The dunnhumby Quarterly: January 2023
The third edition of The dunnhumby Quarterly
Prolific Uncertainty. About health and safety. About finances. About the future. Responding to this ever-present feeling of uncertainty, consumers have shifted priorities and behaviors. While the last three years has been an extremely challenging time, it has also provided the perfect laboratory for analyzing how consumers have changed, and which grocers' value propositions are built best for the long term.
Every few months, we help grocery retailers understand who’s winning in the market – and why – by uniting insights from economic trends, customer needs, and competitive positioning of the 60 to 70 largest retailers in the U.S. grocery market. We also capture the perspectives of our battle tested grocery industry consultants. Each edition dives deep into a different theme. This quarter, the theme uniting all our content is “Navigating Uncertainty.”
WHO IS WINNING AND WHY
Sixth annual Retailer Preference Index (RPI) for U.S. Grocery
Since 2017, dunnhumby’s Retailer Preference Index (RPI) has prepared U.S. retailers and brands for the evolving customer, based on insights from over 10,000 U.S. shoppers annually, about what matters to them most when shopping at 60+ grocery retailers. Now, with six years of data, we have uncovered which retailers are best positioned to thrive in times of business-as-usual and in times of varied forms of market upheaval.
Not all rankings are created equal. dunnhumby’s approach is the only one to measure Customer Preference through a blend of financial performance and customer perception, and, as a result, we are able to predict which grocery retailers are best positioned for the future. More importantly, in our report, we identify what retailers can do to improve their competitive position.
WHAT CONSUMER TRENDS TO KEEP AN EYE ON
Consumer Trends Tracker
In the latest wave of our ongoing Consumer Trends Tracker (CTT), we review the results of a survey on consumer perception regarding inflation and corresponding behavior. As the data shows, inflation is not uniform in its impact. Depending on demographics, geography, and product category, shopping behavior has varied significantly.
WHAT ECONOMIC FACTORS ARE AT PLAY
Eyes on the Economy: Light at the end of the tunnel?
Is there a light at the end of the tunnel? While grocery sales will likely be up 6-8% YoY, inflation-adjusted sales will actually be in negative territory. At the same time, disposable income – a significant component to stimulus-related spending – is softening. This contraction in inflation-adjusted sales is likely mostly due to shoppers shifting behaviors to lower priced products, lower priced channels, and fewer non essentials, as inflation for food-at-home prices will likely persist at these historic levels. In this article, we do a deeper dive into consumer behavior data and share what the numbers mean for grocers.
MARCH: HOW ARE CERTAIN RETAILERS RESPONDING
Retailer Spotlight: Costco
What can grocers do now to win with customers? With a spotlight on Costco, we look at things from a different angle, offering grocers aspiring to more effectively compete with Costco a close analysis of why Costco is winning and what makes it vulnerable.
NEXT EDITION: IN-DEPTH LOOK AT THE FUTURE OF GROCERY
Future Gazing: Grocery 2053
While market context shifts have felt relatively dramatic for the grocery industry over the past few years, the truth is those shifts that unfold over decades are much more consequential. It isn’t one five-year period in grocery history that will change the fortunes of retailers. Rather, grocers will rise (or fall) based on their ability to align themselves to the dominant demographic, cultural, economic and technological trends that will slowly reshape the market context over decades to come.
So, what are the trends will have the biggest potential to reshape the competitive landscape over the next three decades, and what should retailers do about it? Which retailers in the top-quartile can feel secure in their value proposition and customer composition today and as a result are best positioned to win Customers’ hearts and pockets in 2053? And which might need to evolve and target different customers or see their position fade?