Latest news with #ScottMushkin
Yahoo
2 days ago
- Business
- Yahoo
UNFI cyberattack: wholesaler 'still shipping' to customers, CEO says
United Natural Foods continues to ship to customers as the US grocery wholesaler and retailer responds to the cyberattack that has hit the business, its CEO has said. In a stock-exchange filing on Monday (9 June), UNFI said it had detected 'unauthorised activity' on 'certain' IT systems on Thursday last week. The company said it 'promptly' responded by implementing containment measures, including 'proactively taking certain systems offline', which temporarily affected its ability to fulfil customer orders. UNFI published its fiscal third-quarter financial results yesterday and, on a call with Wall Street analysts to discuss the numbers, the company's management faced a series of questions about the cyberattack and its impact on operations. Asked by R5 Capital's Scott Mushkin if UNFI could supply clients, UNFI chief executive Sandy Douglas said the company was able to do so "on a limited basis, and it depends on the technology platform". He added: "Some are in further along on the recovery than others but we are partnering with customers across the country and across our formats in various short-term modes to serve their needs as best as we possibly can. It's getting increasingly positive each day but still work in progress." UNFI is among the largest wholesale distributors of food products throughout North America. It distributes branded and own-label products to more than 30,000 grocery stores, including Amazon-backed Whole Foods Market, as well as independent retailers. Douglas declined to estimate how much of UNFI's deliveries the company was able to make. "The entire process is very fluid and ongoing," he said. "The way I would describe it is each day is better and we're working in a very customised way by market and by customer to serve the capability that exists. "I wouldn't want to give percentages at this time because it's changing every day. It's obviously the top priority of the company to serve our customers as best as we possibly can while we're working to, as rapidly and safely as possible, bring our systems back online." UNFI's food brands include Wild Harvest, Culinary Circle, and Essential Everyday, covering natural, organic, and specialty food products. The group runs 76 retail stores under the Cub Foods and Shoppers chains but the wholesale business accounts for more than 95% of its annual revenue. Douglas was asked later on the call if there are elements of UNFI's operations that made the business "more susceptible" to a cyberattack and whether the breach would mean the company would reassess its investment plans in areas like IT security. "We have, like a lot of companies, a significant investment in process around the cyber area," the UNFI chief said. "It's highly dynamic and rapidly growing and the threat actors out there are always looking for ways to innovate and find new ways to penetrate systems. "We rigorously review and invest in this cyber infrastructure and capability in the company. We use multiple different external benchmarks to assess ourselves and, really hold nothing back in this area. "Having said that, we just got penetrated. We will be continuing to look at every aspect of our defence, every aspect of how our tools are working and what may be necessary to bolster it going forward. It's clearly an area that requires a tremendous amount of focus from companies today and will continue. "How that affects capex going forward? Ultimately, it is a choice and we have and will continue to prioritise cyber investment but I don't think it changes the ultimate big picture for UNFI on capital. But I think a company needs to be both high capability and humble when it relates to cybersecurity and this event is just a demonstrated example of why." For the fiscal year ending 2 August, UNFI reported net sales of $30.98bn, a 2.3% increase from fiscal 2023. The 2024 fiscal year included 53 weeks, compared to 52 weeks in the prior year. Despite the sales growth, operating income fell sharply to $8m, a 93.3% decrease from the previous year. Announcing the results in October, UNFI attributed the decline primarily to increased operating expenses, restructuring, acquisition and integration-related costs, as well as losses on asset sales and charges. It booked a $112m net loss in fiscal 2024, compared with a $24m profit a year earlier. In January, the group set out plans to 'realign' its commercial wholesale organisation into two 'product-centred' divisions with 'focused' sales teams. In the nine months of UNFI's current financial year, a period that ran until 3 May, net sales stood $24.09bn, against $22.83bn in the corresponding nine months in the previous fiscal year. The company booked a nine-month operating income of $47m, compared to $6m a year earlier. It posted a net loss of $31m, lower than the $75m booked in the first nine months of 2023/24. "UNFI cyberattack: wholesaler 'still shipping' to customers, CEO says" was originally created and published by Just Drinks, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Miami Herald
3 days ago
- Business
- Miami Herald
Walmart is quickly gaining ground in the grocery industry. What does that mean for other retailers?
