Amazon, H-E-B, Kroger top new personalization index

Three retailers lead the pack when it comes to personalizing the grocery shopping experience for their customers.

Amazon, H-E-B and Kroger took the top three spots in a special edition of customer data science firm Dunnhumby's Retail Preference Index (RPI), which highlight the grocers who personalize the shopping experience best for their customers.  The three retailers are at the top of the rankings because they deliver targeted savings, a localized assortment, and a frictionless shopping experience best, according to Dunnhumby.

The seven retailers with the next highest overall customer preference index scores are: 4) Giant Eagle, 5) King Soopers, 6) Meijer, 7) The Giant Company, 8) Target, 9) Fry’s, 10) Smith’s.

The inaugural RPI for Leadership and Personalization (PRPI) surveyed 10,000 American grocery shoppers, and includes 65 of the largest grocery retailers. The survey grouped 30-plus personalization “levers” into three drivers of preference: Targeted Savings, Frictionless Experience and Localized Assortment.  A large majority (73%) of those in the top-quartile of the PRPI ranking also are in the top quartile for Targeted Savings, the most important personalization driver.

According to the report, personalization matters most to shoppers in baby care (63%), something is true across all three drivers.  Personalization also matters in health care (53%), and ready-to-eat (52%) but their importance varies by driver.

"Tthe long-term trend of shoppers across all income brackets demanding lower prices, personalization is an opportunity for grocers to better retain and acquire customers,” said Matt O’Grady, president of dunnhumby for the Americas. “The goal of this report is to help retailers improve personalization as a whole – the way customers define it. And because customers define personalization as targeted savings, local assortment and a frictionless shopping experience, understanding their preferences is key."

Key findings from the study are below.

•Only Amazon, H-E-B, Target and Shoprite, who ranked in the top quartile in dunnhumby’s annual US Grocery RPI published in January 2023, were also ranked in the top quartile in the PRPI. 

•Value-oriented retailers such as Costco, Aldi, Lidl and Grocery Outlet, as well as dollar stores, are absent from the top two quartiles of the report due to not relying on personalization to drive growth, but instead relying on geographic expansion and cost-control measures to drive scale, according to Dunnhumby.

•Retailers in the top quartile outperform the rest of the retailers on benefits, costs or both. For top quartile grocery retailers, this translates to a 14% increase in shoppers with a strong emotional connection, a 41% increase in share of wallet, a 34% increase in online visits per month per person, and a 131% increase in traffic share in a grocery retailer’s footprint compared to retailers in the third and fourth quartiles.

•Smith’s, Winn-Dixie, Kroger, Fry’s and Giant Eagle offer shoppers the best Targeted Savings, according to the research. Nearly half (45%) of personalization-related grocery retailer outcomes are driven by Targeted Savings. 

Grocery leaders in this driver do two to three times better than others at rewarding shoppers, helping customers save money (via the loyalty program) and making it easy for them to do so (an easy-to-understand program and point redemption).

•H-E-B, Big Y, Wegmans, Food City  and Schnucks offer the best Localized Assortment, the second most important driver of personalization. Localized Assortment drives 28% of personalization-related grocery retailer outcomes.

 Leaders in this space perform 1.5-2 times better than competitors at providing shoppers with the right variety of products to meet their needs, local product variety (from local farmers or businesses) and a close connection to the local community. 

•Amazon, Target, H-E-B, CVS  and Walgreens provide shoppers with the best Frictionless Experience, the third most important driver of personalization. A Frictionless Experience drives 27% of personalization-related outcomes, according to Dunnhumby. Amazon stands atop the Frictionless Experience category, ranking number one across all retailers in 10 out of the 11 frictionless experience levers.

 Target is the only retailer to beat Amazon in one lever: web and apps. Frictionless Experience Leaders perform roughly two times better than others at reminding shoppers (usual items, forgotten items, previously bought items, follow-ups), providing relevant products and topics, providing digital ease (making it easier to shop online or via the app) and personalizing both the online and in-store experience.