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CHICAGO – H-E-B has regained the leadership position in the sixth annual dunnhumby Retailer Preference Index (RPI), an examination of the U.S. grocery market released today by data science firm dunnhumby. Costco Wholesale holds the second position in this year’s index, followed by Amazon. Wegmans held the fourth position for the third consecutive year.
Rounding out the top 15 are Sam’s Club, Market Basket, Amazon Fresh, Trader Joe’s, Winco, and BJ’s Wholesale, Target, Aldi, ShopRite, Walmart Neighborhood Market, and Walmart.
“We believe this report can serve as a blueprint to help grocers improve their competitive positions, while providing key findings for marketing and consumer preferences,” said Matt O’Grady, president of the America’s at dunnhumby.
The dunnhumby RPI ranks grocers through a combination of financial performance with customer perception. It includes the largest 63 retailers in the industry that sell everyday food and non-food household items. The financial data used in the dunnhumby model comes from Edge Ascential, and the customer perception data is sourced from dunnhumby’s annual survey of 10,000 American grocery shoppers.
Based on dunnhumby’s analysis of 30,000 consumers surveyed between October 2021 and November 2022, there are five drivers of the value proposition:
- Price, promotions and rewards.
- Speed and convenience.
- Quality.
- Digital.
- Operations.
“In 2017, we set out on a journey to understand how customers’ preferences and retailers’ financial results predicted which retailers would last,” O’Grady said. “But little did we know that in the ensuing six years consumers and retailers would have a lifetime of difficulties including a pandemic that shook consumer behavior and the global economy, a prolonged period of supply change struggles, and a once-in-a-generation inflation crisis.”
A ‘fierce battle’ at the top
This year’s survey identifies a “fierce battle” among the top grocery retailers, dunnhumby said. In 2020 and 2021, the pandemic helped propel and then solidify Amazon as the top grocery retailer over H-E-B, Trader Joe’s and Wegmans, since Amazon’s value proposition excelled at both saving customers time and providing a seamless eCommerce experience. But H-E-B reclaimed the top spot due to its superior ability to deliver a combination of better savings and better-quality experience/assortment.
Digital has staying power but is no longer as key to driving short term retailer momentum as it was in the preceding two years, according to dunnhumby.
Earlier iterations of the index found that half of Americans were buying groceries online following a pandemic-related 11-point rise during the preceding two years. Despite historic inflation, over half remained online grocery shoppers in 2022, dunnhumby said. As a result, there are 9.4 million more omnichannel households today than there were in 2019 with a combined grocery budget of $4.9 billion.
Retailers in the top quartile outperform the rest of the market in delivering superior customer benefits, savings, or both. Top quartile retailers have an average compounded average growth rate (CAGR) of 7.3% compared to third quartile retailers with a 3.2% CAGR. In addition, 59% of customers of first quartile retailers have a strong emotional connection with retailers compared to 45% of customers of third quartile retailers.
·Amazon is still superior in online shopping, but all other online retailers are closing the gap, according to this year’s index. The top six retailers for digital are Amazon, Amazon Fresh, Target, Sam’s Club, Walmart, Walmart Neighborhood Market.
Club stores are gaining momentum with three of the top 10 spots in the first quartile now occupied by club stores. BJ’s Wholesale was the biggest mover in the RPI over the last three years, climbing from 27th place to 10th place in 2022. Schnucks climbed 16 spots. Other significant gainers are Food Lion, up 14 spots, Food4Less/FoodsCo, up 12, Weis, up 10, and Food City, which climbed 9 spots.
These retailers have have two things most in common, according to dunnhumby: superior ability to navigate supply chain issues, and existing strengths or made significant gains in their competitive positions in terms of helping customers save money.
