The Friday Checkout: Why Sprouts' self-distribution expansion is timely

Miami Herald

2 days ago

Distribution has been a hot-button issue for the grocery industry this year, with United Natural Foods, Inc.'s cybersecurity attack taking center stage along with C&S Wholesale Grocers' recent bid to acquire SpartanNash.
With all eyes on the food supply chain, grocers' efforts to build out self-distribution networks couldn't be more timely.
Self-distribution was a major talking point during Sprouts Farmers Market's second quarter earnings call earlier this week. Though UNFI's near shutdown was "minimally disruptive" to the fast-growing specialty grocer, according to CEO Jack Sinclair, its expanding self-distribution network is looking more and more appealing these days. It would enable the specialty grocer to have "more control over [its] supply chain while minimizing operations and supply chain risks," Sinclair told investors.
Sprouts runs a network of distribution centers across its operating footprint, with around 80% of its stores located within 250 miles of one. The grocer is expanding that network, with a new DC set to open in Northern California next year. It's also bringing its fresh meat and seafood sourcing in-house, according to an April investor presentation.
"We're going through a transition period," Sinclair said about the ongoing efforts to establish a more self-sufficient supply chain. He added that Sprouts will continue to take over distribution of "key product categories."
Sprouts is far from the first food retailer to turn to self-distribution. Ahold Delhaize US, for example, has ADUSA Distribution as well as ADUSA Transportation to serve all of its stateside banners. This self-distribution push began in 2019 and, as of 2023, included around two dozen facilities along the East Coast.
Walmart is also part of this trend. This year alone, the retailer opened its first owned-and-operated case-ready beef facility, purchased a distribution center in Utah and debuted a Sam's Club distribution center in Florida.
Self-distribution is difficult to carry out for smaller, independent grocers that lack the resources to build and operate supply facilities. But for larger retailers, it can help save money and avoid catastrophe if third-party distributors can't deliver.
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Impulse find
Stop & Shop makes a 'Happy' cameo
Netflix's hit movie "Happy Gilmore 2" features a laundry list of star cameos, including Ben Stiller, rapper Eminem, NFL player Travis Kelce and pro golfers Scottie Scheffler and Rory McIlroy.
And then there's our personal favorite: Stop & Shop.
The Northeast grocery chain's Clifton, New Jersey, store plays a key role early on in the film. Happy Gilmore, played by Adam Sandler, is shown working in the store's produce department when a pesky customer starts prodding him about playing professional golf again. (Spoiler alert: Happy doesn't let the pestering go unpunished.)
"We're grateful to be part of such a culturally relevant moment - and excited for viewers to spot our aisles in this laugh-out-loud sequel," Stop & Shop said in a LinkedIn update.
The star turn will, no doubt, raise awareness of the grocer's brand. "Happy Gilmore 2" garnered 46.7 million views in its first three days on Netflix, according to Variety, marking the best opening performance ever for a Netflix film.
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