United Natural Foods, Inc., a publicly traded wholesale distributor for food and grocery items, has launched its own retail media network, which it calls the UNFI Media Network.

The UNFI Media Network launched in May 2024. It extends digital marketing capabilities to more than 30,000 retail customer locations and about 11,000 brand partners, the distributor said.

Louis Martin, president of wholesale, United Natural Foods, Inc. (UNFI)

UNFI already offered what it called “professional services” to its clients. That included helping clients design the layout of a new store, shelving units, getting deals on refrigeration equipment, or getting better rates on credit card machines bought through the company.

What became clear was that retail media was a service UNFI’s independent and regional clients “were not getting full access to,” Louis Martin, UNFI president of wholesale, told Digital Commerce 360.

UNFI owns some retail banners, including Cub and Shoppers Value.

Why did UNFI start a retail media network?

There are a variety of reasons these independent and regional grocery stores were not getting full access, he said. One of those reasons is the scale at which the retailer can buy and sell product.

“If you’re a small independent grocer or a bodega or a mom-and-pop store with three to four or five outlets, you probably don’t have the bandwidth or infrastructure in place to be negotiating with Kraft on what they’re going to bring into your store,” Martin told Digital Commerce 360.

Another example is that a grocery company could have different store banners through which it sells, but they use different types of technologies, making it challenging to have a single point of entry to “that universe of retailers because they were all in different places,” he said.

As a result, he added, UNFI identified that developing a retail media network would create value for the grocery distributors and store operators it serves. In a sense, UNFI and those companies it served were “sitting on the sidelines as Walmart and Kroger and Amazon and Target were building their infrastructure for retail media.”

“Well, we wanted to make sure our customers had an ability to play in that space,” Martin said. “And not only did we think that internally, but a whole lot of our customers were coming to us and saying, ‘Help me think about this.’ We need to be able to compete and provide this to our consumers in our stores so that they have more tailored and differentiated shopping experiences — because we’re not going to beat Walmart on price, but we can offer a much better shopping experience, and this is a way to do that.”

How does a company develop a retail media network?

At first, Martin said, UNFI planned to build its retail media network capabilities in-house. And it began to do so.

But the distributor realized “really quickly” that developing such technology wasn’t its core capability. And its customers couldn’t wait for the time it would take UNFI to develop it, Martin explained. That led to UNFI meeting with technology providers figure out which retail media platform best matched its goals. Among those providers was Swiftly, which had the added benefit of having already been working with UNFI customers, Martin said, allowing the distributor to get references it felt were credible.

What is an example of a retail media network?

Retail media networks are a type of advertising platform where retailers can sell ad space on their own digital channels to third parties. Advertisers can target their ads using the retailer’s first-party data on customers, including information from loyalty programs. Then, advertisers can place ads on the retail media network provider’s websites, within mobile apps, or in stores via screens and displays. Those options provide an alternative to other targeting methods, such as those that rely on third-party cookies.

The on-site — or on-platform — component allows retailers advertising through the UNFI Media Network to “create a tailored shopping platform” via desktop and mobile.

In UNFI’s case, it’s not limited to UNFI-owned channels, Martin told Digital Commerce 360. Its retailer and supplier partners will be able to advertise off-platform in, for example, the Wall Street Journal as well as on Facebook and other social media platforms, Martin said. What differentiates it from other digital marketing is that they are targeting not just generic consumers from a marketplace or area. Instead, they can target individuals who they know are members of a loyalty program within UNFI’s system.

Based on that, he said, advertisers can “understand with a closed loop” if consumers convert from looking at a product via retail media advertising and then going to a UNFI-affiliated store or supplier website or app.

How does it work?

Retail media networks can work in different ways. For the UNFI Media Network, one way is through suppliers and brands couponing digitally. Another is being part of a retailer’s loyalty program.

Whereas some companies feel they’re devaluing their brand’s equity through couponing, Martin said, there are workarounds that still benefit both the advertising brand and the consumer. One example is that a brand can opt to donate a certain amount of points to a grocery store’s loyalty program if a consumer purchases the brand’s product. The consumer then accumulates points from that purchase that can eventually convert to dollars they can spend on groceries.

“But you did it through a series of transactions,” Martin said. “You didn’t do it because Heinz ketchup happened to be cheap that week, and so there’s a lot of interesting ways to reinforce that loyalty and that activation.”

Grocers and brands selling in UNFI Media Network-affiliated stores can also use in-store digital advertising. For example, some grocery stores might use digital screens on the doors in their refrigerated and frozen sections, highlighting specific products or displaying video advertisements.

It then becomes “plug and play based on what the retailer wants and prioritizes,” Martin said.

That could mean ads prioritizing categories, a retail banner, a loyalty program or in-store activity.

First-party data and user privacy

All this factors into the personalized advertising UNFI Media Network displays. But it’s also based on consumers’ shopping activity.

“What you’re going to see and what gets promoted to you is going to be very much tailored to meet those buying patterns and to help reinforce what you’ve already demonstrated are your preferences or your priorities as a consumer,” Martin said. “And more importantly, through our network, not only are you tailoring it, but one of the things that we thought was so important about Swiftly versus other retail media platforms out there is that the retailer retains 100% control of the information and data of that shopper, of that loyalty subscriber. They don’t have to give that away.”

Other retail media platforms, Martin said, declining to name them, will give companies access to the technology in exchange for user data. Those platforms, he said, are “interested in then using that data to create last-mile delivery connectivity.”

“Well, we’re not in the last-mile business,” Martin said. “We’re in the [business of] helping our shoppers, our business, our retailers grow their business in store. So we actually are able to deliver on the promise that you retain your shopper loyalty data. It is yours. It is private to you. We don’t need to see it to activate the programming that we have and we are able to provide the right ROAS [return on ad spend] analytic analytics to the suppliers without having to sacrifice that privacy either.”

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