H-E-B again takes No. 1 spot in national grocery ranking with its Texas stores

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By Maria Halkias | Dallas Morning News

H-E-B is pictured Tuesday, Sept. 21, 2023, on Lincoln and S Expressway 83. (Denise Cathey/The Brownsville Herald)

H-E-B was named the top U.S. grocery retailer in an influential grocery industry ranking released Thursday.

The San Antonio-based supermarket retailer with annual sales of $43 billion became the first grocer to be recognized three times as No. 1 in the nationwide Dunnhumby retailer preference index.

Amazon ranked second and Costco was third for the second year in a row.

Regional grocers are gaining momentum and the “heightened competitive intensity and greater consumer scrutiny will continue this year and could change the course of retailers’ competitive positions for the long term,” Dunnhumby said.

H-E-B topped the ranking because they have the strongest customer value proposition for the long-term, Dunnhumby said. “This is due to their superior ability to deliver a combination of better savings and better experiences/assortment, supported by time saving through superior digital capabilities.”

Walmart, which has the largest Dallas-Fort Worth grocery market share, held three spots in the top 10, but traditional grocers Kroger and Albertsons trying to merge since last 2022 were left out of the top 10 ranking that reviews the 65 largest retailers that sell food and non-food household items.

New England chain Market Basket ranked fourth followed by Sam’s Club at five, 6. East Coast operator Wegman’s at six, Aldi seventh, New Jersey-based Shoprite eighth, Walmart Neighborhood Market at nine and Walmart tenth.

Kroger and its Fry’s chain moved into the top quartile for the first time in the seven-year-old Dunnhumby index by driving home its overall price offerings last year when saving customers money matters more than in any other year, the research firm said.

In this June 17, 2020 file photo, the H-E-B Plus! in Brownsville can be seen. (Miguel Roberts/The Brownsville Herald)

Amazon has remained in the top 3 every year and ranked twice first with a segmented customer approach with customers whose needs are more focused on time savings through digital experiences, according to Dunnhumby.

H-E-B acquired Austin-based Favor in 2018 and combined its technology program with it to create a digital innovation lab in Austin. It’s also built small e-commerce fulfillment centers with some of its stores to help fill online orders. The Plano store that opened in 2022 has a 55,000-square-foot robotic fulfillment center attached.

The financial data used in the Dunnhumby model comes from Edge Ascential, and the customer perception data is sourced from Dunnhumby’s annual survey of more than 10,000 American grocery shoppers. The five drivers of the customer value proposition are in order: 1) price, promotions, and rewards, 2) quality, 3) digital, 4) operations, and 5) speed and convenience.

Dunnhumby forecasts that sales growth in the $1 trillion U.S. grocery market will increase in the range of 0.5% to 1.5% in 2024.

That’s one of only three times in the last 30 years with growth below 1% and the slowest growth rate since the Great Recession of 2009. The customer data science firm based its forecast on economic headwinds still facing consumers: “slowing disposable income growth, lower savings rate, higher debt, cost to service consumer debt, and the drying up of pandemic-related savings buffers.”