The Retailer Preference Index (RPI)
Navigating the Future
A retailer’s RPI rank is:
a measure of how well a retailer’s customer value proposition is positioned for future, long-term market success.
The Retailer Preference Index Approach
Phase 1: Measure retailer performance on customer perceptions
To answer the question, who’s winning and why in the U.S. grocery market, we follow a three-phase approach. The first phase is:
1. Measure customer perception of retailer performance, on 32 different levers, within 5 different pillars
The purpose of this first phase is to identity retailer performance on the different dimensions of the grocery value proposition.
We collected these perceptions during a survey of 11,000 U.S. grocery shoppers, during the months of September and October of 2024. Each person rated up to three retailers they currently shop. Included in this report are results on the 72 largest retailers of food and consumables, within the formats of:
• Supermarkets and neighborhood stores
• Superstores and hypermarkets
• Club and Cash & Carry
• Food discounters
• Pureplay
Phase 2: Identify which perceptions matter more and which matter less
In the second phase, we model retailer customer perceptions on different pillars of the grocery value proposition against outcomes retailers would want to achieve in the market:
2. Model perception scores on the 5 pillars against financial and emotional connection outcomes
The purpose of this second phase is to identity the relative importance of the different dimensions of the grocery value proposition, in driving sustainable, long-term results.
In our model, our outcome is a composite of measures of:
• Efficiency: getting the most out of current customer, current assortment
• Size: ability to appeal to a lot of customers
• Growth: ability to grow current customer spend and reach new customers
• Emotional Connection: ability to do this with a value proposition customers truly love and trust
Retailers who can have a customer value proposition that is positioned to drive these outcomes are best positioned for long-term success.
What drives sustainable success in the US?
The results of our model tell us that retailers who are better positioned on perceptions of Price, Promotions and Rewards – in other words, saving customers money – are likely to be better positioned for long-term success.
When looking at the results of our model, perceptions of saving customers money drive about 38% of the variation in the U.S. market in retailer outcomes (efficiency, size, growth and emotional connection). This opens the door for other successful strategies beyond a Savings-First strategy, such as a Quality-First strategy. However, given the prominence of Price, Promo, Rewards in driving market results, no retailer can afford to completely deprioritize investing in these levers.
Measures of Quality are the second most associated with long-term success, followed by pillars that effectively cover time savings and frictionless experience – Digital, Speed/Convenience and Operations perceptions.
2024 is the year where the long-term Savings / Quality equation tilted more in favor of Savings than ever, the Digital pillar saw its first retreat in importance and Operations (consistency of delivering on the basics) swung back toward its pre-Covid level. Grocery has always been about, first and foremost, delivering on consumers’ basic needs, and this is more true than ever.
Phase 3: Calculate each retailer’s RPI score and rank
In our final phase of our approach, we calculate each retailer’s RPI score. This gives us the ranking of how well-positioned each retailer is for long-term success in the U.S. market, in light of their customer value proposition:
3. Multiply importance of customer perceptions in driving better market results with retailer performance on those same perceptions, to arrive at retailer’s RPI score
The purpose of this last phase is to identify who is best-positioned to win over the long-term. Retailers can use this information to identify:
- Retailers to benchmark against
- Priorities for improving their value proposition
- Customer strategies to guide long-term planning