue to increase its offerings of specialty products in the next few years — primarily through acquisitions — as a means of picking up additional business, Steven L. Spinner, president and chief executive officer, said here Tuesday.

Speaking at the annual Retail and Consumer Discretionary Conference sponsored by Barclays Capital here, Spinner said Providence, R.I.-based UNFI sees considerable room for growth by supplying specialty product lines — that may not necessarily be natural or organic — to independents and conventional operators. These items that might include grain-fed proteins or specialty cheeses, he noted.


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"We believe we can acquire companies and then build that part of the business to achieve higher growth rates among independents,” he explained. “That’s the channel where we test new products and added-value services, and we intend to focus on building that channel.

Spinner said UNFI also sees similar growth potential among larger conventional operators. “Most conventional chains buy specialty along with natural and organic products, and we need to have a broader offering in that space,” he noted.  “If our SKU mix can serve a broader customer base, then we don’t have to compete only on the price side as we did a couple of years ago.”

He also said UNFI prefers to open smaller distribution centers — what he termed “fold-out centers” — rather than mega-centers like the 800,000-square-foot facility it operates in York, Pa.

“Bigger buildings reach a point of diminishing returns where it’s hard to be efficient when the travel time from aisle to aisle is too long,” he explained.

“When we looked at where we were delivering to, we realized we were better off building fold-out centers because it’s more efficient to build a 500,000-square-foot facility closer to the distribution point than to ship over longer distances, and that’s the approach we plan to follow for at least the next five years.”

Besides consolidating four smaller distribution centers in Denver into a single facility set to open in June, UNFI plans additional fold-out centers in Wisconsin, Upstate New York and Northern California over the next 18 months, Spinner said.

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