February 20, 2015
Consumers are not happy shopping in stores, especially Walmart’s
Customer satisfaction with brick and mortar retail is down for the first time in four years, according to a report by the American Customer Satisfaction Index (ACSI), and that could be really bad news if you believe Claes Fornell, chairman and founder of ACSI.
"Although there are several signs that the economy might finally take off, deteriorating customer satisfaction with retail suggests that consumer demand will not be where it needs to be," said Mr. Fornell, in a statement. "This is also reaffirmed by weak sales for most retailers over the holiday season. Unless consumer spending picks up dramatically, we won’t see much — if any — increase in the pace of economic recovery."
Customer satisfaction with department and discount stores remained unchanged over the past year, according to ACSI, although the gap between the best- and worst-ranked companies continued to widen. Top rated Nordstrom rose four points to score an 86 on the ACSI scale (77 is average) while Walmart fell the same number to finish with a score of 68, the worst in the category.
Consumer satisfaction with grocery stores took a big hit in the past year, falling 2.6 percent to an ACSI score of 76. Rising food prices were seen as a major contributor to consumer dissatisfaction.
Food prices rose 3.4 percent last year while the Consumer Price Index increased only 0.8 percent. "Even with frequent price discounts, it’s difficult for supermarkets to moderate the negative effect of rising food costs, especially when wage growth is weak," said Mr. Fornell.
Trader Joe’s and Wegmans topped the list of grocery stores with ACSI scores of 85. Publix, which dropped five points, tied with H-E-B for second at 82. Walmart was also on the bottom of this list with a score of 71.
Consumers were not all that happy shopping in drugstores either. Satisfaction with drugstores fell 2.5 percent to 77 in the latest ACSI research. Small drugstores led the category with an 81 ACSI score. Rite Aid, which improved five percent, increased to 78 and was followed by Walgreens at 77 and CVS at 75. Walmart, once again, brought up the bottom of the list at 68.
So why did the nation’s largest retailer consistently grade out so low with consumers?
"They are not as dominant on the price side as they were, and the quality still isn’t there," ACSI director David VanAmburg told CBS Moneywatch. "They haven’t stepped up their game on that side, so we are seeing a lot of dissatisfaction by comparison.
BrainTrust
Recent Discussions
Discussion Questions
Why do you think the relative score for customer satisfaction with brick and mortar retailers has declined? What do you think is behind Walmart’s low scores compared to its peers in the various segments tracked by the American Customer Satisfaction Index?
Poll
Customer service, customer service, customer service.
I think retail has crossed a tipping point for general merchandising in terms of consumers having almost zero affinity for shopping in a physical store versus online. The delivery windows are closing, the costs are decreasing and the selections are pretty diverse online, and so I don’t think it’s surprising.
For large general merchandisers, I think it means they have to view their customer and market opportunity holistically and not in terms of offline/online. Their scale should help them compete on a customer experience hyper-focused on convenience at any time or place. That’s a bit different than trends among more affluent shoppers shopping at Trader Joe’s and Whole Foods. I think it comes down to the retail brand’s identity in all cases. When the physical store is known for good deals alone, that’s a pretty dreary value proposition when the same, if not better, is available easier right at the tip of your fingers on a smartphone, tablet or computer. Bad news on one hand, but really exciting from an opportunity to improve standpoint!
When you are the only game in town, there is no benchmark. Walmart has had some store competitors in the past, but their real competitors today are Amazon, Alibaba and eBay. Given the low-cost operations model, Walmart needs to win on better quality in both the big box and new small formats.
It is very interesting to note that Nordstrom rose four points on their ACSI score. If there is a retailer who understands omni-channel and executes personalization, it is Nordstrom. And consumers definitely seem to notice the value-add of a great customer experience at Nordstrom.
In the future of retail there is a growing picture of a “bimodal model”—those competing on selling products, and those focused on consumer experience. From this data the future does not bode well for brick-and-mortar retailers focused on products and price, especially Walmart.
I think it’s interesting that ACSI focused only on the product offering as the major area driving dissatisfaction—product price and perceived quality. I don’t know enough about how they measure it to know whether they have specific evidence from their surveys to support that contention. They certainly didn’t offer any in their comments.
