Wal-Mart, Target, Kroger Lead PoweRanking List

MARK HAMSTRA

WILTON, Conn. — Wal-Mart Stores has garnered the No. 1 position in Cannondale's 2008 PoweRanking survey of retailers, marking the Bentonville, Ark.-based company's 10th consecutive year in that spot.

The survey, released by Cannondale Associates here, uses feedback from trading partners to rank retailers and manufacturers according to a range of criteria relating to their strategic focus and their strength as collaborative partners.

Wal-Mart was followed closely by Target Corp., Minneapolis, and then Kroger Co., Cincinnati, which saw a significant jump in its composite score. Publix Super Markets, Lakeland, Fla., rose from 7th place to 4th in the rankings this year, tied with Issaquah, Wash.-based Costco, followed by Safeway, Wegmans, H.E. Butt Grocery Co., CVS and Walgreens.

“Retailers that excelled in the PoweRanking in 2008 have completed their own customer segmentation and begun to develop alternative store formats and merchandising platforms to address newly identified needs as a result of this segmentation work,” said Ken Harris, managing director, Cannondale Associates.

Among manufacturers, Procter & Gamble, Kraft and PepsiCo maintained their positions at Nos. 1 through 3, respectively, followed by General Mills, Nestlé, Unilever, Coca-Cola, Kimberly-Clark, Kellogg's and Clorox.

Cannondale called this year's PoweRanking study “Full Tilt,” noting that retailing is becoming increasingly focused on the shopper.

“There is a shift in the dynamics of the manufacturer-retailer relationship, and collaboration is more important than ever to succeed in meeting shoppers' needs,” the report stated. “Retailers today have a far greater understanding of their shopper, thanks to shopper card data, better segmentation and more sophisticated tools and personnel. Consequently, manufacturers are challenged to match that accelerated capability by investing in shopper insights research and marketing programs at retail.”

In the PoweRanking analysis, manufacturers scored retailers based on eight criteria: clearest company strategy; best job at branding their stores; durability of their strategy (likely to be on the PoweRanking list 15 years from now); best retailer with which to do business; best category management/buying teams; most innovating consumer marketing/merchandising programs; best supply chain management; and best practice category management.

This year, for the first time, Cannondale also asked both retailers and manufacturers which trading partners were doing the best job at containing costs. Not surprisingly, Wal-Mart was the overwhelming favorite in the retail segment as rated by manufacturers, while retailers named P&G as the clear favorite among suppliers.

WAL-MART IMPROVES

Wal-Mart showed gains in several of the criteria used in the study, including clearest company strategy, durability, innovative marketing and merchandising, and best practice category management.

Retailers are given a score for each category based on the percentage of manufacturers that rank the retailer among the top three. In supply chain management, for example, Wal-Mart earned a score of 92.1% — unchanged from a year ago — indicating that nearly all the manufacturers surveyed placed Wal-Mart among the top three retailers in that area of its operations. It was followed by Target and Publix, respectively, with scores of 31.4% and 26.8%.

Kroger saw some of the most significant gains of any retailer in the study. In the area of “best category management/buying teams,” Kroger garnered the top score among retailers, with 54% of manufacturers citing the company as being among the top three. That represented a gain of 9.7% for that question over the chain's year-ago score. Wal-Mart was No. 2, followed by Target at No. 3.

Likewise, Kroger was the top vote-getter on the question of which retailers are best at category management, earning a score of 52.7%, up 7% over year-ago results. It was followed by Wal-Mart, with a score of 41.6%, and Target, with a score of 40.3%.

Kroger had a strong gain this year on the question of which retailers have the clearest company strategy: Its score was up 7.9%, for a total of 33.2%, ranking it third behind Wal-Mart and Target, respectively. Publix, in fifth place, also showed a strong year-over-year gain, with a score improvement of 3.1%.

In terms of innovative consumer marketing and merchandising, Kroger also showed strong gains over year-ago results, with a 4.1% improvement, to a score of 24.4%, placing it third behind Target and Wegmans, respectively.

Although Wal-Mart was the clear favorite on the question of which retailer is best to do business with — it had a score of 63.7% — Kroger showed the strongest gains of any chain in the Top 10, with an improvement of 5.3%, for a score of 41.9%. Publix was No. 3 in that category, with a score of 28.5%.

In other retail categories:

More than 300 retailers and manufacturers participated in the study, which Cannondale has conducted each year since 1997.

Cannondale Associates compiles its retailer PoweRanking based on feedback from manufacturers. The composite scores are based on eight different criteria related to manufacturers' strategic initiatives and business fundamentals.

Cannondale Associates compiles its manufacturer PoweRanking based on feedback from retailers. The composite scores are based on eight different criteria related to the retailers' strategic initiatives and business fundamentals.