In the first-ever dunnhumby Retailer Preference Index study of the grocery landscape, U.S. consumers picked Trader Joe's, Costco and Amazon as their top grocers.
The RPI study looked at 11,000 U.S. households and asked about 59 grocery retailers, and combined this with data from each retailer's financial performance. Jose Gomes, managing director of North America for dunnhumby said that the survey was unique because it qualified choices based on both emotional connection and financial performance.
The grocers with the highest index scores behind the top three included H-E-B, 4; Walmart, 5; Wegmans, 6; Aldi, 7; Sam's Club, 8; Sprouts, 9; and Whole Foods, 10.
The brands that made the top 10 share four effective strategies on the RPI.
First, they are all focused on price. The study found that if the brand put a strong enough emphasis on reasonable prices, they could sacrifice on things such as speed, digital and personalized discounts.
Second, all of the top brands are keen on offering quality items. For example, Whole Foods may cost a premium, but they still did well on the RPI because of their commitment to quality.
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Third, value is a priority for brands such as Trader Joe's and Sprouts. So, while they may not offer convenience, speed, digital or personalized accounts, they make up for these losses on price and quality.
And finally, price-focused with the support of digital was important to many surveyed consumers. For example, Walmart's digital success helps put it high on the RPI rankings list.
According to other key findings, price and quality are going to continue to be important to consumers, so retailers need to make sure they focus on value before they spend money on rewards or speed.
In addition, most of the top performers, with the exception of H-E-B, are fairly new to the industry so were able to carefully pick prime retail locations. As a result, these brands can differentiate themselves in other ways such as price, products and experience. These same older banners seem to have the weakest emotional connection to shoppers.
"Loyalty can be defined as value plus trust over time, so understanding how customers define both value and trust is the key to success in delivering consistently in every shopping occasion," Gomes told FierceRetail.
Moving forward, the emotional tie to the store will continue to be a priority for shoppers. Gomes says that shoppers today carry four mindsets: discover, buy, shop, reflect. And each customer's journey is unique, dependent on these mindsets.
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"It is imperative that retailers understand these mindsets and need states to connect emotionally. Fit the need to the value offering, be relevant, responsive and rewarding," he said.
The grocer of the future will recognize that value is a personal equation. "For one customer, time is the key need and so enabling easy checkout, delivery to home, etc. is the key to winning. For another, it’s price with the right level of quality. For a third customer, it’s organic or local. Knowing what each customer sees as important in their definition of ‘value’—and delivering upon it—is vital to maintaining a positive relationship," Gomes said.