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Trader Joe's, Costco Top Dunnhumby 'Preference Index'

Trader Joe's, Costco and Amazon topped a list of retailers based on a combination of survey data and financial performance as ranked by the data science firm Dunnhumby.

Dunnhumby said its inaugural Retailer Preference Index is the only industry study to rank retailers using both financial measures and survey responses. 

The RPI study surveyed 11,000 U.S. households and analyzed consumer emotional sentiment for 59 grocery retailers, and then combined the survey data with the retailers’ financial performance which then created each retailer’s preference index.

"Our model captures the complexity of customers’ preferences and their actual choices by quantifying the relationship between how they perceive a retailer with their emotional connection and the financial performance," Jose Gomes, managing director of North America for Dunnhumby, said in a news release. 

The study presented key findings, such as that price and quality are the most important preference drivers. "[R]etailers with a weak value core should focus on shoring up that weakness before turning attention to other drivers such as convenience, rewards, or speed," the company said.

The top ten retailers with the highest preference index scores are:

  1. Trader Joe’s 
  2.  Costco
  3. Amazon
  4.  H-E-B
  5. Walmart
  6. Wegmans
  7. Aldi
  8. Sam’s Club
  9. Sprouts Farmers Market
  10. Whole Foods Market

 

The RPI found that the top quartile retailers share four effective strategies:

* Price-focused - Aldi’s focus on price and certain high-volume staple categories like dairy and packaged foods secured the discount retailer with high rankings on price and overall RPI, company officials said, adding that stores that index high enough on price, can often sacrifice on convenience, speed, digital and personalized discounts and information and still rank highly.

* Quality-focused - Although Whole Foods Market performed below average on prices, it still achieved a high overall RPI because it indexed so high on quality.

* Value-focused -Trader Joe’s, Costco, Sprouts Farmers Market and H-E-B all indexed high on quality and price. Stores that index high enough on price and quality can sacrifice on convenience, speed, digital and personalized discounts and information and still rank highly, according to company officials. 

* Price-focused and supported by digital execution - Walmart’s success in digital translates into a high RPI ranking and from indexing high on price and convenience. Target ranked second on digital execution but ranked only average on the other supporting factors, moving it out of the top quartile of the RPI.

“We firmly believe that retailers must differentiate themselves today to be competitive in face of the myriad of options shoppers have,” said Gomes. “Differentiation begins with the retailer identifying the shoppers that they can serve better than their competition. A solid Customer First strategy, backed by customer data science, will help the retailer focus its finite resources and attention on the customers that are the most important to their success. This study is intended as a first step on that path of understanding.”

The top performing grocery retailers include relatively recent entries into the 100-year-old supermarket business and are more likely to be a national banner. All of these banners, except H-E-B, were either established or began to expand around the 1980s, which allowed many of them to carefully select store locations, which now allow them to focus on differentiating prices, products and store experiences. 

The second best performing quartile of retailers include some of the higher performing, older grocery banners including Meijer, Publix, and Kroger. This quartile has the highest top of mind recall and the second highest financial performance. This group does not perform as well as the top quartile because their price and quality scores were not as strong, but this second group differentiated itself by excelling at secondary preference drivers, such as promotions, rewards, and information.

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