{"id":3628,"date":"2020-11-06T15:27:31","date_gmt":"2020-11-06T09:57:31","guid":{"rendered":"http:\/\/www.intelligencenode.com\/blog\/?p=3628"},"modified":"2026-03-09T15:15:44","modified_gmt":"2026-03-09T09:45:44","slug":"who-won-the-grocery-price-wars","status":"publish","type":"post","link":"https:\/\/www.intelligencenode.com\/blog\/who-won-the-grocery-price-wars\/","title":{"rendered":"Who is set to win the 2020 grocery price wars?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">With the onset of the pandemic and the subsequent 360-degree shift in consumer buying behavior and priorities, there have been some immediately tangible effects on the food and grocery market which has been highest in importance, testing all their existing <a href=\"https:\/\/www.intelligencenode.com\/blog\/quick-easy-guide-retail-management-systems\/\">retail management systems<\/a> and abilities to keep up with demand. Factors such as quality, price,\u00a0 convenience against loyalty, and private labels against well-loved brands all came to the forefront this year, determining which brands managed to reach success in this quickly evolving industry.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Among the best of those brands in the past year are Walmart, Amazon, Kroger, and H.E.B.- the 2020 Progressive Grocer\u2019s annual ranking of leading retailers of food and consumables show that the 100 companies featured grew sales by 5.7% to $1.869 trillion from 1.768 trillion the prior year.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What constitutes success in the grocery price wars?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The answer is a lot more nuanced than one may initially think and extends far beyond low prices. In fact, a <\/span><span style=\"font-weight: 400;\">Retailer Preference Index report<\/span><span style=\"font-weight: 400;\"> published by Dunnhumby in January 2019 examines grocery chains through a uniquely rigorous lens. The following examination and ranking is based largely on their findings.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the report, customer preference hinges on two distinct \u2013 yet equally vital \u2013 factors:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Financial performance \u2013 <\/span><i><span style=\"font-weight: 400;\">sales growth, market share, sales efficiency per square foot<\/span><\/i><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Emotional connection \u2013 <\/span><i><span style=\"font-weight: 400;\">trust, satisfaction, the intensity of loyalty, the likelihood of a recommendation<\/span><\/i><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These two key factors rely in varying degrees on seven measurable \u201cpreference drivers,\u201d which reflect recent customer needs and industry trends in an increasingly competitive and dynamic grocery landscape. Retailers who have been able to optimize their performance find themselves comfortably perched atop the ranking.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The Seven Pillars of customer preference:<\/span><\/h2>\n<p><i><span style=\"font-weight: 400;\">In order of overall impact<\/span><\/i><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Pricing.<\/span><span style=\"font-weight: 400;\"> While more <\/span><span style=\"font-weight: 400;\">popular coverage and perception <\/span><span style=\"font-weight: 400;\">may surround other pillars, price remains a top priority. As Walmart CEO Doug McMillon says,, \u201cPrice still matters. There are a lot of Americans that are counting every penny and every dime.\u201d Price transparency costs relative to other retailers, and prices of natural\/organic products legitimately matter to customers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Quality. It goes hand in hand with Pricing as one of the determinant factors with the deepest influence on customers. The umbrella term \u201cQuality\u201d conveniently covers many interrelated facets, such as freshness of the produce, taste of prepared food, hygiene of stores, treatment of shoppers, and availability of high-end products. In terms of customer preference, it\u2019s worth noting that value perception correlates directly with quality and inversely with price.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Digital. As the media hype surrounding it aptly suggests, Digital is no longer just a good-to-have channel- retailers with digital platforms that best capture an in-store sense of exploration and successfully tailor to personal tastes will win over more customers. That is, provided the platform is convenient, intuitive, and supports products with strong value perceptions.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Operations. Back to the basics: How are products organized? Are items consistently stocked and priced? What kind of variety does the store boast? All these elementary questions still matter, and they\u2019re being handled in increasingly innovative ways with the rise of Digital.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Convenience. Nearby locations and wide product selections mean that customers don\u2019t need to turn elsewhere for any shopping needs. The problem? With both eCommerce and the assortment of retail options rising, customers are as willing as ever to dip their feet in multiple pools.