Costco Ranks First in dunnhumby’s Canadian Grocery Retailer Preference Index

dunnhumby, the global leader in customer data science, today announced Costco as the top Canadian Grocery Retailer in the dunnhumby Retailer Preference Index (RPI), a nationwide study of the Canadian grocery market that combines retailers financial results with customer perceptions to rank grocers for long-term success. Super C (2), Maxi (3) and Walmart (4) follow as the top four grocers in Canada. All retailers in the index’s top tercile are club, discount and superstore banners. Conventional grocers, comprising almost 40 percent of the Canadian market, represent the second and third terciles.

The top tercile retailers grew grocery revenue the most during the past five years and have built a competitive edge in overall market share. Retailers with clear and strong customer value propositions – indicated by higher RPI rankings – grew up to 1.5 times faster over the long-term and three times faster in the past year than retailers with lower RPI rankings.

“The impact of customer’s behavioural shift due to inflation are clear to see across the Canadian market,” said Chris Thomson, dunnhumby’s Senior Vice President in Canada and the U.S. “For retailers to succeed over the next 12 months, they need to be clear on how their value proposition meets and connects to customers’ evolved needs in a way which matters to them. Change leads to opportunities and this change in customer behavior presents opportunities for all Canadian grocers, as long as they are also able to change with their customers.”

Key findings from the study include:

• “Saving customers money” (price, promotions and rewards) is the most important pillar for stronger, long-term market success across Canada. Forty-four percent of a retailer’s long-term success is based on their price, promotions and rewards proposition, with quality coming in at 31 percent, digital (11 percent), speed and convenience (8 percent) and operations (6 percent) make up the other areas of focus for long-term success.
• Value lever importance varies by region, with 48 percent of Ontario based retailers’ long-term success due to their price, promotions and rewards proposition, compared to 35 percent for Atlantic based retailers.
• Costco’s success is due to their powerful performance across four out of the five pillars, including ranking first for operations nationally. In addition, Costco is moving towards becoming an everyday retailer for customers as it becomes more accessible to customers through third-party delivery channels (Uber Eats and Instacart) and as it increases its presence in Home Meal Replacement (HMR) categories.
• Retailers can perform strongly based on focusing on one value proposition lever, such as Food Basics, which ranked third in Ontario overall due to being first for mass promotions and price. However, performing across a combination of levers shows the greatest success.
• The best performing conventional retailers compensate for their disadvantage to first tercile retailers in price and mass promotions with targeted savings through optimized loyalty programs. Through these programs, the retailers excel in promotional relevance, by driving enhanced personalization through a strong app and offering good enough quality (without over investing in quality at the expense of staying close enough on base price). Loblaw Companies’ PC Optimum program is a clear differentiator for all Loblaw’s banners. And Save-On-Foods More Rewards program ensures it is the highest performing conventional grocer in British Columbia and the Prairies.
• Walmart wins on digital but Amazon is a business that all retailers should be watching carefully as three out of 10 Canadian customers shop Amazon for groceries. Walmart ranked first on digital across all regions, saving customers time through their easy-to-use app and website.

“The RPI has been a core report for retailers across the U.S. for the last eight years, playing a fundamental role in helping grocers focus their value propositions on the needs of the customer. The Canadian RPI can play a similarly pivotal role in the Canadian grocery industry, supporting retailers to capitalize on opportunities driven by change and even help conventional grocers do something more unconventional to meet changing needs,” said Thomson.