Customer satisfaction with retail rebounds
Customer satisfaction has improved for the first time after three straight quarters of small declines, according to the National Customer Satisfaction Index (NCSI-UK).
As a result of increased customer satisfaction with retail, the index has gained 0.1% to 72.9 on the NCSI’s 100-point scale, which coincides with a 0.1% fourth quarter growth in GDP, the first positive growth for the economy since the first quarter of 2008. The latest NCSI study measures customer satisfaction with department stores, supermarkets, electrical retailers, petrol stations, and E-commerce.
“The uncertain economy has led consumers to be more cautious with their money,” said Claes Fornell, ACSI founder, professor at the University of Michigan, and author of The Satisfied Customer. “But the improvements in retail customer satisfaction are a good sign that customers may be ready to spend again – if they can find the means to do so.”
Electrical Retailers: Currys Still Last Despite Improvement
Customer satisfaction with electrical retailers improves 1.4% to an industry score of 75. Smaller electrical retail chains continue to lead despite a 1% drop to 79. All three of the largest chains improve: Argos gains 3% to 75, Comet is up 1% to 74, and Currys still lags the industry, but a 4% surge to an NCSI score of 72 has closed the gap somewhat.
Department Stores: John Lewis Increases Lead Over Competition
Department stores gain 2.6% to a customer satisfaction score of 78, highest among the brick-and-mortar retailers and the biggest improvement of all industries measured this quarter. John Lewis widens its lead, improving by 4% to 83. Marks & Spencer gains 1% to 77, followed closely by House of Fraser, up 4% to 76. Debenhams is unchanged at 74.
E-Commerce: Play.com, Amazon UK Head-and-Shoulders above the Rest
Customer satisfaction with E-commerce increases slightly, up 1% to 83. Play.com and Amazon UK lead, up 1% to 88 and 2% to 87 respectively, the two highest scoring companies in any industry of the NCSI. Online sales were strong over the same period, and the volume of online purchases has continued to grow annually. As more consumers shop the Internet, the challenge increases for retailers of all types to expand their online offerings and provide high quality websites to drive sales. Those companies with the best designed, most comprehensive websites are best positioned to dominate.
Supermarkets: Big Improvements for Waitrose, Asda
Supermarkets remain the weakest performer among retailers and the only category to lose customer satisfaction, down 1.4% to 73. Supermarkets now rank as the lowest scoring retail industry for both service quality and price. Customer complaints are the highest at 13%, and supermarkets experienced a sharp drop in the success with which complaints are resolved.
However, customer satisfaction with Waitrose surges 4% to 85, the highest score for any retailer outside of the e-commerce category. Asda gains 4% to 79 and Morrisons is up 1% to 77. Sainsbury’s is unchanged at 73, while Tesco dips by 1% to 72. Tesco’s decline coupled with Asda’s big gain means that the customer satisfaction gap between the two has doubled from a year ago. The aggregate of all other smaller supermarkets falls 5% to 70, contributing most to the drop in satisfaction for the industry as a whole.
“It is more difficult for smaller chains to compete by offering discounts as deep and sustained as their larger competitors,” says Fornell, “So these smaller supermarkets have been hit harder by the effects of runaway food prices.”
Customer satisfaction often suffers in the immediate wake of a large merger or acquisition during reorganisation, but this has not happened in the case of The Co-operative group and Somerfield. In 2008, Somerfield had an NCSI score of 61, an all-time low for supermarkets and retail as a whole. A year later, the new, larger chain is still at the bottom of the industry, but rebounds slightly, up 1.6% to 63.
Petrol stations also improve, up 1.3% to 76. After the cost of petrol fell sharply toward the end of 2008, prices climbed throughout 2009 and are now at an all-time high, suggesting that the rise in customer satisfaction may be short-lived for this price-sensitive industry.