I think that’s a big assumption. Especially when you have as story number one today that Walmart is giving its employees raises. And that the driver behind the raise is the hope that better customer service will improve sales. I would draw a much tighter connection between consumer grumpiness with the overall value of the retail offering and the level of service they’re receiving as part of that value, much more so than blame it on “rising prices.” If that’s true, then why do online retailers continue to do so well? Shouldn’t they be impacted by rising prices too?
I believe the reference to food prices is not the real reason for the change in performance for food retailers. Look at Trader Joe’s and Wegmans as examples that you can still charge higher prices and satisfy customers. Other food retailers can learn from these two formats, which are marked by fun environments, terrific fresh and unique assortments and friendly, knowledgeable staffs. Walmart and many of the other traditional food retailers lack most if not all of these attributes.
It is also interesting to note, that Amazon’s ACSI score (86) was higher than even the best brick-and-mortar food retailers. If you can’t physically deliver on the noted attributes, then the convenience and service provided by online shopping will continue to take share from traditional food retailers.
The lesson learned is the need for an omni-channel experience which delights customers in-store as well as online.
At one point in time there were only brick-and-mortar and catalog sales. If you wanted to know more about the product you needed to speak to a sales person in the store. Same was true if you wanted to actually see the product and touch it, etc.
Today being able to touch, etc., the physical product still something you have to do in a store. However the internet allows you to research the product, get opinions of other shoppers, etc. This lessened the need to go to the store.
The stores lost business and laid off senior, knowledgeable, more costly help. This resulted in less staff, with less knowledge and had a very negative impact on customer service. This is my long winded version of saying I agree with Adrian.
Seems simple enough. Too many retailers continue to confuse labyrinthian pricing schemes with innovation and loyalty discounts with customer service and brand building.
Take a hard look at a lot of retail “marketing” plans and they basically can be reduced down to, “We’ve got the same stuff, sold the same way as everybody else but ours is better because it is cheaper.” That’s not a lot to get excited about.
Where is the meaningful product innovation? Where (as an industry) is a genuinely improved personalized service model? When will more retailers realize they are doing business in the 21st century, not the 19th, and act accordingly?
As to Walmart, part of the issue is it is the biggest target and part of it is that it is also the biggest offender when it comes to confusing value (defined as low price) with value (defined as something desirable from a customer’s point of view).
No surprises here—unless you are shocked, as I am, by the retailing industry’s resistance to significant change.
The most important result is that the the score for some stores rose while the average fell. Consumers demand a good experience when going to a store. If there is no good reason to go to the store, consumers can purchase items online. Obviously some retailers are making an effort to pay attention to consumer experience. As soon as consumers know that something is possible they expect it from everyone else. When it does not happen, consumers can stay home and order from the company that provides a good online experience.
Complaints about Walmart are messy aisles, out of stocks, issues with produce not being as fresh as expected and long check out lines. These can all decrease satisfaction. If similar prices can be found anywhere else online accompanied with a good online experience, consumers can go there.
The ACSI—ok. Before you rant and chant about scores that are based on a sampling of 250 people, by a shop using an original customer satisfaction model from 1989 for an industry that has totally transformed since 2000 let’s consider that whenever shops like the ACSI review retail they rate retail low. Why? My guess is that their sampling technique is old and does not create a blend of shoppers.
ACSI started at the University of Michigan. After living in Ann Arbor, where no one likes Walmart, it is no surprise that Walmart came out low. The press loves these surveys. But do they ever ask where was the sampling was taken from to create these statistics?
I disregard this survey and its ratings. Customer service is always an issue that must be addressed across all retailers, even Nordstrom and Costco.
Walmart is a solid part of global retailing, so does this score matter? What other retailer employs 1.5 million people and provides large stores out in very small towns across the country? NONE! Walmart haters will always be out there, the success of Walmart just infuriates them.
I am proud of what Sam Walton started and what the team has carried forward. It is a sample of how strong our industry is and always will be.
I agree with the comments about service as an underreported part of Walmart’s problems. Think about the issues discussed recently about the challenges keeping fresh meat and produce on display in a “lowest common denominator” service environment like Walmart.
The announcement yesterday about higher wages is a tacit acknowledgment of this problem, especially heading into an era of higher employment and labor shortages. It’s not accident that some of the highest-paying retailers (Costco, for example) have higher satisfaction ratings among both shoppers and associates. Maybe Walmart is finally figuring this out.
Shoppers can sense, but do not understand, why stores do not more directly address their needs. Unfortunately, many people “in the business” don’t fully understand this either. 100 years ago when self-service swept the world, massive benefits accrued by operating supermarkets as warehouses where shoppers came and did their own stock-picking (unpaid labor!)
