H-E-B Makes History, Holds Steady as Top U.S. Grocery Retailer

Annual dunnhumby Retailer Preference Index also notes momentum gains by regional grocers
Emily Crowe
Multimedia Editor
ecrowe
Burnet H-E-B Reopening
H-E-B is the only grocery retailer to take the top spot in dunnhumby's Retailer Preference Index three times.

Texas-based H-E-B has again claimed the coveted top spot in dunnhumby’s seventh annual Retailer Preference Index (RPI), becoming the first food retailer to be recognized three times as number one in the company’s ranking. Amazon took second place this year, while Costco Wholesale rounded out the top three.

The seven other retailers in the top 10, respectively, are Market Basket, Sam’s Club, Wegmans Food Markets, ALDI, ShopRite, Walmart Neighborhood Market and Walmart. According to dunnhumby, retailers in the top quartile of the RPI have a five-year CAGR of 8.5%, while retailers in the fourth quartile have a five-year CAGR 3.6%. Additionally, 59% of customers of retailers in the first quartile have a strong emotional connection with retailers compared to 41% of customers of fourth quartile retailers. 

[Read more: "EXCLUSIVE: Specialty Grocers Remain Destinations Across Demographics"]

The dunnhumby RPI is a comprehensive, nationwide study that examines the approximately $1 trillion U.S. grocery market, and ranks the largest 65 retailers in the industry based on both financial results and customer perception. The financial data used comes from Edge Ascential, and the customer perception data comes from dunnhumby’s annual survey of more than 10,000 American grocery shoppers. 

The five drivers of the customer value proposition are:

  1. Price, promotions and rewards
  2. Quality
  3. Digital
  4. Operations
  5. Speed and convenience

“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. “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.” 

Continued O’Grady: "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.”

Other key findings from the study include: 

  • dunnhumby forecasts 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 recession of 2009. This 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.
  • Competitive intensity is at an all-time high in this fourth year of economic uncertainty. Customers are re-evaluating retailer value propositions more than ever, ensuring those value propositions align with their needs. The average retailer ranking in a value proposition changed by six spots, higher than any previous year.
  •  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 (1), Winco (2) and ALDI (3) are the top three in the RPI’s “Price, Promotions, Rewards” pillar, due to the strongest combination of mass and personalized pricing levers. Wegmans (1), Trader Joes (2) and The Fresh Market (3) are the top three in the “Quality” pillar. Wegman’s has held the top position in the “Quality” pillar every year of the RPI.
  • H-E-B topped the RPI ranking because they have the strongest customer value proposition for the long term. This is due to their superior ability to deliver a combination of better savings and better experience/assortment, supported by time savings through superior digital capabilities.
  • Amazon has been in the top three every year of the RPI and has ranked first twice. They are doing this with 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 in the history of the RPI. The Kroger banners’ move into the first quartile can be explained by improvements they drove in overall price perception in 2023, a year when saving customers money mattered more than any year in this study, prior to 2022. Two other Kroger banners (Fred Meyer and King Soopers) were also among the biggest climbers in this year’s RPI ranking. These latter two sit in the second quartile, just outside of the first quartile.
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