H-E-B Is the Top-Ranked Grocery in the U.S., Nudging Out Amazon

Amazon is still superior in online shopping, while club stores are gaining momentum.

February 02, 2023

CHICAGO—Texas-based grocer H-E-B is the No. 1 customer-preferred grocery store, according to dunnhumby’s Retailer Preference Index, which ranks grocers based on financial results and customer perception. H-E-B ousted Amazon, which fell to third place after holding the top spot for the past two years. Costco was the No. 2 retailer, with the highest overall customer preference index scores, and Wegmans came in at No. 4.

The 11 additional retailers with the highest overall customer preference index scores were: 5) Sam’s Club, 6) Market Basket, 7) Amazon Fresh, 8) Trader Joes, 9) WinCo, 10) BJ’s Wholesale, 11) Target, 12) Aldi, 13) Shoprite, 14) Walmart Neighborhood Market and 15) Walmart.

Key findings from the index include:

A fierce battle at the top between U.S. grocers. In 2020 and 2021, the pandemic helped solidify Amazon as the top grocery retailer over H-E-B, Trader Joe’s and Wegmans, based on Amazon’s value proposition of saving customers time and offering a seamless e-commerce experience, according to the index. But in 2022, H-E-B reclaimed the top spot due to its ability to deliver a combination of better savings and better experience/assortment.

Digital has staying power but is no longer as key to driving short-term retailer momentum as it was from 2020-2021. The pandemic increased the percentage of Americans shopping online for groceries from 39% to 50%, and despite record inflation, over half of those people remained online grocery shoppers in 2022. As a result, there are 9.4 million more omnichannel households today than there were in 2019, with a combined grocery budget of $4.9 billion.

Retailers in the top quartile outperform the rest of the market in delivering superior customer benefits, savings or both. Top-quartile retailers have an average compounded average growth rate (CAGR) of 7.3% compared to third-quartile retailers with a 3.2% CAGR. In addition, 59% of customers of first-quartile retailers have a strong emotional connection with retailers compared to 45% of customers of third-quartile retailers.

Amazon is still superior in online shopping, but all other online retailers are closing the gap. In fact, 52% of customers of first-quartile retailers reported they have an easy online shopping experience, an increase of 13% from 2019. The top six retailers for digital are 1) Amazon, 2) Amazon Fresh, 3) Target, 4) Sam’s Club, 5) Walmart and 6) Walmart Neighborhood Market.

Club stores are gaining momentum, with three of the top 10 spots in the first quartile now occupied by club stores. Costco (2), Sam’s Club (5) and BJ’s Wholesale (10) achieved a high rank through a combination of top-notch dependability and savings while delivering a seamless experience. In dunnhumby’s 2019 RPI, no club store ranked higher than seventh.

BJ’s Wholesale was the biggest mover in the index over the last three years, climbing from 27th place to 10th place in 2022. Schnucks climbed 16 spots and currently sits in the second quartile. Other big ranking movers not in the first quartile but improved were Food Lion (+14 spots), Food4Less/FoodsCo (+12 spots), Weis (+10 spots) and Food City (+9 spots).

According to the index, these five most-improved retailers have two things in common: they displayed superior ability to navigate supply chain issues by improving their ranking in dunnhumby’s operations pillar, which measures out-of-stock perceptions, and they have existing strengths or made significant gains in their competitive position on saving customers money.

With consumers demanding faster service and a reduced-friction way to get their essential goods, Walmart, Albertsons and Aldi, among many other grocery stores, are offering fast delivery and pick up on certain convenience items in order to gain more market share and win smaller basket trips from consumers that shop convenience stores.

According to NACS State of the Industry data, the average in-store basket size increased 6.3% in 2021 to $7.59 and has grown 22.4% over the past two years. Much of that growth can be attributed to pandemic-era shopping, when customers wanted to get in and out quickly and chose c-stores to fulfill that need as opposed to larger, more crowded grocery stores. Those types of trips have stuck around for c-stores post-pandemic, and now grocers want those customers back.

In addition to grocery stores, convenience stores could be taking market share from quick-serve restaurants. Food sales at c-stores have increased to over 20%, according to research from Cardlytics, and the industry’s share of food sales has increased from 18.42% to 21.39% since 2019.

“As c-stores upgrade their foodservice offerings to be on par with QSRs, consumers may be more likely to choose the option that is most convenient for them,” writes Forbes. “Speed is one factor, but so is location … and additional offerings, like gas or beer. For the latter, the scale will always tip in c-stores’ favor.”