Any practical study of the industry shows why retailers run hard to just keep from being totally overwhelmed by logistics without spending day and night focusing on what all these shoppers are doing, and how they are helped or are not.
Manufacturer/suppliers have PAID the stores to do a pretty crappy job of running shopper-friendly stores. But it’s because of the game THEIR merchant warehouse customers (the retailers) have created.
Basically there is a gladiatorial contest, brand-on-brand mayhem, going on in the aisles. The retailer runs a serial blind auction for shelf space, and every brand MUST fight for shelf space by increasing SKU counts. Every facing they do not own WILL be owned by a competitor!
This has resulted in 10 times the floor space that is actually needed, and organized along lines that will maximize payments from suppliers, since the retailer works vigorously to keep prices as low as possible.
Most people are unaware that A&P (back in the days when they grew to be the first BILLION dollar business in the world) targeted something like a 19 percent margin for their stores. If a manager turned in, for example, a 23 percent margin, they would be REPRIMANDED, as that additional four percent should have been used to lower prices—or pay staff better!
That’s because supermarkets became media businesses—quite reasonably. Their weekly flyers were just the tip of the iceberg. The retailer ran the low-margin store as a means of creating AUDIENCE and then charged suppliers for access to that audience, with the retailer deriving their REAL profits from their media businesses.
So now shoppers are getting experience with online shopping and finding it superior to brick-and-mortar shopping in many ways. Why can’t brick-and-mortar be more like online in convenience> However, “As long as shoppers live in brick houses, they will shop in brick stores!” That doesn’t mean a lot of brick-and-mortar stores are not heading for bankruptcy.
If they don’t like their business model tampered with, fine. Someone else is introducing more shopper rational business models, and will bury them. That said, the future is bright for brick-and-mortar retailing—but only for those who are willing to adapt to the new realities.
Are we sure we want to evaluate retailers on this metric? It’s hardly a full story. it seems to me that a customer will always tell researchers a negative sound bite about price, but in fact there are so many more unspoken dimensions that make up how we really feel about shopping at various stores.
Retailers today need to focus on more “human experience” elements, and researchers need to understand that tracking the benefits of those kind of investments is tricky at best.
These indices are driving the conversation in the wrong direction.
The issue of out-of-stocks plays a huge role here. I can go online and see exactly what’s available to me now. I go to a store with a list or something in mind and it’s often a crapshoot. Just recently I wanted make potato and leek soup, and had to visit three stores before finding leeks. Granted they are not exactly in season and I’d have to wait a day to get them if I ordered online, but I wouldn’t have been disappointed in the shopping trip.
In general, the overall brick-and-mortar experience isn’t inspiring consumers whereas the convenience of online is gathering momentum. In terms of Walmart, I will go with David VanAmburg’s quote, “They are not as dominant on the price side as they were, and the quality still isn’t there. They haven’t stepped up their game on that side, so we are seeing a lot of dissatisfaction by comparison.”
It will be interesting to see how Walmart giving around 500,000 workers a raise influences this.
One thing I have learned is that people who like Walmart will shop there. People who hate Walmart will shop there less often. We all know what Walmart’s problems are with customer satisfaction, however Walmart is more about sales than it is about making customers feel good about shopping. Walmart’s score card should be the sales and bottom line, not the fact that customers they will never get anyway like Publix and Wegmans more.
So because things cost more in a grocery store, or because satisfaction with Walmart went down? Sounds like an apples-to-oranges survey.
Yet they tout Nordstrom’s score as rising when price isn’t an issue? And are these the same people shopping at Nordstrom as at Walmart?
Customer dissatisfaction surveys are becoming the norm. No one likes shopping. No one likes to go to a mall. No one likes the help.
From what I’ve seen this past week in San Francisco, Chicago and Vancouver, someone is shopping and seeming happy about it.
Walmart’s low scores come from how miserable it is to shop in their stores. While shoppers originally dealt with it (the miserable customer experience) because pricing was lower, that motivation (good pricing) is now gone.
Plus everything they have now is out of China. It’s mostly crummy merchandise, merchandised badly, so who needs it. This you can get from anywhere and have a better shopping experience.
We would all be much better off in this life if Walmart no longer existed period.
