H-E-B is the No. 1 U.S. Grocery Retailer

Thanks to its sustained focus and excellence on assortment relevance and private brand, the supermarket chain H-E-B dethroned Trader Joe’s from first place as the best supermarket in America, according to the data science firm dunnhumby.

For the third consecutive year, dunnhumby released the Retail Preference Index (RPI), a study that examines the $700 billion U.S. Grocery market.

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This is the first time that the Texas-based H-E-B is ranked as the top U.S. grocery retailer. Trader Joe’s held the number one spot for the last two years.

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 most robust combination of price and quality – tend to have the most financial success and the strongest emotional bond with customers, according to the study.

“One of the most important findings is that leading traditional regional grocers are experiencing a resurgence in customer preference, by winning with relevance and convenience,” said José Gomes, President of North America for dunnhumby.

“If they can compete on price and quality — the value core for grocers — they are uniquely well-positioned to fend off the growing threat of non-traditional players. This also leaves them better insulated against an economic downturn. In the end, there is no ‘one size fits all’ approach to winning in this market, and retailers with Customer First strategies are most likely to fare best,” Gomes added.

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The following is the list of the 14 grocery retailers with the highest overall customer preference index scores:

  1. H-E-B
  2. Trader Joe’s
  3. Amazon
  4. Market Basket
  5. Wegmans Food Markets
  6. Costco
  7. Aldi
  8. Sam’s Club
  9. Walmart
  10. Publix
  11. WinCo Foods
  12. Fresh Thyme
  13. Sprouts Farmers Markets
  14. ShopRite
H-E-B - grocery retailer

For the study, a survey was conducted among 7,000 U.S. households to determine which of the top 60 largest grocery retailers have the strongest combination of financial performance and emotional consumer sentiment.

Other key findings from the Retail Preference Index study:

  • Leading traditional, regional grocers are winning with relevance and convenience. Some regional grocers are getting stronger and are now going toe-to-toe with leading non-traditional retailers.
  • H-E-B, Fry’s, Smith’s and Kroger, all leading regional grocers, stand out as being just as prepared for the next economic downturn as industry superstar Costco, due to having excellent private brands, highly relevant promotions, better existing price perception, and lower cross-shopping by their customers with Walmart, Aldi and Dollar General.
  • Convenience has grown more in importance than any other customer need, due to the efforts of traditional grocers. Assortment relevance is also becoming a more powerful lever for driving convenience.
  • For the third year in a row, price and quality remain the two most important customer needs that retailers must meet.
  • Price is the more important half of the value core for shoppers of almost all incomes. The top five grocery stores for price are: 1) Aldi, 2) Market Basket, 3) WinCo, 4) Lidl, and 5) Trader Joe’s. It isn’t until annual household incomes reach $200k that customers will generally favor quality in the value core.
  • Amazon Go shows that Amazon has strong brick-and-mortar grocery chops. When Amazon opens its branded chain of brick-and-mortar grocery stores, retailers can expect Amazon to offer a strong value core, supported by an excellent private brand, high-quality ready-to-eat, decent perishables, great price perception and speed of shopping.
  • Not all discounters are faring well. Lidl is living in the space between hard discounter and the typical traditional grocery store and failing to excite customers. Lidl’s price perception isn’t as strong as Aldi’s, and they have operational and assortment relevance issues that Aldi doesn’t.