From Wal-Mart to Kroger, Retail Ranking Shows Industry in Flux

It's probably the most telling part of trade relations: when partners grade each other.

That's what happens in Kantar Retail's 15th annual PoweRanking report, which was recently unveiled.

This latest installment does a nice job of identifying the retailers, manufacturers and trends gaining momentum in the midst of fast industry change.

Kantar produces separate annual lists of the best manufacturers and retailers, as ranked by their partners (some 400 responded). The roster of best suppliers was headed by P&G, Kraft, General Mills, PepsiCo and Unilever. This column, however, will focus on top retailer picks by manufacturers, who voted based on a range of strategic and business fundamentals criteria. What's interesting isn't just which retailers made the top list, but also how scores compared to prior performance (two-year rolling basis).

Here are this year's top 10 retailers along with their composite scores: The big three are Wal-Mart (54.2%), Target (49.4%) and Kroger (38.8%). These are followed by Costco (21.3%), Publix (14.4%), Wegmans (13.1%), H-E-B (12.3%), CVS (10.7%), Walgreens (9.1%) and Safeway (8.3%).

The biggest gainers were Target ( 8.2), Walgreens ( 2.0%) and Costco ( 1.7%), while the biggest decliners were Wal-Mart (-8.1%), Safeway (-5.2%) and Kroger (-3.9%). A word about declines: Respondents were asked to identify only their top picks, so those choices have the impact of pushing others down.

Here are some key takeaways from my reading of the report and discussion with Kantar Retail folks.

• Collaboration wins: Target gained for being “a collaborative partner who mutually wants to succeed with … vendor partners.”

• Lack of clear strategy hurts: Wal-Mart suffered from declining clarity of company strategy and challenges in communicating its value proposition.

• Rising expectations can challenge: Kroger created “huge expectations” for how to interact with manufacturers using data, and now “manufacturers are wondering what the next steps will be,” said Kantar's Ken Harris, CEO, Americas consulting.

• Economy brings hurdles: Safeway is struggling with how to balance its lifestyle store approach with keeping prices in line in this economy, said Ginny Valkenburgh, Kantar's insight manager.

This year's report focused on the theme “Quick Response,” referring to both the new digital codes and the imperative for speed in trade relations. I see another reason to emphasize the word quick this year. It's amazing how quickly perceptions of companies are being transformed.