I believe online has created a new metric in ease and convenience for the shopper. How can a brick-and-mortar store match the ease and choice of merchandise of online? Online has raised the expectation.
Here is how my most recent shopping experience sets my expectation. I needed new dress loafers. Saturday I went to Zappos and QUICKLY looked through about 200 pairs. I picked five. They arrived on Tuesday. I sent four back, but wasn’t quite satisfied with the one I kept and ordered three more. They arrived yesterday. Of the three, I found one I liked the best and sent all the others back this morning.
If I go to the store, I have to wait for service. I have just a handful of styles to choose from. I pick a couple I like. I sit down. I wait for service. OOPS. They don’t have my size. Now I have to go to another store … same process. Maybe I find one that is OK, but not quite right. Do I buy it or leave it?
So today what is my expectation? Ease of shopping. Exceptional choice. No dependency on a sales person or what is in stock, and I never have to leave my home. That is my expectation. It has created a new level of expectation that a brick-and-mortar store can’t possibly compete with.
Increased customer expectation due to online shopping really causes problem with brick-and-mortar. The instant gratification and availability of merchandise and delivery scheduling raises the expectations of shoppers in the store. In the case of Walmart, what I noticed recently is that they have trouble keeping the shelves full, which is a reflection of labor. I never expect a lot of one-on-one customer service with Walmart, I do expect competitive pricing and product availability. Once the labor has been trimmed to the point they can’t keep the shelves full, their shopper satisfaction has to fall.
Adrian is right on. Customer service which is a byproduct of effective training is a major reason for a decline in brick-and-mortar satisfaction.
It appears that the stores that are struggling in their customer satisfaction are the low-price leaders. They are a commodity. The only loyalty is because of a price. The moment there is another store—physical or online—the customer will jump ship.
As a result, if a customer shops on price, they are going to compare to online. If the customer can wait and the price online is lower, well, I think you know what the price-sensitive customer will do.
Based upon this survey most of these retailers should be bankrupt! Let’s face facts: when invited to complain, anyone will find a reason. Does it change shopping patterns? Publix had a 5% decline, but it doesn’t look like it made a difference on the bottom line. Walmart is packed every time I go! So what gives? Maybe we should consider putting our market research dollars on things that make a difference. Heck, I believe that Obama’s approval rating was below 50% when he won his second term. Does the American Customer Satisfaction Index actually tell us anything meaningful? I don’t think it does.
In my area there is a Walmart directly across the road from a Target. They share the same stoplight. Following the troubling Target credit card breaches and how poorly they were handled, I’ve shopped much more often at Walmart and far less often at Target for the kind of stuff you can readily get at either place. I have been pleasantly surprised with the better prices, good store maintenance , and checkout ease at Walmart based on the stereotypes of this company that seem to be so ingrained out there. My only real complaint is that certain out-of-stocks at Walmart seem to be an ongoing issue and not just with advertised sale merchandise. But over all I’d say Walmart has won me over for now. I wonder if competent local management understanding their market, and being well aware there’s a direct competitor nearby is not the key.
As most of us here know, every retailer should operate and conduct their business as if they have a direct competitor across the street. But too many don’t.
One statement within the discussion was inexplicably unexplored as a possibility for the consumer gloom. Discount stores are seeing a lot of displaced middle class consumers caught in the wait for this economy to take off. People with champagne and caviar taste with their all new bread and water budgets might be more and more aggravated as the years of recession close in on a decade. It is a shame that this perspective was not explored more closely. I wonder why? Oh well, maybe next time.
It’s obvious that the perception of good customer satisfaction with brick and mortar retailers has declined as customer service has improved online. Here’s a blog post we wrote about trending directions being taken by retailers to meet the challenges of delivering impeccable customer service and to lower the costs for customer service that hadn’t been good in the past: “Customer Services Getting Serious Upgrades By Retailers To Lower Costs & Raise Shopper Satisfaction” based on Forrester’s “Navigating The Future Of Customer Service.“
I agree with the posters who attributed the decline in satisfaction with grocery stores to rising food prices. We have to assume that scores for grocery would increase if food prices declined, right?
So is it all about price? Not all. Outstanding customer service is critical. Best examples are Publix and Wegmans. It also helps if the supermarket is not just a big box for shelving and selling products. It can be an enjoyable and fun place to shop. Examples include Stew Leonard’s, Giant Eagle’s Market District, Dorothy Lane Markets, Price Chopper’s Market Bistro, etc. Then there is the long gray line of grocery stores you can’t wait to get out of.
