CINCINNATI — For the third straight year, Texas chain H-E-B was rated as the No. 1 US grocery retailer in the eighth annual dunnhumby Retailer Preference Index (RPI), with value grocer Market Basket pushing Amazon out of the No. 2 spot to edge past Costco Wholesale.
This year’s RPI, based on retailer performance in 2024, brought some big changes in the top five finishers. Warehouse-style grocer WinCo Foods vaulted to No. 4 from No. 14 last year, while deep discount chain Aldi jumped to No. 5 from No. 7. Those moves knocked Amazon and Sam’s Club out of the top five, to No. 6 and No. 8, respectively. Market Basket climbed to second from fourth, and Costco held firm at No. 3.
Released this week, dunnhumby’s RPI evaluated 72 of the largest retailers in the $1 trillion US grocery market and ranked them based on consumer emotional sentiment, execution in meeting customer needs and financial performance. The customer data science firm noted that its index differs from other grocery retail rankings by combining customer perception with financial results.
Dunnhumby gauged customer perception through its survey of 11,000 US grocery shoppers in September and October 2024, while retailer financial performance was assessed using data from Flywheel. Retailers examined included supermarkets and neighborhood stores, superstores and hypermarkets, warehouse clubs and cash-and-carry stores, food discounters and pure-play online operators.
Rounding out the top quartile of grocery retailers ranked this year were Trader Joe’s at No. 7, Wegmans Food Markets at No. 9, Wakefern Food Corp.’s ShopRite at No. 10, Walmart at No. 11, Walmart Neighborhood Market at No. 12, Publix Super Markets at No. 13, Meijer at No. 14, BJ’s Wholesale Club at No. 15, Lidl at No. 16, Kroger at No. 17 and Ahold Delhaize USA’s Hannaford at No. 18.
Source: DunnhumbySupermarkets hold their own despite pressure
Climbing into the RPI’s first quartile this year were supercenter chain Meijer, warehouse club operator BJ’s, deep discount grocer Lidl and conventional supermarket chain Hannaford. Falling out of the top quartile were mass merchant Target and Fry’s, a Kroger Co. supermarket chain. Trader Joe’s jumped to seventh place this year from No. 16 previously, when it occupied the last spot in the ranking’s first quartile.
For the first time ever in the RPI, regional supermarket formats — H-E-B, Market Basket and WinCo — took three of the top four spots, according to dunnhumby. That came amid the continued decline of supermarket market share over the past 10 years and in the wake of two “contextual shocks” to the US grocery market — COVID-19 and inflation, which accelerated share gains by club and cash-and-carry formats and online grocery retail penetration, the study said.
“Couple this with the fact that supermarkets are the format that still reaches the most consumers in the US, and it’s clear supermarkets still and will likely always have a role,” dunnhumby said in the RPI report. “Which role is the question. H-E-B, Market Basket and WinCo all have much higher share of their average customers’ grocery budgets than the typical retailer.”
Shoppers prize savings
This year’s RPI focused on five “pillars” driving the customer value proposition — price, promotions and rewards; quality; digital; operations; and speed and convenience — that shape consumers’ emotional connection to a grocery retailer and, in turn, that company’s financial performance, dunnhumby said. In tandem with the shopper survey, which indicates the strength of emotional bonds with customers, the index’s statistical model reflects grocery retail financial measures such as size (dollar sales share), efficiency (sales per square foot and customer wallet share) and sales momentum (five-year compound annual growth rate).
“Since releasing the first US Grocery RPI eight years ago, retailers and shoppers have weathered COVID, supply chain disruptions, agricultural shortages due to climate impacts, and a prolonged period of high food inflation that have reshaped shopping behavior and how Americans perceive the grocery retail environment,” said Matt O’Grady, president of the Americas at dunnhumby. “Clients across the grocery retail sector understand that market success is dependent upon saving shoppers money and implementing innovative pricing technologies to maintain their customer base.”
