H-E-B was named as the top grocery retailer in the United States, according to Dunnhumby, a specialist in customer data science.
The rest of the top ten are:
- Market Basket
- Sam’s Club
- Walmart Neighborhood Market
The index, according to Dunnhumby, ranks grocers by combining financial results with customer perception. It includes the largest 65 retailers that sell everyday food and non-food household items. As established by the firm, the five drivers of the customer value proposition are price, promotions and rewards, quality, digital, operations, and speed and convenience.
Retailers in the index’s top quarter enjoy a five-year CAGR of 8.5% versus 3.6% for retailers in the lowest quarter. In addition, 59% of customers shopping at first-quarter retailers have a strong emotional connection with their store of choice compared to 41% of the bottom-quarter storerunners’ customers.
As it looks ahead through 2024, Dunnhumby has forecast that U.S. grocery market sales growth will track between 0.5% and 1.5%, one of only three times in the last 30 years when growth might be below 1% and the slowest growth rate since the Great Recession of 2009. The slowdown is due to the economic headwinds still facing consumers, slowing disposable income growth, lower savings rate, higher debt, cost to service consumer debt and the drying up of pandemic-related savings buffers. However, those aren’t all the challenges facing retailers. Competitive intensity is at an all-time high in a fourth year of economic uncertainty, Dunnhumby asserted. Consumers are re-evaluating retailer value propositions, ensuring they align with personal needs.
The prime driver of better long-term performance is the combination of savings through low base prices and highly personalized promotions and rewards. High-quality assortments are the next major driving factor. Market Basket, Winco and Aldi came in as the top three in the Index’s Price, Promotions, Rewards pillar due to their strongest combination of mass and personalized pricing levers. Wegmans, Trader Joe’s and The Fresh Market were the top three in the Quality pillar. Wegmans has held the top position in the Quality ranking every year of the RPI, Dunnhumby pointed out.
H-E-B topped the index ranking with the strongest customer value proposition for the long-term, which the research firm credited to a superior ability to deliver a combination of better savings and better experience/assortment, supported by time savings through superior digital capabilities. Amazon has made the top three every year of the RPI and has ranked first twice, buoyed by its segmented approach rather than by building a customer value proposition that equally attracts different segments of the general population.
Two Kroger banners, Kroger and Fry’s, advanced to the top quarter for the first time in the index’s history, helped by improvements in overall price perception achieved in 2023. Two other Kroger banners, Fred Meyer and King Soopers, were among the biggest climbers in this year’s RPI ranking, coming in just below the first quarter
“Knowing your customer and your competitive positioning regarding customer needs will be critical for retailers to scratch out any organic growth in 2024,” said Matt O’Grady, dunnhumby’s President of the Americas. “In this year’s RPI, we illuminate how the consumer views the grocery market and how different retailers are meeting the general population’s needs as well as the needs of different consumer segments.”