I think that it comes down to pricing, customer service, and personalization.
Pricing: eCommerce really threw a wrench into the retail industry because online retailers are able to offer low prices consistently because of lower operation costs, etc. Brick and mortar has to keep up or be able to provide something that eCommerce can’t (in the form of added value) to keep shoppers coming back.
Customer service: Brick and mortar stores are great because someone is generally there to direct you to the right aisle and give you recommendations when you need them. Employee training is key here to make sure they provide this every time. eCommerce is stepping up its game by providing live chat, but of course this was inspired by the in-store experience.
Personalization: Shoppers want to feel special. They have so many choices, but they chose your store. Give them rewards that they’ll actually use and cater to their individual needs to keep them loyal.
I was late to reading this but some great commentary as always.
I’ll bookend the opening response—”Customer service, customer service, customer service”—with, experience, experience, experience.
Retail is like opera, it’s a great story told with music, acting, costumes, and the set. It’s a live performance. Perhaps the old favorite: “The Warehouse,” has run its course and it’s time for a new show.
More Discussions
How Timely Is the Planned Lowe’s Website Renovation Focusing on Personalization?
Is Lowe’s being timely with its website reno, and is it right to be placed as…Should Costco Be Opening Members-Only Gas Stations?
Is this the right move for the warehouse club?As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…
Customer service, customer service, customer service.
I think retail has crossed a tipping point for general merchandising in terms of consumers having almost zero affinity for shopping in a physical store versus online. The delivery windows are closing, the costs are decreasing and the selections are pretty diverse online, and so I don’t think it’s surprising.
For large general merchandisers, I think it means they have to view their customer and market opportunity holistically and not in terms of offline/online. Their scale should help them compete on a customer experience hyper-focused on convenience at any time or place. That’s a bit different than trends among more affluent shoppers shopping at Trader Joe’s and Whole Foods. I think it comes down to the retail brand’s identity in all cases. When the physical store is known for good deals alone, that’s a pretty dreary value proposition when the same, if not better, is available easier right at the tip of your fingers on a smartphone, tablet or computer. Bad news on one hand, but really exciting from an opportunity to improve standpoint!
When you are the only game in town, there is no benchmark. Walmart has had some store competitors in the past, but their real competitors today are Amazon, Alibaba and eBay. Given the low-cost operations model, Walmart needs to win on better quality in both the big box and new small formats.
It is very interesting to note that Nordstrom rose four points on their ACSI score. If there is a retailer who understands omni-channel and executes personalization, it is Nordstrom. And consumers definitely seem to notice the value-add of a great customer experience at Nordstrom.
In the future of retail there is a growing picture of a “bimodal model”—those competing on selling products, and those focused on consumer experience. From this data the future does not bode well for brick-and-mortar retailers focused on products and price, especially Walmart.
I think it’s interesting that ACSI focused only on the product offering as the major area driving dissatisfaction—product price and perceived quality. I don’t know enough about how they measure it to know whether they have specific evidence from their surveys to support that contention. They certainly didn’t offer any in their comments.
I think that’s a big assumption. Especially when you have as story number one today that Walmart is giving its employees raises. And that the driver behind the raise is the hope that better customer service will improve sales. I would draw a much tighter connection between consumer grumpiness with the overall value of the retail offering and the level of service they’re receiving as part of that value, much more so than blame it on “rising prices.” If that’s true, then why do online retailers continue to do so well? Shouldn’t they be impacted by rising prices too?
I believe the reference to food prices is not the real reason for the change in performance for food retailers. Look at Trader Joe’s and Wegmans as examples that you can still charge higher prices and satisfy customers. Other food retailers can learn from these two formats, which are marked by fun environments, terrific fresh and unique assortments and friendly, knowledgeable staffs. Walmart and many of the other traditional food retailers lack most if not all of these attributes.
It is also interesting to note, that Amazon’s ACSI score (86) was higher than even the best brick-and-mortar food retailers. If you can’t physically deliver on the noted attributes, then the convenience and service provided by online shopping will continue to take share from traditional food retailers.
The lesson learned is the need for an omni-channel experience which delights customers in-store as well as online.
At one point in time there were only brick-and-mortar and catalog sales. If you wanted to know more about the product you needed to speak to a sales person in the store. Same was true if you wanted to actually see the product and touch it, etc.
