Costco is Canada’s top grocery retailer: Dunnhumby
Costco is Canada’s top grocery retailer, says a new study from global consumer data firm Dunnhumby.
The company’s first annual Canadian Retailer Preference Index (RPI) study, released this week, ranked retailers by combining financial results with customer perceptions.
Metro-owned discount chain Super C came in second place, followed by Maxi (Loblaw) and Walmart—meaning all retailers in the index’s top tercile are club, discount and superstore banners.
Conventional grocers, comprising almost 40% of the Canadian market, represent the second and third terciles, Dunnhumby said.
READ: Retailers are betting on discount. Will the momentum last?
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 impact of customer’s behavioural shift due to inflation are clear to see across the Canadian market,” said Chris Thomson, Dunnhumby's SVP in Canada and the U.S., in a release. “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 behaviour presents opportunities for all Canadian grocers, as long as they are also able to change with their customers.”
The study also found 44% of a retailer’s long-term success is based on their price, promotions, and rewards proposition. Quality (31%), digital (11%), speed and convenience (8%) and operations (6%) make up the other areas of focus for long-term success.
Value lever importance varies by region, Dunnhumby found, with 48% of Ontario-based retailers’ long-term success due to their price, promotions and rewards proposition, compared to 35% for Atlantic Canada-based retailers.
Dunnhumby said Costco’s success is due to their performance across four out of the five pillars, including ranking first for operations nationally.
The U.S.-headquartered club is also moving towards becoming more accessible to customers through third-party delivery channels (Uber Eats and Instacart) and increasing its presence in home meal replacement (HMR) categories.
Retailers can perform strongly based on focusing on one value proposition lever—such as Metro-owned Food Basics, which ranked third in Ontario overall due to being first for mass promotions and price.
Loyalty programs offer conventional retailers the opportunity to compensate for their disadvantage in price and mass promotions. Dunnhumby pointed to Loblaw’s PC Optimum program and Save-On-Foods More Rewards as two successful programs.
When it comes to digital, Walmart came out on top. However, three out of 10 Canadian customers shop Amazon for groceries.