For generations, Giant Eagle sat atop the grocery industry in its home base of Pittsburgh. As recently as 2019, the storied supermarket operator commanded nearly 30% of the grocery market in the Steel City region, putting it well ahead of Walmart, its closest competitor, which claimed about a fifth of the market that year. But Giant Eagle's once-formidable advantage has slipped away over the past few years, and the retailer is now running neck-and-neck with Walmart, which snuck up in 2022 to claim the No. 1 spot in the Pittsburgh grocery market with a share of more than 25%, compared with only 21% for Giant Eagle, according to figures compiled by Chain Store Guide. Giant Eagle closed some of the gap with Walmart in 2023 and regained its position as the area's top grocer last year with a 24% share - putting it less than 1 percentage point ahead of Walmart. Walmart's strength in the Pittsburgh area is hardly unique. The retailer was the top grocery retailer in other metro areas in 2024, including Raleigh, North Carolina, - where it held a substantial lead over Ahold Delhaize-owned Food Lion - and Richmond, Virginia, where it edged out Kroger, Chain Store Guide data cited by Axios shows. Nationally, Walmart attracted over a fifth of consumer spending on groceries during the 12 months that ended March 31, well ahead of No. 2 Kroger, which claimed a market share of just under 9%, according to statistics from Numerator. Walmart's grocery market share in the U.S. has slowly increased over time, while Kroger and Albertsons have lost ground and Publix's share has stagnated, data from Numerator shows. A mounting challenge for traditional supermarkets Walmart's national scale as a low-price grocery seller has forced traditional supermarket chains long accustomed to defining the food retailing landscape to rethink their value proposition. Beyond its reputation for low prices, the Arkansas-based retailer has increased the quality of the food it sells and made other leaps forward, leaving competitors scrambling for answers, said Scott Mushkin, CEO of R5 Capital and a longtime grocery industry expert. "You're really dealing with a company that's taking the advantages of a traditional grocer away from them," Mushkin said about Walmart. The situation is taking on new urgency as Walmart continues to invest heavily in its delivery capabilities even as many traditional grocers let their digital infrastructure stagnate, according to industry analysts. Walmart has devoted substantial resources to automating its supply chain infrastructure, which has helped the company sharply reduce delivery costs. The retailer has opened several "next-generation" fulfillment centers, which use automated systems to simplify fulfillment processes, and announced last summer that it would add five new robot-equipped grocery distribution facilities. Walmart's ongoing innovation in e-commerce enables the retailer to cost-effectively expand its reach with shoppers who might not want or be able to visit its brick-and-mortar stores while also giving it an advantage in connecting with digitally savvy shoppers, experts said. "What's so amazing is how Walmart has been able to overcome the convenience gap" that stems from its reliance on big box stores that often are not as close to shoppers as local supermarkets, said Jordan Berke, a former Walmart executive in China who is now CEO of Tomorrow Retail Consulting. "They've been able to just delete that disadvantage by having the best online grocery proposition of any branded grocer, and so we see from city to city customers feeling like Walmart is their local convenient grocer because they can get an order faster and more completely than they can from their local regional and save money in the process," Berke said. Walmart's decision to invest heavily in its digital capabilities over the past decade has created a powerful "flywheel" effect that will be difficult for most other retailers to match, especially those that outsourced their e-commerce operations to companies like Instacart and DoorDash, said Barry Clogan, a veteran grocery e-commerce specialist who is CEO of retail media consulting firm Retailmediatools. "The challenge for a lot of grocers in the U.S. is they went to this e-commerce thing [thinking], 'I'm not sure I can ever make it profitable,'" said Clogan. "But you had to make a leap of faith. [Walmart] took the leap of faith. They built the internal muscle. They've created incredible data. They're now able to monetize that data and provide a closed loop of how they get better at utilizing that data" to drive sales. Walmart's dominance of the grocery industry is increasing rapidly. Ten years ago, Walmart's U.S. grocery sales were less than Kroger's and Albertsons' combined. In its latest fiscal year, the mass retailer generated $276 billion in U.S. grocery sales - about 