The RPI
Who Are the Winners
Retailers who have better RPI scores (i.e. better customer perception in areas that matter most) have stronger financial outcomes
When we compare our RPI rankings against financial outcomes, the conclusion is clear. Better customer perception leads to better financial outcomes. Retailers in the 1st Quartile of our rankings (ranked 1st – 18th in overall RPI score) not only have grown grocery revenue the most over the past year, but they’ve grown the most over the past 5 years and have, over the long-term, built an edge over others in overall market share.
1st Quartile retailers grow 2.5x faster over the long-term than 4th Quartile retailers and over 1.5 faster than 2nd Quartile retailers.
In dollar terms, the average 4th Quartile retailer made about $3.3B in revenue in 2019 and $4.4B in 2024. If they had a customer value proposition that ranked in the 1st Quartile overall over the past 5 years, growing at the same rate of a 1st Quartile retailer, they could have made $5.4B in 2024. In other words, not investing in identifying and maintaining the right customer value proposition results in $1B in revenue left on the table, in growth terms, for the average 4th Quartile retailer.
Strong financial outcomes over the long-term start with the ability to drive strong customer outcomes. 1st Quartile retailers demonstrate a greater ability to win in their current footprints, with their current customers, and they are doing so with a customer value proposition that builds an emotional connection with customers.
Which retailers have the best RPI scores and are best positioned for long-term success?
Source: Retailers ranked by RPI score, which is a result of dh’s RPI model. Customer perceptions input into the model were from dh RPI survey database, August 2023, n=10,641 US grocery shoppers. Each retailer’s perceptions are among past 4 week shoppers of the retailer. *Rankings subject to slight change
1st Quartile retailers are a mix of best-in-class regional banners and non-conventional, national banners. H-E-B, Market Basket, WinCo Foods are examples of best-in-class regional supermarkets that have a customer value proposition built to weather the growth of club, discounter, limited SKU and pureplay formats, as well as the ups-and-downs of shocks to consumer context.
Costco, Aldi, Amazon, Trader Joe’s and Sam’s Club represent the vanguard of the aforementioned growth formats of the past decade. The strength of their value propositions promise continued growth into the future.
Meijer, Lidl and Hannaford are newcomers to the 1st Quartile this year; however, these banners have historically been close to the 1st Quartile, near the top of the 2nd Quartile, so their appearance in the 1st Quartile is not a big surprise.
We also saw some notable rank changes in the 1st Quartile. The average rank change in our study is about 4 or 5 places. WinCo, Trader Joe’s and Lidl all moved up more than average, due to improving their customer perceptions in key areas and due to shifts in what is important to consumers aligning well with these retailers’ strengths.
Rank Gainers and Decliners in 2024
The rank gainers and decliners this year yield two lessons: the power of focus and the power of headlines. The biggest thing rank gainers had in common was their commitment to maintaining their most differentiated, competitive advantage, while narrowing the gap to the competition on their biggest vulnerability. This is a hallmark of strong, focused strategy and execution.
To the power of headlines, the Kroger-Albertsons merger, and the associated arguments made in high profile court cases centering on price gouging and anti-competitive practices, appears to have taken a toll on customer perception of these organizations’ banners. 7 of the biggest 18 rank decliners in 2024 were Kroger or Albertsons’ banners. Albertsons (the banner) was the single biggest rank decliner overall in our study this year. The Kroger banner that declined the most, King Soopers, is located in Colorado, the site of one of the three high profile Kroger-Albertsons merger court cases.