Dive Brief:

• H-E-B claimed the top position in Dunnhumby’s Retailer Preference Index for 2023, marking the second year in a row that the Texas supermarket chain has finished atop the predictive list which ranks grocers based on their financial performance and customer opinions.
• Amazon took second place, moving up from No. 3 in 2022, while Costco slipped a notch to third place. Massachusetts regional grocer Market Basket won the fourth spot in the index — pushing Wegmans to No. 6 — and Sam’s Club held onto its No. 5 position.
• The results underscore the high importance consumers have been placing on the ability of retailers to provide an optimal combination of savings, personalized promotions, quality goods and time-saving digital experiences.

Dive Insight:

H-E-B’s No. 1 position in the index continues the grocery chain’s dominance of the rankings over the years. The company has achieved the top spot three times since Dunnhumby launched in the index in 2018, ahead of Amazon and Trader Joe’s, which have both earned first place twice.

Aldi, Shoprite, Walmart Neighborhood Market and Walmart rounded out the top 10 retailers in the index, which ranks the largest 65 food retailers in the U.S. Dunnhumby mines financial data from Edge by Ascential in combination with data from an annual survey of about 10,000 American grocery shoppers to determine the results.

Two Kroger-owned banners — Kroger and Fry’s — finished in the top quartile of the index for the first time, in large part because they have done an exceptional job of demonstrating a commitment to savings, according to the research. Trader Joe’s, meanwhile, fell eight positions to No. 16.

Big Y and Hannaford were among the retailers that ascended the most on the list in 2023, moving up 22 and 14 spots, respectively. Albertsons, Ingles, King Soopers, Fred Meyer, Giant Food and Price Chopper all also finished significantly higher than they did in 2022.

Grocers are facing a highly competitive landscape as they begin 2024, with consumers heavily scrutinizing retailers as they remain under continued economic pressure from a range of factors, Dunnhumby noted in its report.

Those headwinds, which include crimps on people’s disposable income, higher debt costs and lower savings rates, portend the slowest annual rate of growth for the grocery industry since 2009, according to the report. U.S. grocery sales are likely to grow between 0.5% and 1.5% this year, down from 2.5% in 2023 and below their historical average growth rate of 3%, according to Dunnhumby. 

“Heightened competitive intensity, retailer responses to competitive moves and consumer attention to differences in retailer value propositions are creating a perfect storm contributing to these changes in customer perceptions,” Dunnhumby said. “Knowing your customer, and your competitive positioning on these customer needs, will be critical to creating organic growth in 2024.”