Amazon leads grocers in personalization

Creating a personalized shopping experience is at the forefront of most grocers’ minds these days, and a new report by data analytics firm dunnhumby said online retail giant Amazon is leading the pack. 

Dunnhumby's Retailer Preference Index (RPI), released Tuesday, ranks H-E-B and Kroger at second and third place, respectively, noting that the top three companies “deliver targeted savings, a localized assortment and frictionless shopping experience best.” 

The Top 10 list is rounded out with Giant Eagle in fourth place, followed by King Soopers (5th), Meijer (6th), The Giant Company (7th), Target (8th), Fry’s (9th) and Smith’s (10th). 

“With the long-term trend of shoppers across all income brackets demanding lower prices, personalization is an opportunity for grocers to better retain and acquire customers,” said Matt O’Grady, president of dunnhumby for the Americas, in a statement. “The goal of this report is to help retailers improve personalization as a whole—the way customers define it. And because customers define personalization as targeted savings, local assortment and a frictionless shopping experience, understanding their preferences is key. The Personalization RPI provides a framework not only for grocery retailers looking to lead the market in personalization, but also for those who are in the earlier phases of their personalization journey who are trying to understand where to focus their resources.” 

The report called Amazon peerless in the category of frictionless experience, which dunnhumby said drives 27% of personalization-related outcomes.  

Target, H-E-B, CVS and Walgreens were also notable leaders in the category, according to dunnhumby, which noted that grocers leading in frictionless service are twice as good as their competitors at "reminding shoppers (usual items, forgotten items, previously bought items, follow-ups), providing relevant (products and topics), providing digital ease (making it easier to shop online or via the app), and personalizing both the online and in-store experience.” 

Amazon ranked No. 1 in 10 of the 11 criteria used to define a frictionless experience, according to the report.  

Costco, Aldi and discount grocers Lidl, Grocery Outlet and dollar stores were all absent from the top two quartiles of the ranking because of their focus on geographic expansion and cost control over personalization, according to the report. “If their ability to expand into new markets diminishes in the future, these grocery retailers will need to look to personalization to drive growth with current customers,” the report noted.  

Grocers that made it into the top quartile of the ranking performed better than other retailers on benefits, cost and in some cases both. That means an average 14% increase in shoppers with a strong emotional connection, a 41% increase in wallet share, a 34% increase in monthly online visits and a 131% increase in traffic share relative to the bottom half of grocers. 

Smith’s, Winn-Dixie, Kroger and Giant Eagle ranked best in offering targeted savings, a category that dunnhumby said drives 45% of personalization-related grocery retailer outcomes. The top performers in the category are two to three times better at rewarding shoppers through loyalty programs with a user-friendly program and point-redemption system.  

H-E-B, Big Y, Wegmans, Food City and Schnucks had the best localized assortment of products, which drives 28% of personalization-related grocery retailer outcomes, the report noted. The top-ranking grocers were 1.5 to 2 times better than competitors at offering the right variety of products, local products and creating a connection to the community.