Today being able to touch, etc., the physical product still something you have to do in a store. However the internet allows you to research the product, get opinions of other shoppers, etc. This lessened the need to go to the store.
The stores lost business and laid off senior, knowledgeable, more costly help. This resulted in less staff, with less knowledge and had a very negative impact on customer service. This is my long winded version of saying I agree with Adrian.
Seems simple enough. Too many retailers continue to confuse labyrinthian pricing schemes with innovation and loyalty discounts with customer service and brand building.
Take a hard look at a lot of retail “marketing” plans and they basically can be reduced down to, “We’ve got the same stuff, sold the same way as everybody else but ours is better because it is cheaper.” That’s not a lot to get excited about.
Where is the meaningful product innovation? Where (as an industry) is a genuinely improved personalized service model? When will more retailers realize they are doing business in the 21st century, not the 19th, and act accordingly?
As to Walmart, part of the issue is it is the biggest target and part of it is that it is also the biggest offender when it comes to confusing value (defined as low price) with value (defined as something desirable from a customer’s point of view).
No surprises here—unless you are shocked, as I am, by the retailing industry’s resistance to significant change.
The most important result is that the the score for some stores rose while the average fell. Consumers demand a good experience when going to a store. If there is no good reason to go to the store, consumers can purchase items online. Obviously some retailers are making an effort to pay attention to consumer experience. As soon as consumers know that something is possible they expect it from everyone else. When it does not happen, consumers can stay home and order from the company that provides a good online experience.
Complaints about Walmart are messy aisles, out of stocks, issues with produce not being as fresh as expected and long check out lines. These can all decrease satisfaction. If similar prices can be found anywhere else online accompanied with a good online experience, consumers can go there.
The ACSI—ok. Before you rant and chant about scores that are based on a sampling of 250 people, by a shop using an original customer satisfaction model from 1989 for an industry that has totally transformed since 2000 let’s consider that whenever shops like the ACSI review retail they rate retail low. Why? My guess is that their sampling technique is old and does not create a blend of shoppers.
ACSI started at the University of Michigan. After living in Ann Arbor, where no one likes Walmart, it is no surprise that Walmart came out low. The press loves these surveys. But do they ever ask where was the sampling was taken from to create these statistics?
I disregard this survey and its ratings. Customer service is always an issue that must be addressed across all retailers, even Nordstrom and Costco.
Walmart is a solid part of global retailing, so does this score matter? What other retailer employs 1.5 million people and provides large stores out in very small towns across the country? NONE! Walmart haters will always be out there, the success of Walmart just infuriates them.
I am proud of what Sam Walton started and what the team has carried forward. It is a sample of how strong our industry is and always will be.
I agree with the comments about service as an underreported part of Walmart’s problems. Think about the issues discussed recently about the challenges keeping fresh meat and produce on display in a “lowest common denominator” service environment like Walmart.
The announcement yesterday about higher wages is a tacit acknowledgment of this problem, especially heading into an era of higher employment and labor shortages. It’s not accident that some of the highest-paying retailers (Costco, for example) have higher satisfaction ratings among both shoppers and associates. Maybe Walmart is finally figuring this out.
Shoppers can sense, but do not understand, why stores do not more directly address their needs. Unfortunately, many people “in the business” don’t fully understand this either. 100 years ago when self-service swept the world, massive benefits accrued by operating supermarkets as warehouses where shoppers came and did their own stock-picking (unpaid labor!)
Any practical study of the industry shows why retailers run hard to just keep from being totally overwhelmed by logistics without spending day and night focusing on what all these shoppers are doing, and how they are helped or are not.
Manufacturer/suppliers have PAID the stores to do a pretty crappy job of running shopper-friendly stores. But it’s because of the game THEIR merchant warehouse customers (the retailers) have created.
Basically there is a gladiatorial contest, brand-on-brand mayhem, going on in the aisles. The retailer runs a serial blind auction for shelf space, and every brand MUST fight for shelf space by increasing SKU counts. Every facing they do not own WILL be owned by a competitor!
This has resulted in 10 times the floor space that is actually needed, and organized along lines that will maximize payments from suppliers, since the retailer works vigorously to keep prices as low as possible.
Most people are unaware that A&P (back in the days when they grew to be the first BILLION dollar business in the world) targeted something like a 19 percent margin for their stores. If a manager turned in, for example, a 23 percent margin, they would be REPRIMANDED, as that additional four percent should have been used to lower prices—or pay staff better!