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Discounts, Rewards, &amp; Info. Under the glare of a supermarket\u2019s fluorescent light, nothing\u2019s quite as friendly as a useful coupon or an exclusive sale. Stores who get it right see grand profits; those who don\u2019t can see dollar waste up to 71%.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Speed. A fast checkout is always an added bonus. Speed doesn\u2019t have a positive correlation with financial success, and many of the most beloved chains have all but sacrificed speed for higher pillars. That said, it certainly doesn\u2019t hurt user experience or general optics.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">It should be noted that these values are not necessarily ubiquitous. <\/span><span style=\"font-weight: 400;\">A study done by Market Force<\/span><span style=\"font-weight: 400;\">, for instance, separates the Quality and Operations pillars into several distinct categories pertinent to user experience and doesn\u2019t factor prices as heavily in determining customer attitudes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That said, Dunnhumby\u2019s investigation is as meticulously thought out as any, and its conclusions tend to reflect overarching industry findings (including that of Market Force).<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">2020\u2019s top grocery retailers<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Having listed the pillars, it\u2019s worth noting that no retailer can conceivably lead the pack in every pillar. After all, each grocery chain has only so many resources. The key is strategically allocating these finite resources in profitable ways.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In other words, each retailer has to make certain tradeoffs in its commitment to these Pillars. Some simply do it better than others.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This year, the <\/span><span style=\"font-weight: 400;\">dunnhumby Retailer Preference Index found that<\/span><span style=\"font-weight: 400;\"> for the first time, <\/span><span style=\"font-weight: 400;\">H-E-B surpassed Trader Joe\u2019s as Top U.S. Grocery Retailer. <\/span><span style=\"font-weight: 400;\">The other grocery retailers with the highest overall customer preference index scores are: 2) Trader Joe\u2019s, 3) Amazon, 4) Market Basket, 5) Wegmans Food Markets, 6) Costco, 7) Aldi, 8) Sam\u2019s Club, 9) Walmart, 10) Publix, 11) WinCo Foods, 12) Fresh Thyme, 13) Sprouts Farmers Markets, 14) ShopRite. The RPI study surveyed 7,000 U.S. households to determine which of the top 60 largest grocery retailers have the strongest combination of financial performance and consumer emotional sentiment. (Source: Businesswire)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">H.E.B.: <\/span><span style=\"font-weight: 400;\">This Texas-based retailer has built a devoted following with high-quality customer-targeted offerings and a calculated approach to Price.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2020 it propelled itself to first place primarily due to an improved focus on their <a href=\"https:\/\/www.intelligencenode.com\/blog\/private-label-brand-national-killers\/\">private brand<\/a> and regional assortment relevance- and is among the many newer retailers going head to head with giants like Costco in their readiness for potential economic downturns and staying competitive in <a href=\"https:\/\/www.intelligencenode.com\/blog\/use-price-quality-matrix-optimize-product-pricing\/\">price and quality<\/a>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Trader Joe\u2019s.<\/strong> This unconventional grocer and prior leader in the grocery sector is a prime example in value perception primarily for its commitment to low prices and high quality. With its <\/span><span style=\"font-weight: 400;\">optimal store layout<\/span><span style=\"font-weight: 400;\"> and complete eschewing of Digital and several Convenience factors, Trader Joe\u2019s has been able to focus its efforts (and dollars) on in-store experience and top-of-the-line affordability. This, along with its uniquely laid back ambiance and human touch, has cultivated a particularly niche private brand that has built unbreakable emotional connections with customers nationwide.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Wegmans<\/strong>. With the top Quality ranking and a high Convenience score, Wegman\u2019s has earned its way into the top five overall. But here\u2019s where things get interesting: Wegman\u2019s isn\u2019t in the first quartile in any other Pillar and ranks notoriously low for Pricing. This is where the notion of a tradeoff is most evident: Wegman\u2019s doesn\u2019t need unbeatable prices because its products are worth their costs. According to Market Force, this unwavering commitment to high-quality items and in-store experience alone has vaulted Wegman\u2019s to \u201cAmerica\u2019s favorite grocery retailer.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Costco.<\/strong> While Wegman\u2019s demonstrates that success doesn\u2019t depend on low prices, Costco shows it still can. The ambitious bulk retailer scores are high in each of the top four Pillars \u2013 Price, Quality, Digital, and Operations \u2013 with a particular commitment to leading the pack in pricing. And if you\u2019ve ever been to Costco, you\u2019ve likely witnessed firsthand how little speed matters to sales growth.