By Paula Rosenblum, Managing Partner
3/4/2008
Retailers Knew – Customers Were NOT Satisfied
TECC Store was published in 2007 shortly after the University of Michigan’s American Consumer Satisfaction Index (ACSI) publication. We observed that while the ASCI reported Americans were apparently never more satisfied with the goods and services they purchase, our retailer respondents felt the biggest business challenge they faced in their stores were customer complaints about their in-store experience. These same retailers believed their best hopes lay in educating and empowering their in-store employees with the use of technology, and adding self-service customer facing technologies.
Here we are, one year later, with the publication of the most recent ASCI report. Overall satisfaction with retailers is down to 77 (out of a possible score of 100). Last year at this time, the ACSI reported an overall rating of 81. This year’s report is specific about individual retail chains. Among the lowest rated reported retail chains? Wal-Mart at 68, its lowest rating ever, and Home Depot comes in at 67. The big winners? The best scores detailed are for Publix supermarkets and Barnes and Noble at 83, Nordstrom at 80 and pure-play eCommerce retailer Amazon.com at a whopping 88. A good recap of the survey is available on AOL.
Also in the news last week was another echo of our retailers’ fear last year: Business Week declared 2007 “The year fed-up consumers finally dropped the hammer.” Not surprisingly, the article observed that “Technology is aiding the uprising, empowering consumers to do much more to make themselves heard.” We know you’re not surprised. In fact, this new news is old news to retailers.
Now That We Know the Lagging Indicators, What Are the Leading Indicators?
The ballots above were counted late – and the mainstream press is reporting on events that have already occurred. The ACSI and BusinessWeek are both looking backwards. So looking forward, where are we now?
In reality, Wal-Mart had a better holiday season than Target and Kohl’s, even though it scored way lower on the customer satisfaction survey. Nordstrom had a weak fourth quarter. As a result, it certainly seems like low price is back in vogue again, at least for now. Our technology vendor clients report renewed retailer interest in technologies that drive cost savings.
Further, our much more recent data has told us retailers are approaching a Rubicon with their employees. RSR’s latest reports on Loss Prevention and Workforce Management reported an ever-worsening schism between retailers and store employees. The same employees that are supposed to create an improved customer experience are now supposed to help the retailers become more efficient, but retailers are telling us their employees just don’t care. Employees continue to steal from them, and turnover remains intractable, even in a down economy. In pure reaction mode, retailers are making moves that have not endeared them to employees: Circuit City laid off 3,400 of its best and brightest after an unprofitable holiday season, only to attempt to re-hire some when sales began to plummet along with profits. Healthcare costs continue to rise, and the costs are passed along to the workforce.
With or without the help of employees, the notion of customer centricity is far from dead. We believe winning retailers will provide positive customer experiences even while they continue to take cost out of the system. In this environment, positive self-service experiences are critical to retailer top and bottom line experiences.
Where Do We Go from Here? We’ll Be Asking You
RSR is about to launch a new benchmark survey, “The Customer-centric Store.” Our hypothesis is as follows: even in a down economy retailers are still driving technology improvements in the store. We also believe retailers do not really have a lot of choice in this matter: Customers are still cranky. If they want to price-shop, they can just go on-line, where the experience is actually more satisfying. Cost-effective means of driving customer satisfaction are critical to the in-store experience. In-store employees don’t seem to be quite getting it done.
So any day now, expect a request to take a brief survey. We know you know what your biggest challenges are. We know you know where your opportunities lie. You know what internal obstacles you face. And finally, we know you are aware of the technologies that can help you take advantage of your opportunities. This is an advance request. Please let us know.
RSR’s goal remains to elevate the level of conversation in the retail industry. Your responses really do help us do that. And hopefully our reports add value to those conversations. We can’t wait to hear what you have to say.
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