Whole Foods Pressured to Minimize Reliance on UNFI
Activist investor Jana Partners is pressuring Whole Foods Market to reduce its reliance on its biggest supplier, United Natural Foods Inc., and bring distribution in-house, potentially causing issues, according to some analysts.
Whole Foods currently lacks the advanced logistics systems some other retailers have, and an in-house distribution plan could actually add to costs, say analysts.
The chain sourced nearly 33 percent of its supplies from UNFI in 2016. Aside from UNFI, Whole Foods sources goods from local, regional, and national producers, specialty wholesalers, and direct distributors, which analysts say is a fragmented market where the chain has weaker price leverage than it does with UNFI.
Ajay Jain, an analyst at Pivotal Research Group, notes, "Even major self distributing chains like Kroger ... also rely on suppliers like UNFI because they can procure products more easily than the retailer." UNFI has an agreement to continue its supply relationship with Whole Foods through September 2025, reports Reuters. Full Story
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