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customers' overall price perceptions for each banner drive this pillar. Price has been the dominant driver of long-term preference in the grocery industry. Over the past three years, the importance of Price was marginally declining as the economy strengthened but was still the most important driver in 2019. During 2020, however, Price was less important as consumers looked to get in-and-out as quickly as possible and scrambled to simply find items in-stock.

Price perceptions are also correlated with how far shoppers will travel and how emotionally connected they are to the store. Simply put, shoppers will travel longer distances for better prices and are more likely to be satisfied with retailers with strong price perception. Additionally, Price perception is much more likely to be positively impacted by better base prices than by relevant discounts and promotions.

So, how has Covid changed the competitive dynamic? As mentioned above, the Price is the top driver in explaining long-term performance in previous reports, but for driving short-term financial performance during the Covid Era alone, Price dropped behind Speed, Digital, and Discounts, Rewards & Information. This shift in customer needs aligns nicely with traditional banners, who have historically done well on Speed and Discounts, Rewards & Information, but poorly on Price. This also helps explain why traditional banners like Food Lion, Albertson's and Winn Dixie performed well in 2020, while powerhouse banners like Walmart, Costco and Trader Joe's have stumbled a bit.

Also, in a year of rapidly growing prices and the chaos resulting from the virus, we saw traditional banners improve their Price perception scores more than any other channel. We don't expect that traditional retailers did anything much different, but we hypothesize that their Speed and Safety scores helped to create a Price perception halo and that customers felt EDLP competition had less reliable and consistent pricing than they typically had. More relative value was delivered by traditional banners and that translated in improved Price perception for many shoppers. However, we expect Price perception across banners to return to their pre-Covid levels once the dust settles in the back half of 2021 and 2022. The two tables on the right highlight the gains made by traditional grocers with regards to Price perception. The first table below shows the First Quartile banners for Price. Only four of the fourteen banners are traditional banners, and they include Market Basket, H-E-B, ShopRite and Fareway. The remaining ten banners fall into mass, warehouse, or discount channels which is consistent with the three previous RPI studies. However, when we look at the notable gainers in the second table, all those jumping more than five ranks are traditional banners. Although Price was less important this year, these gains by traditional banners also helps to explain why they did so well in 2020.

We also expect that, long-term in a post-Covid world where supply chains are back to normal and pricing signals are once again clear, Price will be the dominant driver for choosing a preferred retailer. This could also be amplified if the much of the country experiences economic struggles and government stimulus is delayed or non-existent. The structural damage to the economy is still not fully understood and the more damage that occurs during the virus, the longer it will take for the economy to fully bounce back.

Price and Covid: Voice of the customer

"I only buy where I can pick up groceries without leaving my car, but I must purchase minimum $35. If I only need a carton of milk, I just have to wait until I need 5 or 6 cartons, or enough other things to add up. I almost always end up spending too much."

The Great Recession programmed lasting value-consciousness into the minds of consumers. How might COVID-19 rewire us again?

The fourth annual dunnhumby Retailer Preference Index for U.S. Grocery (RPI) sheds light on what makes a retail winner, and how the pandemic has impacted consumer shopping behaviors. Known as retail's equivalent of the Gartner Magic Quadrant, the RPI surveyed about 10,000 consumers to understand what's driving customer preference and rank the top 57 grocery retailers in the United States.

Join dunnhumby CEO Guillaume Bacuvier as he dives into the latest study, revealing the levers for success, and which retailers are winning the hearts, and wallets, of shoppers today.

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In order to reflect on how the grocery world changed in 2020, we have changed how we calculate our overall Grocery RPI score. Given the historically unique metrics we've witnessed in the economy, the restaurant industry and the grocery industry, along with the rare influence a global pandemic has brought to consumer behavior, we're viewing grocery success in 2020 through a different lens than we viewed grocery success in prior years.

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In the first episode of Customer First Radio, Dave Clements, Global Head of Retail for dunnhumbyand David Ciancio, Global Head of Grocery for dunnhumby kick off the series by discussing what it means to be a truly Customer First business, share which retailers and brands today embody a Customer First mindset, and examine how Customer First materialized during the pandemic with retailers.

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Photo by Will Francis on Unsplash

The 2021 Retailer Preference Index: Who's winning and why. David Ciancio, Global Head of Grocery discusses the 2021 U.S Retailer Preference Index (RPI): Grocery Edition with the lead author of the RPI, Erich Kahner. They unveil key insights and discuss who is winning and who is best positioned for the future.

Prophets of Aisle Six, Episode 2: Heinen’s Fine Foods
dunnhumby’s Prophets of Aisle Six, Episode 2: Heinen's Fine Foods

The Prophets of Aisle Six is the first online reality series focusing on innovation in the food retail industry. In this episode, Jose Gomes, dunnhumby's North America Managing Director, travels to the downtown Cleveland store of Heinen's Fine Foods. Jose meets with Tom and Jeff Heinen, co-owners and brothers, and learns how they are evolving their grandfather's mission of delivering excellent customer service. With 23 stores in Northeast Ohio and the greater Chicago area, and a 90-year legacy, Heinen's is proving that being a small retailer can be an advantage when it comes to data.

In this series, dunnhumby tours the globe and speaks with some of the world's greatest brands, exploring their biggest challenges and how they are using customer data science to meet those challenges.

In my last post, I posed five questions to retailers to help them determine whether they're ready for a customer-first mindset. Now, I'd like to challenge the retail basics that seasoned retailers were trained on, and suggest instead a new customer data science approach.

"Retail is detail" is common industry wisdom, and it means that achieving success is subtle and difficult. Success in any field demands practice and experience, and so it is little wonder that many senior retail and brand leaders and managers have vast years of involvement, and that most have grown up through the business in progressive steps.

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