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Amazon.<\/strong> The digital giant <\/span><a href=\"https:\/\/www.businessinsider.com\/amazon-whole-foods-deal-effect-on-grocery-prices-2018-7\"><span style=\"font-weight: 400;\">is cited as<\/span><\/a><span style=\"font-weight: 400;\"> \u201chaving a downward pressure on [grocery] pricing\u201d with its cost comparisons and Prime membership perks. Despite not ranking high for Quality or Convenience, <\/span><a href=\"https:\/\/money.cnn.com\/2018\/06\/06\/news\/companies\/costco-target-walmart-kroger\/index.html\"><span style=\"font-weight: 400;\">CNN Business believes<\/span><\/a><span style=\"font-weight: 400;\"> that Amazon\u2019s \u201ctested playbook for undercutting established players\u2019 prices [is all it takes] to grab market share.\u201d With technological tools and innovative data crunching at its disposal, Amazon\u2019s spot on this list feels secure for years to come.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And a few others\u2026<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><strong>Aldi and Lidl<\/strong> \u2013 Two German discount retailers with a limited variety of products, but listed at unbeatable prices <\/span><a href=\"https:\/\/www.npr.org\/sections\/thesalt\/2017\/09\/27\/552384150\/discount-grocers-aldi-and-lidl-give-u-s-stores-a-run-for-their-money\"><span style=\"font-weight: 400;\">that even rival<\/span><\/a><span style=\"font-weight: 400;\"> Amazon\u2019s influence on the price war.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><strong>WinCo<\/strong> \u2013 Despite being a minor player out west, it scores well due to its \u201ccombination of Price and emphasizing Quality in the right places with a focus on the retail basics.\u201d<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">What exactly are those \u201cright places,\u201d? And how does a retailer make those decisions?<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">High-value perception depends on more than low prices alone<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">That much is clearly evidenced by H.E.B\u2019s recent success. Furthermore, simply focusing on certain pillars isn\u2019t enough either. Sure, half of the retailers who excel in both Digital and Discounts rank in the top quartile overall, but the other half in both categories score closer to the bottom.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thus, the key doesn\u2019t necessarily lie with which pillars you prioritize, but <\/span><i><span style=\"font-weight: 400;\">how<\/span><\/i><span style=\"font-weight: 400;\"> you prioritize them. You can&#8217;t just cut prices; you need to know which prices to cut and by how much. Throwing darts at the board with product decisions and hoping something sticks is how retailers end up in the 3rd and 4th quartiles.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Since similar macro approaches can yield wildly varying results based on the micro details, retailers are carefully refining their plans to stay ahead of their competition. And in this day and age \u2013 when Amazon of all companies is at the cutting edge \u2013 this means turning to solutions founded in advanced technology.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">eCommerce grocery price wars<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">According to a survey conducted in August 2020 by TABS analytics spanning over a thousand adults, Walmart has passed Amazon as America\u2019s top online <a href=\"https:\/\/www.intelligencenode.com\/retail-dashboard\/food-and-grocery\/\">food &amp; grocery<\/a> retailer. The proportion of adults who shop online for groceries is significantly smaller compared to 2019, despite the pandemic. <\/span><span style=\"font-weight: 400;\">Furthermore, smaller retailers like FreshDirect and NetGrocer now span across more than 16% of the grocery eCommerce market, proving the study\u2019s findings that these smaller businesses have grown their share in the eCommerce market much faster than it\u2019s larger counterparts. Inclusion of emergent services such as partnerships with companies like doordash and introducing curbside pickups at the start of social restrictions and increasing fear due to the pandemic also played a part in alternative sales growth despite not being completely digital in nature- and despite varying numbers and levels of success of eCommerce groceries, all trends point to the same insight; that an omnichannel presence and strategy, in simply its accessibility to consumers with different needs, can help boost sales in a huge way.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Winning the grocery price war requires tech strategies infused with data and dynamic pricing<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Robot cashiers may make headlines, but AI has a much wider range of applications to optimize a grocer\u2019s results.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Companies of all sizes (see: WinCo) are implementing technology for <\/span><a href=\"https:\/\/www.digitaldoughnut.com\/articles\/2018\/june\/the-grocery-tech-landscape-2018\"><span style=\"font-weight: 400;\">a host of forward-thinking initiatives<\/span><\/a><span style=\"font-weight: 400;\">: \u201c<a href=\"https:\/\/www.intelligencenode.com\/knowledge\/product-assortment-planning-retail\/\">assortment planning<\/a>, big data and data processing, customer insights, customer loyalty, eCommerce, in-store analytics, in-store marketing technology, price optimization, promotion optimization, and promotion targeting.