That’s because supermarkets became media businesses—quite reasonably. Their weekly flyers were just the tip of the iceberg. The retailer ran the low-margin store as a means of creating AUDIENCE and then charged suppliers for access to that audience, with the retailer deriving their REAL profits from their media businesses.
So now shoppers are getting experience with online shopping and finding it superior to brick-and-mortar shopping in many ways. Why can’t brick-and-mortar be more like online in convenience> However, “As long as shoppers live in brick houses, they will shop in brick stores!” That doesn’t mean a lot of brick-and-mortar stores are not heading for bankruptcy.
If they don’t like their business model tampered with, fine. Someone else is introducing more shopper rational business models, and will bury them. That said, the future is bright for brick-and-mortar retailing—but only for those who are willing to adapt to the new realities.
Are we sure we want to evaluate retailers on this metric? It’s hardly a full story. it seems to me that a customer will always tell researchers a negative sound bite about price, but in fact there are so many more unspoken dimensions that make up how we really feel about shopping at various stores.
Retailers today need to focus on more “human experience” elements, and researchers need to understand that tracking the benefits of those kind of investments is tricky at best.
These indices are driving the conversation in the wrong direction.
The issue of out-of-stocks plays a huge role here. I can go online and see exactly what’s available to me now. I go to a store with a list or something in mind and it’s often a crapshoot. Just recently I wanted make potato and leek soup, and had to visit three stores before finding leeks. Granted they are not exactly in season and I’d have to wait a day to get them if I ordered online, but I wouldn’t have been disappointed in the shopping trip.
In general, the overall brick-and-mortar experience isn’t inspiring consumers whereas the convenience of online is gathering momentum. In terms of Walmart, I will go with David VanAmburg’s quote, “They are not as dominant on the price side as they were, and the quality still isn’t there. They haven’t stepped up their game on that side, so we are seeing a lot of dissatisfaction by comparison.”
It will be interesting to see how Walmart giving around 500,000 workers a raise influences this.
One thing I have learned is that people who like Walmart will shop there. People who hate Walmart will shop there less often. We all know what Walmart’s problems are with customer satisfaction, however Walmart is more about sales than it is about making customers feel good about shopping. Walmart’s score card should be the sales and bottom line, not the fact that customers they will never get anyway like Publix and Wegmans more.
So because things cost more in a grocery store, or because satisfaction with Walmart went down? Sounds like an apples-to-oranges survey.
Yet they tout Nordstrom’s score as rising when price isn’t an issue? And are these the same people shopping at Nordstrom as at Walmart?
Customer dissatisfaction surveys are becoming the norm. No one likes shopping. No one likes to go to a mall. No one likes the help.
From what I’ve seen this past week in San Francisco, Chicago and Vancouver, someone is shopping and seeming happy about it.
Walmart’s low scores come from how miserable it is to shop in their stores. While shoppers originally dealt with it (the miserable customer experience) because pricing was lower, that motivation (good pricing) is now gone.
Plus everything they have now is out of China. It’s mostly crummy merchandise, merchandised badly, so who needs it. This you can get from anywhere and have a better shopping experience.
We would all be much better off in this life if Walmart no longer existed period.
I believe online has created a new metric in ease and convenience for the shopper. How can a brick-and-mortar store match the ease and choice of merchandise of online? Online has raised the expectation.
Here is how my most recent shopping experience sets my expectation. I needed new dress loafers. Saturday I went to Zappos and QUICKLY looked through about 200 pairs. I picked five. They arrived on Tuesday. I sent four back, but wasn’t quite satisfied with the one I kept and ordered three more. They arrived yesterday. Of the three, I found one I liked the best and sent all the others back this morning.
If I go to the store, I have to wait for service. I have just a handful of styles to choose from. I pick a couple I like. I sit down. I wait for service. OOPS. They don’t have my size. Now I have to go to another store … same process. Maybe I find one that is OK, but not quite right. Do I buy it or leave it?
So today what is my expectation? Ease of shopping. Exceptional choice. No dependency on a sales person or what is in stock, and I never have to leave my home. That is my expectation. It has created a new level of expectation that a brick-and-mortar store can’t possibly compete with.
