Market Basket was named the best grocer in inflationary times

Market Basket beat discount giants Aldi, Dollar General, Walmart and others as the best grocer for inflationary times in an inflation-focused edition of the dunnhumby Retailer Preference Index (RPI).

The Dunnhumby RPI Special Inflation Edition 2022 report, released Tuesday, determined that the grocery bill represents the largest household budget item that consumers can instantly change into record inflation. In turn, retailers best placed to save shoppers money are generating visits faster and building stronger emotional bonds with customers during inflationary times, said dunnhumby, a customer data science specialist.

Dunnhumby

“Market Basket has proven to be the best performing retailer in these uncertain economic times, being the best in the country at saving customers money while at the same time building stronger emotional connections with their shoppers and thus increasing shopper visits. faster than most other retailers, “according to Grant Steadman, president of Chicago-based dunnhumby North America. “Retailers who are focusing their customer value proposition on saving customer money are best placed to address the challenges of this protracted period of inflation and economic uncertainty.”

Consumer preference drivers, or pillars, as defined by dunnhumby for the study included Save Me Money (affordability), Save Me Time (affordability), Make It Better (quality and service), Make It Seamless (e-commerce) and Make It Dependable (in stocks and consistent prices). To see which drivers had the greatest impact on traffic growth and emotional connection with retailers, dunnhumby surveyed 18,000 U.S. grocery shoppers in two research waves (October 2021 and June 2022), collected perceptions of 69 of the largest grocery retailers and modeled their responses against Placer. to pedestrians and web traffic Similarweb.

After Market Basket at no. 1, the top five grocery retailers in the inflation RPI included WinCo Foods, Grocery Outlet, and Save A Lot. Rounding out the top 10 were Lidl (# 6), Dollar General (# 7), The Kroger Co.’s Food 4 Less / Foods Co. banners (# 8), Family Dollar (# 9) and food commissioners (No. 10).

“Market Basket – a traditional grocery chain of 90 stores in New England – leads all retailers in our RPI inflation ranking,” dunnhumby said in the report. “They do so by also ranking first in the United States in the very important Save Me Money pillar. Within the Save Me Money pillar, there are many levers that a retailer can take advantage of, from base prices, to promotions, to private label. Market Basket is the only retailer that is in the top five in both base price perception and mass promotion perceptions, which more than compensates for its lower performance in Save Me Time. “

By far, Save Me Money was the main customer preference factor in research, five times more important than the next two Save Me Time and Make It Better, dunnhumby noted, adding that Make It Seamless and Make It Dependable had a little or no impact on retailers’ performance in its RPI inflation model.

Seventeen retailers made up the top quartile of the inflation RPI, meaning they offer the best combination of the five pillars. Retailers that are in the top 17 also included Wakefern’s Price Rite (# 11), HEB (# 12), Fareway (# 13), Costco Wholesale (# 14), Walmart Neighborhood Market (# 15), Walmart (# 16) and Trader Joe’s (# 17).

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In the current inflationary environment, “base price followers” have little room for maneuver by proposing the lowest prices, dunnhumby pointed out. However, these chains can minimize harm and possibly strengthen emotional bonds with customers through tight base price gaps and strong execution of mass promotions, communications, personalization and private branding, the report said. Kroger, Food Lion, BJ’s Wholesale Club, and ShopRite were cited as examples of retailers with customer value propositions that better compete with base price leaders in periods of inflated pricing.

Discount stores such as Dollar General, Family Dollar, Grocery Outlet, Lidl and Save A Lot feel a strong favorable wind during inflationary times, while during periods of economic stability they maintain “a highly vulnerable long-term proposition due to quality weaknesses” and they cross-shop with each other and with other inflation-ready retailers like Walmart, Dunnhumby noted.

“Three of Market Basket’s top five competitors rank in the bottom two quartiles of Inflation RPI, and only 43% of its customers cross-shop with Walmart, less than 55% of Walmart’s average competitor. Also, dollar and Aldi chains are scarcer in New England; only 8% of Market Basket customers cross purchases in Dollar General versus 20% of Dollar General’s average competitor, “dunnhumby explained in the study.” On the other hand, discounters such as Save A Lot, Lidl, Family Dollar and Dollar General are vulnerable due to the much higher cross-shop between them and other inflation-ready retailers like Walmart. For example, 81% of Dollar General shoppers cross-shop at Walmart and 38% shop cross purchases in Family Dollar.

Research on the Inflation RPI also revealed that warehouse club retailers have taken a major hit in traffic growth so far this year. Dunnhumby said the trend reflects a “misalignment” with consumer behavior, as high prices have prompted many shoppers to spread their shopping across multiple visits with smaller baskets. Likewise, the study found that low-income shoppers tend to prefer smaller packs in high inflation.

“Club retailers like Costco, Sam’s Club, BJ’s Wholesale, the market outlier in saving customers time, are also underperforming the market in year-over-year visitor growth in 2022,” dunnhumby said in the report. “According to Placer.ai, the club channel decreased 1.9% in the first half of 2022 compared to the first half of 2021, more slowly than any other channel. This is noteworthy because the club channel tends to be well positioned for long-term success. The inflationary times have taken some wind off the club’s channel sales. “

Unsurprisingly, specialty grocery stores and leading premium supermarkets with quality first – such as Sprouts Farmers Market, The Fresh Market, Wegmans Food Markets, Publix Super Markets and Harris Tetter – are not well positioned for inflationary times because they are “too behind most of the market. ”in the Save Me Money preference driver, dunnhumby reported. The study found that these retailers are also following the market in year-over-year visitor growth in 2022.

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“A look at how the positioning of retailers differs over the long term versus inflationary times reveals that a change in the market environment presents a reversal of fortune for some retailers. The notable differences in rankings between inflation and standard RPI results reveal a critical contextual shift for customers, “dunnhumby noted in the report.” For example, Wegmans, Sprouts, Fresh Market, Fresh Thyme, Big Y Foods and Publix place the market in the perceptions of Save Me Money and consequently are less positioned for inflationary times. However, they are able to leverage their differentiated Make It Better positioning in superior long-term growth and emotional connections. The inability to meet customers where they are. they find during inflation could not only lead to loss of market share in the short term, but could also create cracks in the strong long-term emotional connection they have built with their buyers. “

Amazon, perhaps, provides the best example of how inflation can change a retailer’s value game in the eyes of grocery consumers. In 2022 Dunnhumby Retailer Preference Index (RPI), Amazon ranked No. 1 (prior to HEB) among over 60 retailers as the best grocer and in this year’s first dunnhumby eCommerce Retailer Preference Index (RPI), Amazon ranked # 1. 2 (behind HEB) as a leading online grocer. However, a decrease in online traffic this year has led Amazon from the top ranks of grocery retailers into the RPI of inflation.

“Amazon, typically # 1 for its long-term value proposition in our annual RPI study, saw a 6.5% drop in web traffic this year, slower than the average grocery retailer. While a competitive advantage in ecommerce provides wind in the sails over the long term, during inflationary times that wind dies, “dunnhumby said in the study, adding that HEB, the top ranked online grocer in RPI eCommerce, came in at 12. Place in the RPI of inflation.

“Make It Better and Save Me Time are the other pillars to show a positive association with retailers’ results during inflationary times, but their impact is dwarfed by the impact of Save Me Money,” according to dunnhumby. “Translation: Customers are much more likely to forgo the benefits of better product quality and time savings to save money during inflationary times.”

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