How Grocery Retailers Build Top-Shelf Reputations

Last month saw the release of the yearly Harris Poll Reputation Quotient, a poll ranking the businesses in the U.S. with the strongest corporate reputation. It was no surprise that the top 10 for 2018 contained companies such as Amazon, the Walt Disney Co. and Tesla, but a closer look sees a strong turnout for the grocery retail sector.

Wegmans, the beloved Northeastern supermarket chain, came in at second overall, and there were also appearances for H-E-B, Publix and Aldi—at the expense of the likes of Apple and Google, which have fallen out of the top 10 completely.

What are these grocery chains—some highly regional players—doing so right, that the corporate giants are doing wrong? How does a strong corporate reputation lead to shopper retention and retail performance?

Private Ownership

One glaring commonality between the four supermarkets in the top 10 is that none are public companies. H-E-B and Wegmans are family-owned, Aldi is privately controlled, and Publix is owned by its employees in much the same style as John Lewis in the U.K.

There’s a great deal of evidence that having a nonpublic ownership structure in which staff are genuinely incentivized, well-paid, engaged and treated very fairly makes a huge difference—not only in terms of a company’s corporate reputation, but also through the customer satisfaction that results from enhanced service levels. Compare this to much larger publicly traded retailers, which often have a reputation for high staff turnover and low morale.

Related:'Women of Wegmans' Takes Retailer's Cult Following to New Heights

Staff are the secret weapon to increasing a company’s corporate reputation as well as customer loyalty. They are, after all, a brand’s best ambassadors—the front-line face of the company that shoppers will physically interact with on sometimes a daily basis. If treated well, they can pass on their advocacy to shoppers.

Local Focus

The fact that three of the retailers in the top 10 are regional players shouldn’t be overlooked. Wegmans operates within a Northeastern remit, and Publix has a presence through the Southeastern states, but predominantly in Florida.

H-E-B may well be one of the 30 biggest retailers in the world, but it operates entirely within Texas and Mexico. Such entrenched regionality creates much more local engagement. These brands have a great reputation with the suppliers in their local communities, using regional farmers, ranchers, dairies and vineyards—essentially any supplier you can think of—to create a variety of products from Texas-shaped chips to special barbecue sauces. This creates far stronger and far more meaningful links with the local community than most national retailers can realistically hope to achieve.

Related:H-E-B Acquires Delivery App Favor

Charitable

This local focus on suppliers is matched by a regional focus on charity activity, and we know that shoppers say they want companies they buy from to make more than just a profit. Wegmans has a number of drives to support its neighborhood communities. In 2017, it donated 14.5 million pounds of food to local food banks and raised almost $8 million dollars through leading community charity events. This month, the retailer committed to expanding its Zero Waste initiative, which aims to eliminate all forms of food waste across its locations by using less-than-perfect produce, donating to local food banks and using remaining scraps as feed for livestock. At Wegmans' pilot store in Canandaigua, N.Y., the retailer has achieved an 82.6% recycling rate, while further entrenching its links with local farmers and community groups.

Aldi may be an international brand, but its U.S. charity activity has a very local feel. Its partnership with Action for Healthy Kids supports schools that are nearby its store locations, hosting fitness and nutrition classes and creating farm-to-school programs.

When a retailer not only supports its local suppliers, but also its local communities, it creates a very real emotional attachment. This is a crucial aspect in creating a long-lasting corporate reputation, bringing with it goodwill and a higher share of wallet from consumers.

Bryan Roberts is global insights director at TCC Global.