Texans love their home-based H-E-B and so, it seems, does the rest of America after it was named the top U.S. grocery retailer in the seventh annual Dunnhumby Retailer Preference Index (RPI).
H-E-B is the first grocery retailer to be recognized three times as number one in the RPI ranking after a nationwide study that examined the circa $1 trillion U.S. grocery market. In doing so it surpassed Amazon
In this year’s rankings, Amazon placed second and Costco third, rounding out the top three grocers in the U.S. for a second year in a row. The seven other retailers in the top 10 are: Market Basket, Sam’s Club, Wegman’s, Aldi, Shoprite, Walmart Neighborhood Market, and Walmart.
Dunnhumby, best known for its work with loyalty cards for U.K. market leader Tesco and Kroger
“Knowing your customer and your competitive positioning regarding customer needs will be critical for retailers to scratch out any organic growth in 2024. Customers are re-evaluating their opinions of retailers more than ever and that will only intensify in the coming months due to the economic headwinds facing consumers,” said Matt O’Grady, Dunnhumby’s President of the Americas.
“In this year’s RPI, we’ve 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,” he added.
Lowest Growth Since 2009
The report includes the largest 65 retailers in the industry that sell everyday food and non-food household items. The financial data used comes from Edge Ascential, and the customer perception data is sourced from Dunnhumby’s annual survey of more than 10,000 American grocery shoppers, covering price, promotions and rewards, quality, digital, operations, and speed and convenience.
Dunnhumby forecasts the U.S. grocery market sales growth will be 0.5% to 1.5% in 2024 – one of only three times in the last 30 years with growth below 1% and the slowest growth rate since the global financial crisis in 2009. This slowdown is because of 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, the company said.
It also said that competitive intensity is at an all-time high in a fourth year of economic uncertainty. Customers are re-evaluating retailer value propositions more than ever, ensuring those value propositions align with their needs.
Savings through low base prices and highly personalized promotions and rewards remains the strongest driver of better long-term retailer performance, followed by maintaining high quality assortment.
Market Basket, Winco and Aldi are the top three in the RPI’s ‘price, promotions, reward category, with the strongest combination of mass and personalized pricing levers. Wegman’s, Trader Joes and The Fresh Market are the top three for quality. Wegman’s has held the top position for this every year of the RPI.
H-E-B Wins On Long-Term
H-E-B topped the RPI ranking because it has the strongest customer value proposition for the long-term, according to the research. This is thanks to its “superior ability to deliver a combination of better savings and better experience/assortment”, supported by time savings through superior digital capabilities.
Last year the grocer diversified its formats and rebranded its convenience stores as Fresh Bites, opening its first new store under the name in April and now at three outlets. Meanwhile, it expanded its no-frills discount format Joe V’s, which debuted in Houston in 2010.
H-E-B has also opened more dedicated e-commerce facilities to help fulfill pick-up and delivery orders, opening two facilities in 2023, including a first 100,000-sq-ft standalone fulfillment center, bringing to seven the online fulfillment centers it has opened since debuting in 2018.
Amazon has been in the top three every year of the RPI and has ranked first twice through a segmented approach, rather than building a customer value proposition that equally attracts different segments of the general population.
Two Kroger banners (Kroger and Fry’s) made it to the top quartile for the first time thanks to improvements in overall price perception in 2023, a year when saving customers money mattered more than any year in this study. Two other Kroger banners (Fred Meyer and King Soopers) were also among the biggest climbers in the ratings.