Dive Brief:

• United Natural Foods, Inc. (UNFI) plans to boost efficiency across its network of distribution centers during the coming fiscal year as it looks to strengthen its finances and spur growth, company officials said during an earnings call Tuesday.
• The grocery wholesaler posted $7.3 billion in net sales during its fiscal fourth quarter, a record amount for the period that reflects an 8% year-over-year increase, Chief Financial Officer John Howard said during the call. Full-year sales were up 7.3% compared with 2021, to $28.9 billion.
• UNFI plans to step up its use of automation as a key pillar of its strategy, and this week announced that it will work with robotics company Symbotic to help improve its ability to provide retailers with better service.

Dive Insight:

UNFI intends to devote a “significant portion” of its capital expenditure budget for the coming year on sharpening its ability to serve its customers, and automation will be a core part of that strategy, CEO Sandy Douglas said during the earnings call.

The company is intent on doing a better job getting orders to retailers predictably and accurately, and believes technology like the artificial intelligence-driven gear it will procure from Symbotic will play a key role in that endeavor, Douglas said. He noted that UNFI’s supply chain capabilities were significantly disrupted by the pandemic, and said the company is looking to technology to smooth its business moving forward.

“The steps we're taking in 2023 build on our fiscal 2022 achievements and will serve as the launch pad for our reinvigorated investment strategy and elevated long-term growth trajectory,” said Douglas.

Under the arrangement with Symbotic, the tech firm will install robotics and software in five of UNFI’s distribution centers during the next four years. UNFI runs a total of 56 distribution centers in the United States and Canada, and distributes products from approximately 12,000 suppliers to about 30,000 customer locations, according to Douglas.

UNFI said it might opt to expand the deployment of the warehouse automation equipment to additional distribution centers, but did not provide details about when that might happen.

Asked during the earnings call about the risks of depending on automation, Douglas said UNFI would not become too reliant on any one solution. “In all cases we're pursuing multi-partner tracks to address any risk that might be inherent in one technology versus another,” Douglas said.

Howard said UNFI has recently made progress bringing human workers onboard even as it directs resources toward automation. The job vacancy rate at the company’s distribution centers declined to 4% during Q4 from 7% during the third quarter, while the percentage of unfilled driver positions fell by a percentage point, to 8%, he said.

“We view these improvements as a signal that the associate-friendly programs we've instituted are having a positive impact and we expect these vacancy reductions will lead to improvement in our operating expense trends over the next few quarters as new associates get up to speed,” Howard said. “This should drive efficiency gains, gradually reduce the need for third-party labor and improve the customer experience.”