[January 09, 2019] |
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Trader Joe's Repeats as Top U.S. Grocery Retailer in the dunnhumby Retailer Preference Index
dunnhumby,
the global leader in customer data science, today released the second
annual dunnhumby Retailer Preference Index (RPI), a comprehensive,
nationwide study that examines the $700 billion U.S. Grocery market. The
RPI study surveyed 7,000 U.S. households to determine which of the top
56 largest grocery retailers have the strongest combination of financial
performance and consumer emotional sentiment. Trader Joe's was again the
top-rated grocery retailer. The grocery retailers with the highest
overall consumer preference index scores are: 1) Trader Joe's, 2) Costco
Wholesale, 3) Amazon, 4) H-E-B, 5) Wegmans Food Markets, 6) Market
Basket, 7) Sam's Club, 8) Sprouts Farmers Markets, 9) WinCo Foods, 10)
Walmart, 11) Aldi, 12) Peapod, 13) The Fresh Market.
This press release features multimedia. View the full release here:
https://www.businesswire.com/news/home/20190109005221/en/
Retailers ranked in the First Quartile of the dunnhumby Retailer Preference Index, January 2019 (Graphic: Business Wire)
"While consumer confidence in the U.S. is at a near 18 year high and the
U.S. economic growth is outpacing the rest of the world, there are signs
of turbulent times ahead and grocery retailers need to be prepared,"
said Jose Gomes, President of North America for dunnhumby. "Because of
pressures that grocery retailers are facing today, a common reaction is
to think only of the short term. But by focusing on the customer
preference levers that we have identified in this RPI to inform their
strategies, retailers can buy an insurance policy for the future to
ensure they can weather the storms ahead."
The overall RPI ranking evaluates retailer performance on seven pillars:
price, quality, digital, operations, convenience, discounts/rewards and
speed. The retailers who focus their business on superior value
perception - defined by the strongest combination of price and quality -
tend to have the most financial success and the strongest emotional bond
with consumers.
Key findings from the study:
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Understand customer needs and be excellent at what matters most to
win their preference. Trader Joe's is a prime example of a
retailer making trade-offs to deliver superior alue, and it has
earned them the top spot for two years in a row. With its small
format, lack of digital shopping and limited national brand offering,
the retailer focuses on speed of in-store shopping and having a rich
Private Brand offering. This bricks-and-mortar only, private brand
approach minimizes costs and keep prices low, allowing them to
reinvest in customer service, product quality and in-store experience.
This strategy sacrifices reaching customers through a growing digital
channel and breadth of assortment, and therefore losing on one-stop
shop-ability and convenience. However, this loss is also their gain
since it allows them to deliver what matters most to their customers.
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Two needs rise above all others for most food retailers and have
the greatest weight in determining RPI ranking, forming the core of
value perception: Price and Quality. Retailers that rank in the
first quartile overall excel in value perception and, as a result,
have sales growth that is 2x greater than retailers in the second
quartile and 9x greater than retailers in the bottom two quartiles.
The other customer needs, like digital, speed, convenience or
discounts/rewards, while still important, have a weaker association
with retailer preference.
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First quartile retailers are mostly non-traditional grocers, who
have developed a highly targeted offering designed to maximize value
perception for their specific customer base. More traditional,
regional grocery banners with a long history are hurting because of
it, having relatively poorer performing financials and/or emotional
bonds. The reason: these traditional banners have inferior price
perception and/or quality. The RPI's top three overall retailers excel
in these two factors (Amazon in price; Trader Joe's and Costco on
both).
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For some traditional, regional grocers, discounts/rewards and
promotions are contributing to sales growth, but for many, this is
adding to financial difficulty. In the U.S., hundreds of millions
of dollars are spent on discounts, rewards and promotions every year,
but over two-thirds of promotions don't break even. To maximize the
success of a discounts/rewards program, retailers need to have at
least average price perception and a highly relevant assortment,
supported by a strong private brand.
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Private brand is a common key to driving value perception and
improving customer preference for retailers up and down the rankings.
Six of the top 10 private brand performers are in the first quartile
of the RPI overall. Additionally, many of the most successful
traditional, regional grocers occupy the second quartile, and they
complement a highly relevant assortment with a strong private brand,
allowing them to maintain solid price perception. Lastly, private
brand is a key element in driving both price and quality perception
and thus overall value perception, where retailers in the bottom two
quartiles are struggling the most.
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Retailers who tended to see improvements in their digital rank also
tended to see slips in their operations (i.e. out of stocks, pricing
consistency, clean stores, right product variety). Retailers that
ramp up investment in digital must be cautious not to take their eye
off the retail basics.
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Some retailers have achieved an excellent digital customer
experience, but their financial performance has not benefited, while
others with a focus on digital manage to thrive. Retailers missing
any of the following are not maximizing the impact of digital
investment: large scale, great price perception and a category DNA
leaning toward center store items and non-grocery products.
The latest dunnhumby RPI is available for download today at: http://bit.ly/2C5LMqq.
Retailers included in the RPI that are interested in receiving their
individual banner profiles can visit dunnhumby's booth (#2073) at NRF
2019 or contact us at https://www.dunnhumby.com/unitedstates.
About dunnhumby
dunnhumby is the global leader in Customer Data Science, empowering
businesses everywhere to compete and thrive in the modern data-driven
economy. We always put the Customer First.
Our mission: to enable businesses to grow and reimagine themselves by
becoming advocates and champions for their Customers. With deep heritage
and expertise in retail - one of the world's most competitive markets,
with a deluge of multi-dimensional data - dunnhumby today enables
businesses all over the world, across industries, to be Customer First.
The dunnhumby Customer Data Science Platform is our unique mix of
technology, software and consulting, enabling businesses to increase
revenue and profits by delivering exceptional experiences for their
Customers - in-store, offline and online. dunnhumby employs over 2,500
experts in offices throughout Europe, Asia, Africa, and the Americas
working for transformative, iconic brands such as Tesco, Coca-Cola,
Meijer, Procter & Gamble, L'Oréal.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190109005221/en/
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