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the use of tech in analyzing grocery data becomes more ubiquitous, Planet Retail director Boris Planer\u2019s <\/span><span style=\"font-weight: 400;\">proclamation<\/span><span style=\"font-weight: 400;\"> that the \u201cability to connect with the customer and mine data is going to be one of the main capabilities for the future\u201d rings as true as ever.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For instance, major grocery mogul Kroger <\/span><a href=\"https:\/\/www.winsightgrocerybusiness.com\/technology\/kroger-making-its-mark-grocery-tech\"><span style=\"font-weight: 400;\">has been lauded<\/span><\/a><span style=\"font-weight: 400;\"> for moving to the forefront of digital progression which includes \u201cstrategic investments\u201d such as \u201ccustomer-centric technology solutions\u2026 space-optimized stores\u2026 and smart-priced products.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">More significantly, tech-fueled dynamic pricing has become <\/span><a href=\"https:\/\/www.pymnts.com\/news\/ecommerce\/2018\/dynamic-pricing-holiday-shopping-amazon\/\"><span style=\"font-weight: 400;\">one of the primary drivers<\/span><\/a><span style=\"font-weight: 400;\"> pushing Amazon to the forefront of this grocery war. Such a fluid price tag approach can simultaneously benefit revenue while providing customers improved offers in real-time. Moreover, the retail consultants at Plant Retail found that around 78% of retailers are seeking better ways to apply fluctuating prices and prudent discounts.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, as Planer himself realizes, \u201cretailers are beginning to understand that it would be a big mistake to think they can do it on their own.\u201d<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Intelligence Node is here to help retailers embrace tech solutions<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Absorbing the endless sea of data gathered from the distinct factors of <a href=\"https:\/\/www.intelligencenode.com\/blog\/its-all-about-the-pricing-strategies\/\">pricing strategy<\/a> is a task requiring time and effort, as well as a high degree of tech vigilance. Intelligence Node has created solutions to take this burden off your plate and streamline the entire process to improve your overall competitive advantage.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For instance, the <a href=\"https:\/\/www.intelligencenode.com\/solutions\/price-monitoring-software-for-ecommerce\/\">Inoptimizer \u00ae tool<\/a> is an efficiency-minded price optimizer built to put retailers in the best position both for their customers and relative to the competition. It automates <a href=\"https:\/\/www.intelligencenode.com\/blog\/5-online-retail-pricing-strategy-examples-worth-copying\/\">retail pricing<\/a> and inventory management, reads market trends to recommend the most profitable prices, and traces product histories to fortify future strategizing.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s not even to mention 360\u00b0Pricing\u2122, which examines price elasticity, inventory levels, competitive pricing, and more to better determine optimal markups and markdowns<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A further look at the <\/span><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.intelligencenode.com\/our-story\/\">Intelligence Node<\/a> solutions<\/span><span style=\"font-weight: 400;\"> will highlight numerous useful benefits, such as trend tracking, <a href=\"https:\/\/www.intelligencenode.com\/solutions\/assortment-planning\/\">assortment intelligence<\/a>, and user-friendly data feeds. But all of this is all to emphasize a simple truth: the best grocery retailers haven\u2019t reached the top by accident. Trader Joe\u2019s, Wegmans, Amazon, Costco, and W-E-B have developed superior business models that utilize the Pillars to boost emotional connection and financial performance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And with those tools firmly in hand, climbing to the top of the customer preference mountain becomes a much more attainable goal for your retail business.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the onset of the pandemic and the subsequent 360-degree shift in consumer buying behavior and priorities, there have been some immediately tangible effects on the food and grocery market&#8230;<\/p>\n","protected":false},"author":2,"featured_media":3631,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,41],"tags":[1032,1030,1029,1028,1034,1024,1031,929,1033],"class_list":["post-3628","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-consumer-behavior","category-pricing-strategy","tag-aldi-grocery-prices","tag-aldi-prices-2018","tag-gorcery-prices","tag-grocery-price-comparison","tag-grocery-retail","tag-grocery-war","tag-lidl-prices","tag-online-grocery","tag-supermarket-prices"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Who is set to win the 2020 grocery price wars?<\/title>\n<meta name=\"description\" content=\"2020\u2019s grocery 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