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Premium, standard, or value—which grocery segment is winning in CX?

Derrick Cline | Jul 2, 2019 Derrick Cline 07/02/19

Food and beverage consumer behaviors are rapidly evolving. Disruptions like the rise of online meal kit subscriptions, the expansion of convenience store offerings, and the increased usage of third-party delivery are changing the way people get their food—and no one is feeling the impact quite like the grocery industry.

Not only is grocery competing with a multitude of industries, they’re also challenged to gain and retain customer loyalty within their own industry. Grocery customers have numerous options and aren’t always the most loyal group. Our research shows those who spend more than $250/month on food are doing so at 5+ different grocery brands on average.

In order to get a better understanding of how grocery stores were faring in the customer experience, we broke out 117 brands into these 3 segments:

  • Premium (e.g., Whole Foods + Dean & DeLuca)
  • Standard (e.g., Publix + Hy-Vee)
  • Value (e.g., ALDI + Lidl)

Next we turned to our market intelligence tool BrandGeek®—the fastest most accurate source of behavioral data—and analyzed customer feedback data to see which segments were winning in the customer experience and which were falling short. Here is a bit of what we discovered:


Premium has the highest satisfaction, but Value has the highest recommend scores

When it comes to Overall Satisfaction, Premium stores came out on top. They also took the lead in Availability of Merchandise, Speed of Checkout, and Staff Friendliness. But when we looked at the Likelihood to Recommend scores, it was the Value segment that was the clear winner—showing Value brand customers are exceedingly loyal and willing to talk about it.

When we looked at the shopping rates of the top four departments (produce, dairy, meat, and center store) we again discovered Value coming out on top.

Premium brands are winning with their bakery and deli offerings, likely due in part to the increased popularity of fresh-and-prepared offerings. This could be a big opportunity for Standard brands to drive customer satisfaction and loyalty by ramping up their selection of on-the-go meals.


Motivations vary depending on where customers shop

When it comes to motivators, we learned that customers choose grocery brands for varying reasons. If it’s about location convenience, they’re more likely to pick a Standard store—but they’re willing to go out of their way for quality products at a Premium store. They’re also more likely to choose a Premium or Value brand due to a previous positive experience—even if that’s not the most convenient option.

Though location convenience and product quality are not something grocery stores can always control, providing a positive experience is where they can have a big impact. In order to drive loyalty and keep customers coming back, brands have to execute service standards and deliver on customer expectations. 


Hungry for more?

This segment analysis is just a portion of our research on the food spend and shopping habits of more than 20,000 consumers. To learn more, download the report: How grocery can earn “share of stomach” with fresh-and-prepared food


Derrick Cline | Consumer Insights Manager