21% more than what the two supermarket giants took in together during their most recent fiscal years. Walmart's U.S. e-commerce operations were profitable for the first time during the first quarter of its current fiscal year, the company reported in May. Developing differentiation strategies When Kroger and Albertsons tried to merge, they made the case that they needed to combine in order to compete more effectively with Walmart, Costco and Amazon in the highly competitive grocery sector. Regulators argued, however, that allowing Kroger and Albertsons to combine would be anticompetitive, causing the deal to fall apart. Giant Eagle, like other supermarket companies, has tried to win over shoppers by lowering prices. The company has advertised multiple investments it's made in price reductions, including the $25 million it spent last year to cut produce prices by an average of 20%. Also last year, Giant Eagle agreed to sell its fleet of about 270 convenience stores to Alimentation Couche-Tard of Canada in a deal set to close later in 2025. The grocer intends to direct much of the $1.6 billion it expects to collect from the deal into lowering costs for shoppers, the Pittsburgh Post-Gazette reported. Analysts suggested that instead of trying to lure shoppers with lower costs - battling Walmart on its own terms, in essence - grocers should look to exploit their inherent strengths as local and regional retail mainstays. "It's very difficult to compete with Walmart on price. They just have structural advantages in their size, their economies of scale, their relationships with vendors" that are hard for retailers other than warehouse operators to keep with, said R.J. Hottovy, head of analytical research for which tracks and analyzes foot traffic at retail locations. "You have to differentiate yourself in other ways. That might be product mix, that might be level of service." Regional grocers and specialty chains, for example, enjoy advantages in terms of the freshness of the goods they sell and their ability to present them that are hard for Walmart to match, said Robert Altun, a research analyst who covers Walmart for RetailStat. "Smaller grocers are going to win if they find a niche … if they have products that Walmart's not going to carry because it doesn't fit their margin profile," Altun said. Frazier Farms Market, a three-store grocery chain in the San Diego area that focuses on natural foods, is an example of a retailer that has found success by emphasizing its unique attributes. All of the company's stores are within a short drive of a Walmart supercenter. The retailer, which runs locations in La Mesa, Oceanside and Vista, California, has benefited from its agility and ability as a local retailer to fine-tune its selection to meet its customers' needs, said owner Matt Frazier. "We can introduce new, creative things that they're just not going to do," Frazier said, referring to Walmart. Frazier Farms focuses on carrying products shoppers can't easily find elsewhere, such as less common cuts of meat, including between 12 and 15 varieties of gourmet steak, he said. The retailer's meat selection includes a cut called a Denver steak that has recently gone viral on TikTok, and Frazier said that employees make a point of explaining the attributes of products to visitors to its stores who might not be familiar with them. "We're able to offer unique things, and we're able to bring in brands that maybe hit the market, maybe they're a little smaller, [but] they get trendy," Frazier said. Sprouts Farmers Market is another example of a retailer that is thriving despite Walmart's myriad advantages. The health-focused grocer, which operates around 440 locations in 24 states, has posted steadily increasing same-store sales over the past two years even as other grocers, such as Kroger and Albertsons, have recorded relatively weak growth by that measure. In addition, the average number of visits to each Sprouts location increased 4.2% year over year, while visits to stores across the wider grocery space rose less than 1%, according to data from Sprouts lagged behind other retailers in terms of comparable-store sales as recently as 2023. But the company has reversed its fortunes, in part by developing smaller stores that cost less to build and operate. Sprouts has also intensified its efforts to build ties with the health-focused shoppers it targets. Even as other grocers find ways to stand out on various levels, however, Walmart's remarkable success as an omnichannel retailer gives it powerful advantages that are likely to continue to pose challenges to its competitors, Berke said. "We don't see any retailer globally that's been able to pull together the formula that Walmart is [rolling out] currently and having the success that they're having," he said. Copyright 2025 Industry Dive. All rights reserved.
