Costco is Canada's top grocery retailer
Club, discount and superstore banners are tops with Canadian consumers when it comes to grocery shopping.
Costco Wholesale Corp. came out on top in the Dunnhumby Retailer Preference Index, a nationwide study of the Canadian grocery market that combines retailers financial results with customer perceptions to rank grocers for long-term success. It was followed by Super C, Maxi and Walmart.
All retailers in the index’s top group are club, discount and superstore banners. Conventional grocers, comprising almost 40% of the Canadian market, represent the second and third groups.
Costco’s success is due to its powerful performance across four out of the five customer value proposition pillars, including ranking first for operations nationally, Dunnhumby noted. (The five drivers of the proposition are: 1) price, promotions, and rewards; 2) quality; 3) digital; 4) speed and convenience; and 5) operations.)
[READ MORE: Costco Q1 income beats Street, e-commerce sales surge 13%; to open 26 new clubs]
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.
In other findings, 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 top tercile retailers grew grocery revenue the most over 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 study found that “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%, digital (11%), speed and convenience (8%) and operations (6%) make up the other areas of focus for long-term success.
“The impact of customer’s behavioral shift due to inflation are clear to see across the Canadian market,” said Chris Thomson, Dunnhumby's senior VP 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.”
Methodology
The Dunnhumby RPI combines financial results with customer perception. For this RPI, dunnhumby analyzed customer and financial data for the 28 largest conventional, discount, superstore, and club banners in Canada, which account for 97% of market share in those formats. The customer perception data comes from Dunnhumby’s survey of 6,000 Canadian grocery shoppers.
The five drivers of the customer value proposition are: 1) price, promotions, and rewards, 2) quality, 3) digital, 4) speed and convenience, and 5) operations. Financial data analyzed included market share, near-term and long-term sales growth.
