Although Walmart, Target, Kroger and Costco each retained their respective standing in the 2014 Kantar Retail PoweRanking survey, Amazon.com is closing ranks as it advanced to the #5 rung on the annual scorecard of how U.S. retailers and manufacturers view each other across the most important areas of their commercial relationships.
Amazon's ascension in the annual PoweRanking survey, now in its 18th year, comes just one year after its debut among the top 10 U.S. retailers. "Amazon is paving new territory with consumers," noted one manufacturer survey participant. "By offering a virtual marketplace, home delivery and package simplicity, [it is] not just meeting shopper needs but transforming how consumers think about fulfilling their needs in the future."
Publix, H-E-B, Wegmans, Walgreens and Safeway rounded out the top 10 list of retailers on this year's PoweRanking report, whose co-authors said portrays an industry grappling with considerable uncertainty stemming from several fundamental forces currently reshaping the retail landscape.
Walmart Expands Lead
In terms of top retailer performance, Walmart expanded its lead with high marks for its comprehensive and efficient supply chain management in particular. Manufacturers also praised Walmart for increasing its investments in digital capabilities and expanding its smaller store formats. As one manufacturer participant noted: "As Walmart gets bigger and [flexes]… into new spaces (i.e. online, convenience store, etc.), [it] will have to stay ahead of the curve knowing Amazon's threat. They will find a way to further innovate and cater to their consumers' needs," as a result of its "scale and resources."
P&G, General Mills, PepsiCo Strengthen Positions
Turning to the study’s findings on the manufacturer side, retailers once again gave Procter & Gamble a collective nod as the top-ranked trading partner. As Walmart did among the retailers, P&G strengthened its position atop the manufacturer leaderboard, receiving the #1 ranking on five out of the eight individual metrics that comprise the total PoweRankings.
General Mills and PepsiCo both improved their ranks since last year to capture the second- and third-place positions respectively, rounding out the top three manufacturers in 2014.
Among the significant trends factored in the study are the emergence of Millennials as the dominant shopping cohort of the future; the extension of e-commerce into packaged goods and perishables; and the new normal of a national economy dramatically divided between the rich and the poor, none of which are new wrinkles for the retail industry. What is new in 2014 is that retailers and manufacturers are seeing these forces impact their business in tangible and unsettling ways.
"The retail landscape is undergoing rapid, fundamental change," said Kantar Retail VP Dianne Graham. "Marketplace leaders will be those companies that are best able to anticipate trends and then act quickly to adapt to changing shopper preferences and behaviors," added Graham, one of the 2014 PoweRanking report’s authors.
In particular, PoweRanking respondents reported that they are heavily focused on figuring out how to win with the approximately 80 million Millennials now aging into their prime spending years. According to one retail survey respondent: "It is crucial that suppliers help us better understand the Millennial shopper. We need their guidance and collaboration in adapting and preparing for their new shopper needs in assortment, value and communication."
The 2014 PoweRanking report further reflects a consensus that industry changes have reached a tipping point. Retailers and manufacturers want help from their major trading partners to move forward – and fast. Another retailer respondent summarized the overall situation by noting: "If we just sit and rest on our laurels, we’re missing opportunities, especially when it comes to reaching out to customers in new ways. If we keep on this way, I think we’re going to fall behind."
Other key findings revealed in the 2014 PoweRanking report:
- Mars, Inc. entered the PoweRanking Top 10 for the first time in 2014, rising two spots since last year to land at #9.
- Many mid-size manufacturers (under $10 billion annual revenue) fared well in 2014: Hershey (#11), Clorox (#15) and Hormel Foods (#19) each improved two ranks since last year. S.C. Johnson & Sons also made an impressive leap from #32 to #18, and Hillshire Brands rose four ranks to #23 overall.
- Following its split from Del Monte Foods in March 2014, Big Heart Pet Brands debuted as a new manufacturer at #25 in the rankings.
- Walgreen's was the only other top 10 retailer besides Amazon to improve its overall ranking since last year, moving up one spot from #10 to #9.
The 2014 PoweRanking study, which can be downloaded here, captured responses from more than 600 retailer and manufacturer participants on topics of food, drug, mass merchandiser, dollar, convenience and club channels and manufacturers in food, household products, general merchandise and health and beauty care.
The objective of Kantar Retail's PoweRanking report, the first of which was released in 1997, originated from its industry benchmarking studies on category management and trade promotion management. It has since evolved to research and benchmark how retailers and manufacturers view each other in the most important areas of the manufacturer-retailer relationship.