WILTON, Conn. -- Wal-Mart towered over other retailers in the general score on the recently released annual PoweRanking survey from Cannondale Associates here, while the two other retailers that showed the greatest gains overall were also from the mass and club channel -- Target and Costco.
"This is the first year that it's been so clear that three of the companies that are doing so well are not supermarkets," Ken Harris, a founding partner of Cannondale and author of the report, told SN.
Retailers are ranked by manufacturers, and vice versa. In order, the highest-rated retailers were Wal-Mart, Safeway, Target, Kroger, H-E-B, Publix, Wegmans, Ahold, Costco and Meijer.
This year's report used consumer-driven behavior as the gold standard, for both retailers and manufacturers. The two highest-ranked manufacturers were Kraft and Procter & Gamble, followed by General Mills, Coca-Cola, Pepsi-Cola, Frito-Lay, Nabisco, Campbell Soup, ConAgra and Unilever HPC, all of which supply Center Store groceries.
Within the report, retailers that ranked highest on "Most Innovative Consumer Marketing/Merchandising" were H-E-B and Wegmans, both privately held regional grocers.
"It's how they have adapted," said Harris. They were followed by Target, Wal-Mart, Safeway, Kroger, Publix, Ahold, Meijer and Giant Eagle. This category was considered key because of the theme for 2002, "Consumer Driven."
Last year's report talked about the importance of execution at retail, and this year's highly ranked retailers -- Wal-Mart, Target and Costco -- are known for delivering on execution. "Some might argue they are 'plug and play,' but when they say they are going to do something, they do it," Harris said. A "your word is your bond" kind of thinking exists with those three retailers more than with others, Harris continued. "Manufacturers respect that. They are willing to work and go through paces as long as the retailer lives up to its promises."
All three big-box retailers are trying to grow their brands, including private label. Kirkland private label is huge at Costco, as are Wal-Mart's and Target's own labels. "It's that they're doing it in a way that manufacturers understand," said Harris. "It has less to do with merchandising and more to do with marketing." Wal-Mart, Target and Costco are speaking the manufacturers' language to a broader audience, he said.
Their focus is on elements that bring consumers in and get them to buy more, with not as much emphasis on price. Target is definitely not known for lower prices, and while Wal-Mart promotes this, the retailer is not always necessarily the lowest, Harris said. Costco is low price "only if you buy unwieldy, big packages," he said.
Retailers were ranked on points such as: clearest company strategy; best branding of stores; whether they would be powerful retailers 15 years from now; which were the best to do business with; and which have the best category management and buying teams, most innovative consumer merchandising programs, best supply chain management and best practice category management/Consumer Marketing At Retail (CMAR).
Among CPG manufacturers, Kraft won four of the eight categories, which placed it above the usual winner Procter & Gamble, which was second. General Mills, Coca-Cola, Pepsi-Cola and Campbell Soup made strong gains. Campbell's jump in the PoweRanking was 3.8 points, putting it back in the top 10.
Retailers are impressed by how hard Campbell's is working, Harris said. The company may not have all the answers, but at least it is focused on how to grow its business, he said.
"If the retailer is internally focused, it may not be able to see which manufacturers in dry grocery are saying, 'Throw us a life raft, help us help you,"' Harris said. Grocery retailers should take a closer look at how these manufacturers can help them, for example, by sharing sales data.