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Who Leads, And Lags, In Customer Satisfaction?

ACSI supermarket graph

Last updated on February 24th, 2014 at 12:46 pm

Customer satisfaction improved for a third consecutive year for retail, according to a report released by the American Customer Satisfaction Index (ACSI). The retail sector overall gained 1.7 percent to an ACSI benchmark of 77.9, boosted by higher customer satisfaction with specialty retail stores, supermarkets, drug stores and gasoline service stations. A fourth traditional retail industry, department and discount stores, showed no change in customer satisfaction compared with a year ago.

Better customer service and widespread discounting among brick-and-mortar retailers more than offset a drop in customer satisfaction with internet retail. With more shoppers choosing to purchase online, customer service may have hit a rough patch for web retailers during the 2013 holiday season. Although online sales growth for the period was weaker than expected, it far exceeded the uptick for traditional retail sales.

“A spate of last-minute holiday purchases online, combined with inclement weather, left some buyers disgruntled by delayed shipments,” says Claes Fornell, ACSI chairman and founder. “That’s the likely reason for internet retail getting its lowest customer satisfaction benchmark in more than a decade. Nevertheless, diminished foot traffic at malls—along with a surge in shopping via mobile phones and tablets—indicates that consumers are increasingly embracing the advantages of online commerce.”

Specialty retail improves but lackluster results for department and discount stores

Customers had a better shopping experience at specialty retailers during the 2013 holiday season, with the category gaining 2.6 percent to an ACSI benchmark of 80. Department and discount stores, on the other hand, remained flat at 77. Upscale Nordstrom led at 83 and discounter Walmart had the lowest score of 71.

“For traditional retailers, discounting in and of itself is not necessarily associated with weak customer satisfaction, nor is high-end retailing a guarantee of the opposite,” said David VanAmburg, ACSI director. “Discount chains Kohl’s and Dollar General are both above average for customer satisfaction and are among the industry’s top four, while Macy’s, a traditional department store, comes in at the low end.”

Several chains were clustered in the ACSI range of 77 to 79, including J.C. Penney, Sears, Target and the aggregate of smaller stores. Compared with a year ago, JCP was down 2 percent, while Sears was up by 3 percent. Macy’s declined 3 percent to 76, but Target suffered the greatest negative change, tumbling 5 percent to an ACSI benchmark of 77.

Among specialty retailers, including wholesale warehouse clubs, office supply chains and clothing stores, Costco regained the lead with a 1 percent uptick to 84, followed by Barnes & Noble (unchanged) and Lowe’s (+4 percent) at 82. Home Depot improved 3 percent to 79, but didn’t catch Lowe’s, which has held the customer satisfaction advantage in home improvement for more than a decade. At the low end, discounter TJX gained 4 percent to 79, pulling slightly ahead of both Gap and Best Buy (tied at 77).

The newly merged Office Depot and OfficeMax moved in opposite directions as of the fourth quarter of 2013, with Office Depot slumping 6 percent to 79 and OfficeMax gaining 5 percent to 82. Staples improved as well, up 3 percent to an ACSI benchmark of 81.

“Mergers often lead to problems with customer service and reduced customer satisfaction,” said VanAmburg. “It is too early to tell how the larger company created from the Office Depot-OfficeMax merger will fare in 2014, or if Staples will emerge as the real winner among office supply chains in the battle for customer satisfaction supremacy.”

Specialty retailers earned strong ratings for staff courtesy and for store layout and cleanliness (ACSI benchmarks of 81) compared with department and discount stores at 78. Specialty stores also did a better job of providing name-brand merchandise (81) than department and discount stores (77).

Publix shines among supermarkets; smaller drug stores strengthen lead

Customers recognize good value for their money when buying groceries, and the industry inched up 1.3 percent to an ACSI score of 78. Among national and regional supermarket chains, Publix dominated for customer satisfaction with a stable benchmark of 86. Since the ACSI’s inaugural year in 1994, Publix has remained No. 1 in its category—a feat unmatched by any other company in the index.

The aggregate of smaller grocery chains placed second at 81, followed closely by Kroger at 80. For the first time in six years, Whole Foods dropped in customer satisfaction, down 3 percent to 78. Winn-Dixie, Supervalu and Safeway were tightly grouped with scores of 76 to 77, while Walmart lagged behind at 72.

Customer satisfaction with health and personal care (drug) stores was up 2.6 percent to an ACSI benchmark of 79. The improvement came from a large gain for smaller drug stores. Walgreens and CVS are tied at 76, while Rite Aid slid 4 percent to 74.

Customers give high marks to both supermarkets and drug stores for locations and hours (ACSI benchmarks of 86 and 87, respectively). When asked about the quality of pharmacy services, shoppers gave better marks to drug stores (84) than to supermarkets (80).

Customer satisfaction with online retail falls to 12-year ACSI low

Customer satisfaction with internet retail plummeted 4.9 percent to an ACSI benchmark of 78, the lowest score since 2001. While results for the largest pure-play internet retailers like Amazon.com and eBay vary, the decline was mostly attributable to a big drop for smaller sites, including both pure players and the websites of brick-and-mortar retailers. This group plunged 9 percent to the bottom of the industry at 75.

While higher demand at holiday crunch-time may have posed a service challenge to some web retailers, Amazon improved customer satisfaction by 4 percent to top the category at 88. Newegg was second at 83, while eBay dropped 4 percent to 80. Likewise, Overstock retreated 2 percent to 79. Netflix showed a large gain of 5 percent, recovering partially from a massive blow to customer satisfaction the company took in 2011. At 79, Netflix is gaining, but still not close to its peak ACSI result of 87 in 2009.

Shoppers find the checkout and payment processes of online retailers (ACSI benchmark of 90) to be vastly superior to that of traditional department and discount stores (72) or specialty retailers (77). Online sites also beat traditional stores by a wide margin for both merchandise selection and availability.

Internet brokers at record high for customer satisfaction

Customer satisfaction with online brokerage improved for a second year, up 2.6 percent to an ACSI benchmark of 80—a record high that coincided with the stock market’s all-time high. The category showed nearly across-the-board gains, with Charles Schwab vaulting into the lead, up 9 percent to 84. Fidelity rose 4 percent to 81, while the aggregate of smaller brokerages (such as Vanguard and Scottrade) gained 3 percent to 80. E*TRADE was lower at 76, but showed a similar 4 percent increase. TD Ameritrade was the sole decliner, falling 4 percent to 74.

“While e-brokers can’t control the market conditions that obviously affect customer satisfaction, they should continue to seek opportunities to differentiate themselves for times when the market isn’t so bullish,” said Fornell. “Enhancing the investment experience on mobile devices may be one such opportunity.”

The full report is available for free download here.

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Donald E. Stephens Convention Center
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