The American Customer Satisfaction Index (ACSI) fingered low unemployment levels as one of the biggest culprits behind a drop in customer satisfaction across all six retail sectors under review, as Amazon lost top billing in the e-commerce category—a position it had held since 2010.
A healthy economy and relatively full employment levels are good for consumer spending but not ideal for service-driven businesses like retail and restaurants, where skilled employees can find better opportunities instead of simply settling for a paycheck. January unemployment numbers ticked up slightly to 4 percent from 3.9 percent, per data from the Bureau of Labor Statistics.
Retailers, notoriously plagued by high turnover among hourly workers, are even more susceptible to churn when competition for talent is fierce. Hiring and training new staff while managing headcount shortages strains service-oriented retail business, ACSI said in its ACSI Retail and Consumer Shipping Report 2018-2019.
“There is a slump in customer satisfaction in every category of the retail sector,” ACSI managing director David VanAmburg said. “Internet retail versus brick-and-mortar retail, department stores versus specialty stores, it’s all down. Considering the importance of retail to overall consumer spending, this decline is a big deal.”
Customer satisfaction dropped in all six retail subsectors reviewed, including department and discount stores, specialty retailers, e-commerce, health and personal care stores, supermarkets and gas stations. ACSI gathers data year-round on each sector save for e-commerce, for which it looks exclusively at the Oct. 8-Dec. 26 holiday shopping season.
“Historically, the ACSI has found that the more service typically required for a given industry, the lower the customer satisfaction, and it rings true for retailers this year,” VanAmburg said. “Things like courtesy and helpfulness of store staff, call center support, and even availability of merchandise on the shelves all have a service element and have seen drops from a year ago.”
Department and discount stores
Among department and discount stores, satisfaction dipped 1.3 percent to an average score of 76. Warehouse membership company Costco earned the highest marks with a score of 83, while Nordstrom—widely known for its legendary service—declined 2 percent to a score of 79, matching competitors Dillard’s and Kohl’s. ACSI said Belk, among the few with an improved score, was aided by a 500-store rollout of Beauty Bars, which attracted new customers and lifted sales.
Walmart and Sears landed at the bottom of the pack, with the former criticized for painfully slow in-store checkout and discourteous staff, ACSI said. Sears stores, meanwhile, earned an “all-time low” score of 70, marking a 4 percent plunge. Customers aren’t pleased with Sears’ selection of merchandise and often encounter out-of-stocks, part of the ongoing chaos surrounding the retailer recently saved from the brink of bankruptcy.
ACSI found that people really like the mobile apps department and discount stores offer, giving them a score of 82 for quality—higher than any other metric under consideration (though included for the first time this year). Apps also get a high mark of 81 for reliability, trailed slightly by website satisfaction at 79, up one point from the prior year. These gains in digital don’t sufficiently offset a decline in the store experience, where consumers said the store cleanliness, layout, staff courtesy and helpfulness and checkout were all worse than they were in 2017.
Specialty retailers overall similarly declined 1.3 percent, averaging a score of 78—slightly ahead of department stores, ACSI said. Victoria’s Secret parent company L Brands retains the top ranking, though its score of 82 represents a 4 percent drop from its “record high” in the previous index. Ascena, owner of brands including Ann Taylor, Loft, Lane Bryant and Dressbarn, improved 1 percent to a higher-than-average score of 80. Gap inched up 1 percent to clinch the industry average, while Foot Locker’s 78 score remains unchanged year-on-year. Dick’s Sporting Goods fell to near the bottom of the group, with its score of 75 declining three points from the prior year.
Benchmarking metrics trended higher overall for specialty stores than for the department and discount subsector. Apps scored similarly well for quality and reliability with scores of 82 apiece and consumers found better brand offerings in store, moving up to 84 from a score of 82. However, like department stores and discounters, consumers reported a lackluster store experience, where locations where less kempt and staff less pleasant and accommodating than in the prior year.
Though e-commerce is driving change industry-wide as consumers gravitate to the convenience and cost competitiveness of the web, even internet retailing isn’t immune from plummeting customer satisfaction, as its score dropped 2.4 percent to 80. Amazon, the leader in this subsector since 2010, saw its score drop 4 percent to 82 percent due in part, ACSI said, to slowing retail growth in the wake of the Whole Foods acquisition.
Costco dethroned Amazon to claim the top spot with a score of 83. Nike, Nordstrom and Kohl’s score of 81 comes in above the industry average while Macy’s and Target’s online presence matches the average. Again, Walmart and Sears bottomed out, with the Bentonville, Ark.-based retailer earning 74, one point ahead of the latter. Walmart’s recent digital investments grew its e-commerce sales by 43 percent, the company reported in fourth-quarter earnings.
As in other subsectors, consumers were pleased with these retailers’ mobile apps—scoring 86 and 85 for quality and reliability—but several other metrics didn’t fare quite as well. Scores for paying and checking out on desktop, as well as navigation and site performance all declined. Customers also gave lower year-on-year marks for merchandise selection and inventory availability as well as how helpful they found product images and descriptions.