UNFI Case Study: The Value of Differentiation in Retail

March 3, 2025           5 minute read

What makes your store stand out? 

In an increasingly competitive grocery industry, differentiation is vital for independent retailers looking to distinguish themselves from mass/club offerings and local competitors. Attempting to compete on price alone rarely works, and competing on location is only effective until a competitor sets up shop nearby.  

Instead, independent retailers need to find more impactful ways to carve out a meaningful position in the market that keeps target customers coming back. 

In this UNFI case study, we’ll take a closer look at the key elements of differentiation and how two retailers found success partnering with UNFI to distinguish themselves for the right reasons. 

Differentiation Defined 

Differentiation comes down to making your business distinct from your competitors by offering a unique value proposition – giving customers something they can’t get elsewhere. For independent retailers, it’s essential, and it offers several key benefits:

• It builds brand loyalty. 

• It helps increase market share.

• It improves profitability. 

How do you differentiate your store? It all starts with creating a great in-store experience. Building on that foundation, you can focus on several key areas to set your store apart: curating a unique product assortment, delivering exceptional customer service, and leveraging technology. Sustainability and wellness initiatives are also powerful ways to differentiate. The key is finding what draws customers to your store rather than a mass/club competitor.

Differentiation Success Stories 

UNFI has partnered with many independent retailers to help them define and execute a differentiation strategy. One example is Sherm's Thunderbird Market, a local retailer in Oregon. When a large grocery store chain opened across the store from one of their locations, they took the opportunity to differentiate themselves. Working with UNFI’s Shelf Services team, they removed slow movers and expanded popular categories like prepared meals, value products, private label items, and larger pack sizes. They used UNFI’s store mapping and assortment insights to better stock and showcase these differentiators, which in turn enhanced the shopping experience and their market position. 

“[Working with UNFI’s Shelf Services team has] definitely kept us competitive [in our market]. We do a much better job than our competition on private label, and [UNFI’s Shelf Services team] did a great job getting those products in the right places so our customers can see the value of them. We also typically carry a lot more SKUs than other retailers, so for us, giving the customer that selection is key - and that’s one of the things they really helped us do, was organizing our products in such a manner that it calls out the sheer size of the selection we offer,” said Dack Doggett, Operations Manager, at Sherm’s. 

Hollywood Markets is another independent retailer that successfully differentiated itself in partnership with UNFI’s Store Design and Shelf Services team. The Detroit-area grocery chain underwent a complete store redesign in a growing area, harnessing an opportunity to serve their target shopper while building on their identified strengths – specialty meats and customer service. 

Aside from this success in the meat department, Hollywood Markets has found an opportunity to differentiate by tailoring their experience to younger families while serving their established customers. 

Andy Welch, Buyer at Hollywood Markets, said, “Our target customer is younger families who are building their lives with their children. It can be hard to capture this group—they’re on the move, they’re taking the kids to sports practices and activities, but are still making an effort to eat together at home. Listening to these customers is key for us, and making sure we meet their needs by offering new, fresh, exciting products as well as grab-and-go or more convenient options. 

Welch continued,  “However, a large portion of our existing customers want a more service-oriented experience, so we need to make sure we’re taking care of both of those customers. […] What sets us [Hollywood Markets] apart is our ability to create long term relationships with customers and make sure we provide them with the products they want and need.” 

For more on these success stories and differentiation strategies, download our case study.