Increased customer expectation due to online shopping really causes problem with brick-and-mortar. The instant gratification and availability of merchandise and delivery scheduling raises the expectations of shoppers in the store. In the case of Walmart, what I noticed recently is that they have trouble keeping the shelves full, which is a reflection of labor. I never expect a lot of one-on-one customer service with Walmart, I do expect competitive pricing and product availability. Once the labor has been trimmed to the point they can’t keep the shelves full, their shopper satisfaction has to fall.
Adrian is right on. Customer service which is a byproduct of effective training is a major reason for a decline in brick-and-mortar satisfaction.
It appears that the stores that are struggling in their customer satisfaction are the low-price leaders. They are a commodity. The only loyalty is because of a price. The moment there is another store—physical or online—the customer will jump ship.
As a result, if a customer shops on price, they are going to compare to online. If the customer can wait and the price online is lower, well, I think you know what the price-sensitive customer will do.
Based upon this survey most of these retailers should be bankrupt! Let’s face facts: when invited to complain, anyone will find a reason. Does it change shopping patterns? Publix had a 5% decline, but it doesn’t look like it made a difference on the bottom line. Walmart is packed every time I go! So what gives? Maybe we should consider putting our market research dollars on things that make a difference. Heck, I believe that Obama’s approval rating was below 50% when he won his second term. Does the American Customer Satisfaction Index actually tell us anything meaningful? I don’t think it does.
In my area there is a Walmart directly across the road from a Target. They share the same stoplight. Following the troubling Target credit card breaches and how poorly they were handled, I’ve shopped much more often at Walmart and far less often at Target for the kind of stuff you can readily get at either place. I have been pleasantly surprised with the better prices, good store maintenance , and checkout ease at Walmart based on the stereotypes of this company that seem to be so ingrained out there. My only real complaint is that certain out-of-stocks at Walmart seem to be an ongoing issue and not just with advertised sale merchandise. But over all I’d say Walmart has won me over for now. I wonder if competent local management understanding their market, and being well aware there’s a direct competitor nearby is not the key.
As most of us here know, every retailer should operate and conduct their business as if they have a direct competitor across the street. But too many don’t.
One statement within the discussion was inexplicably unexplored as a possibility for the consumer gloom. Discount stores are seeing a lot of displaced middle class consumers caught in the wait for this economy to take off. People with champagne and caviar taste with their all new bread and water budgets might be more and more aggravated as the years of recession close in on a decade. It is a shame that this perspective was not explored more closely. I wonder why? Oh well, maybe next time.
It’s obvious that the perception of good customer satisfaction with brick and mortar retailers has declined as customer service has improved online. Here’s a blog post we wrote about trending directions being taken by retailers to meet the challenges of delivering impeccable customer service and to lower the costs for customer service that hadn’t been good in the past: “Customer Services Getting Serious Upgrades By Retailers To Lower Costs & Raise Shopper Satisfaction” based on Forrester’s “Navigating The Future Of Customer Service.“
I agree with the posters who attributed the decline in satisfaction with grocery stores to rising food prices. We have to assume that scores for grocery would increase if food prices declined, right?
So is it all about price? Not all. Outstanding customer service is critical. Best examples are Publix and Wegmans. It also helps if the supermarket is not just a big box for shelving and selling products. It can be an enjoyable and fun place to shop. Examples include Stew Leonard’s, Giant Eagle’s Market District, Dorothy Lane Markets, Price Chopper’s Market Bistro, etc. Then there is the long gray line of grocery stores you can’t wait to get out of.
I think that it comes down to pricing, customer service, and personalization.
Pricing: eCommerce really threw a wrench into the retail industry because online retailers are able to offer low prices consistently because of lower operation costs, etc. Brick and mortar has to keep up or be able to provide something that eCommerce can’t (in the form of added value) to keep shoppers coming back.
Customer service: Brick and mortar stores are great because someone is generally there to direct you to the right aisle and give you recommendations when you need them. Employee training is key here to make sure they provide this every time. eCommerce is stepping up its game by providing live chat, but of course this was inspired by the in-store experience.
Personalization: Shoppers want to feel special. They have so many choices, but they chose your store. Give them rewards that they’ll actually use and cater to their individual needs to keep them loyal.
I was late to reading this but some great commentary as always.
I’ll bookend the opening response—”Customer service, customer service, customer service”—with, experience, experience, experience.
Retail is like opera, it’s a great story told with music, acting, costumes, and the set. It’s a live performance. Perhaps the old favorite: “The Warehouse,” has run its course and it’s time for a new show.