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H-E-B and Costco knock off Amazon as top US grocers

By Maria Halkias, The Dallas Morning News
Published: January 31, 2023, 11:16am

H-E-B, followed by Costco, have supplanted Amazon as the top U.S. grocers in an influential industry ranking.

Amazon lost its lead to San Antonio-based H-E-B after the e-commerce leader held the top spot during the first two years of the pandemic, according to the new Dunnhumby retailer preference index released Tuesday.

“H-E-B, Costco and Amazon are the three retailers with customer value propositions best built for long-term success,” the report said.

H-E-B, while well-established in other parts of Texas, is now actively building its namesake stores in Dallas-Fort Worth. It has opened stores in Frisco and Plano, and breaks ground Friday on a store in Mansfield. That store is expected to open in early summer 2024.

Later this year, stores in Allen and McKinney are scheduled to open. It’s also planning to start construction on a second Frisco store in June.

In 2020 and 2021, Amazon was the Dunnhumby index winner with its e-commerce lead. H-E-B ranked second in the overall ranking.

By 2022, H-E-B reclaimed the top spot with a combination of “better savings and better-quality experience/assortment,” according to Dunnhumby, which generates the only grocery ranking that combines financial results with customer perceptions. The index includes the largest 63 retailers in the industry that sell food and non-food household items.

“Digital has staying power but is no longer as key to driving short-term retailer momentum as it was from 2020 to 2021,” the report said.

Amazon fell to third place in 2022 with Costco behind H-E-B. The rest of the new list includes another regional grocery powerhouse, Rochester, N.Y.-based Wegmans, in fourth place and warehouse club stores moved up the list.

The rest of the top 15 with the highest overall customer preference scores are: 5) Sam’s Club, 6) Market Basket, 7) Amazon Fresh, 8) Trader Joes, 9) WinCo Foods 10) BJ’s Wholesale Club, 11) Target, 12) Aldi, 13) Shoprite, 14) Walmart Neighborhood Market and 15) Walmart.

The retailers in this group have $924 in grocery sales per square foot and a 5-year compound annual sales growth rate of 7.3%. The top 15 retailers together had an average of 59% of their customers saying they have a strong emotional connection with the grocers.

H-E-B is the largest privately owned company in Texas, with annual sales of almost $39 billion from its four concepts H-E-B, Dallas-based Central Market, Mi Tienda and Joe V’s Smart Shops. The 118-year-old grocer operates stores in Texas and Mexico and has said its geographic focus is part of its success.

“We’ve chosen to serve a state rather than a segment of customers. So we’re trying to serve everyone in Texas and northern Mexico,” said H-E-B president Craig Boyan said last month on a Federal Reserve Bank of Dallas podcast. “That means we have to be successful by serving every different income level and ethnicity and demographic type.”