Rising in importance over the last eight years, the ability to provide customer savings via pricing, promotions and rewards now accounts for 38% of a grocery retailer’s long-term success, the highest percentage in the RPI’s history, dunnhumby reports. Next most important to retailer success was quality at 27%, followed by digital at 16%, operations at 11% and speed/convenience at 7%.
“2024 is the year where the long-term saving/quality equation tilted more in favor of savings than ever, the digital pillar saw its first retreat in importance and operations (consistency of delivering on the basics) swung back toward its pre-COVID level,” the study said. “Grocery has always been about, first and foremost, delivering on consumers’ basic needs, and this is more true than ever.”
Customer perception is key
Higher RPI rankings indicated grocers providing stronger customer value propositions, as these retailers grew up to 2.5 times faster over five years than those with lower rankings, the study noted. Top finishers performed “clearly better” than the market average in offering low everyday prices, even without promotions or sales, and scored better than average in providing value and quality via private brands.
“In the last three years, H-E-B has separated itself from the rest of the top five due to their superior ability to deliver a combination of better savings, quality, shopping experience and assortment,” dunnhumby said.
Top RPI finishers also have prospered amid rising competition from non-traditional players.
“H-E-B, Market Basket, WinCo Foods are examples of best-in-class regional supermarkets that have a customer value proposition built to weather the growth of club, discounter, limited-SKU and pure-play formats, as well as the ups-and-downs of shocks to consumer context,” dunnhumby explained. “Costco, Aldi, Amazon, Trader Joe’s and Sam’s Club represent the vanguard of the aforementioned growth formats of the past decade. The strength of their value propositions promise continued growth into the future.”
Though Amazon was the No. 1 grocery retailer in 2021 and 2022, it dropped out of the RPI’s top three for the first time in eight years, in part due to the decline of digital in importance to customers from 18.5% in 2023 to 16% in 2024, the report said. That contrasted with big gains by Lidl and Trader Joe’s in the 2024 rankings, with Lidl making the top quartile for the first time.
“Lidl saw modest improvements in a few areas: prices, digital and operations,” according to dunnhumby. “This, coupled with the uptick in importance of savings (their strength) and downtick in importance of quality (their weakness), explained their jump. Trader Joe’s, a former top US grocery retailer in the RPI, stopped its slide and improved its ranking from the 15th position to the eighth position by being ahead of the market on quality while being about average at savings. Trader Joe’s, the second-highest-ranked retailer for quality, leads other quality-first retailers in savings perceptions.”
Coming in first by customer perception pillar were Market Basket for price, promotions and rewards; Wegmans for quality; Amazon and its Amazon Fresh supermarkets for digital; Fareway Meat & Grocery for speed and convenience; and Costco for operations.
“This year’s RPI shows that the fundamentals still apply, as H-E-B has proven year over year,” O’Grady said. “Any format can win. The first step is to understand your customers and how customers perceive you. Secondly, prioritize efforts to save your customers money that is consistent with your positioning. And finally, use the RPI as a framework to help you determine where you should invest and where you should make trade-offs.”
The Kroger Co. and Albertsons Cos., the nation’s largest conventional supermarket operators, both saw their RPI rankings slide this year, dunnhumby added, citing the “negative halo cast by the merger news headlines” as a possible reason, particularly in states where court proceedings on the mega-merger were held.
“To the power of headlines, the Kroger-Albertsons merger, and the associated arguments made in high-profile court cases centering on price gouging and anti-competitive practices, appears to have taken a toll on customer perception of these organizations’ banners,” dunnhumby said in the RPI report. “Seven of the biggest 18 rank decliners in 2024 were Kroger or Albertsons banners. Albertsons (the banner) was the single-biggest rank decliner overall in our study this year. The Kroger banner that declined the most, King Soopers, is located in Colorado, the site of one of the three high-profile Kroger-Albertsons merger court cases.”
