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Store Investments the Only Saving Grace in Sagging Consumer Satisfaction

Distracted as they are by the myriad of issues facing retailers, it seems store executives are increasingly missing the mark in terms of delivering on consumer expectations—especially in the sectors focused on apparel.

The American Customer Satisfaction Index polled more than 50,000 consumers to determine how happy they were across a variety of metrics, which it rates on a 100-point scale. Coming off of a record-high year, the survey found that customer satisfaction with retail dipped by 0.3% in 2017, relative to the previous year.

The report looked at six retail industries, including drug stores, supermarkets and gas stations. “Department stores and specialty retailers lose the most ground as consumers now prefer to shop online,” the report pointed out, adding e-commerce players outperform all other retailers. “However, even internet retailers show signs of strain, particularly among smaller companies and the online businesses of traditional brick-and-mortar stores.”

Department and discount stores

Looking at the department and discount store category specifically, Costco lead in overall satisfaction, scoring 83 points out of a possible 100. Nordstrom snagged the No. 2 slot with 81 points and BJ’s Wholesale Club, Fred Meyer and Sam’s Club tied to round out the top 3 with 80 points each. Thanks to a 5 percent drop, Dillard’s fell from the top spot in 2016 to 79 points, ranking it with J.C. Penney, Kohl’s and Meijer. JCP slipped to its current ranking after closing 139 stores, while Meijer gained on remodeling efforts and a better prepared foods area.

Dollar General took the biggest tumble, falling 6 percent to 73 points. Sears fared almost as poorly, falling 5 percent to 73 points. “Sears has been slow to adapt to online retail, but according to customers, its physical stores also leave a lot to be desired,” the report noted.

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With 71 points, Walmart trailed the rest of the pack.

When polled about shopping attributes across the category, ASCI reveals that all but two metrics declined last year—though most only by a point. Areas where satisfaction slid included convenience of store locations and hours, courtesy and helpfulness of staff, website satisfaction and speed of checkout process. The biggest decline was for frequency of sales and promotions, a reflection of stores’ attempt to wean shoppers off of their discount addiction.

“There are two bright spots for department stores: customers report that speaking to customer service on the phone is better than it was a year ago (+3% to 77), and that inventory stocks have improved (77),” the survey found.

Specialty retailers

Like department stores and discounters, specialty chains ranked 1.3% lower in 2017 than the prior year. However, L Brands came out as the biggest winner with a 5 percent gain, positioning it in the top spot. The company’s 85-point score set a record for the category. ASCI attributes the performance to L Brands’ funneling 70 percent of its investments into expanding and renovating stores. Consumers also seemed to have embraced the rebranding efforts of Abercrombie & Fitch, which totaled 79 points, representing a 4 percent advancement.

The report found that employees in these stores were among their biggest assets.

“According to customers, staff at specialty stores provide excellent service and outperform every other retail category,” according to the report. “These employees often have an area of expertise and deeper knowledge of products, and customers find them most helpful and courteous (84). They also facilitate a speedier checkout process (+5% to 82).”

Those surveyed said the drawbacks at specialty store locations included the frequency of out of stocks and the availability of brand names. Here again, shoppers lamented the noticeable pullback on sales and discounts.

Online retailers

While it is the sector of retail that consumers rated the highest, e-commerce still dipped by 1.2% in 2017. Amazon bested the group with 85 points, though the company fell by 1 percent when compared to 2016. Newegg racked up 83 points and eBay earned 81 points, putting it on par with Overstock, which was up by 3 points.

Poll respondents rated all but two aspects of online shopping worse in 2017 than in the prior year, including ease of checkout and payment, availability of merchandise size and colors, and shipping options. Only site performance and navigation were rated the same as the previous year.

Overall, ACSI says customer satisfaction is important given that “firms with higher levels of customer satisfaction tend to have higher earnings and stock returns relative to competitors,” plus these companies ware better positioned to weather downturns.