acsi american customer satisfaction...

ACSI

ABOUT ACSIThe American Customer

Satisfaction Index (ACSI®) is a

national economic indicator of

customer evaluations of the quality

of products and services available

to household consumers in the

United States.

The ACSI uses data from

interviews with roughly 180,000

customers annually as inputs

to an econometric model for

analyzing customer satisfaction

with more than 300 companies

in 44 industries and 10 economic

sectors, including various services

of federal and local government

agencies.

ACSI results are released

throughout the year, with all

measures reported on a scale of

0 to 100. ACSI data have proven

to be strongly related to several

essential indicators of micro and

macroeconomic performance. For

example, firms with higher levels of

customer satisfaction tend to have

higher earnings and stock returns

relative to competitors. Stock

portfolios based on companies

that show strong performance in

ACSI deliver excess returns in up

markets as well as down markets.

At the macro level, customer

satisfaction has been shown to

be predictive of both consumer

spending and GDP growth.

American CustomerSatisfaction Index®

©2018 ACSI LLC. ALL RIGHTS RESERVED.

INDUSTRY RESULTS FOR:Department & Discount Stores

Specialty Retail Stores

Health & Personal Care Stores

Supermarkets

Internet Retail

Gas Stations

February 27, 2018

Health & Personal Care79 +1.3%

Supermarkets79 +1.3%

Gas Stations76 0.0%

Specialty Retail 79 -1.3%

Department & Discount77 -1.3%

Internet Retail82 -1.2%

ACSI RETAIL REPORT

2017

http://www.theacsi.org






According to new data from the American Customer Satisfaction Index (ACSI®), customer satisfaction with retail overall is down slightly, leveling off from the record high posted a year ago. The ACSI registers a 0.3% slip for the Retail Trade sector, now 78.1 on a 100-point scale.

The ACSI report covers six retail industries: department and discount stores, specialty retail stores, drug stores, supermarkets, online retail, and gas stations. Despite a strong holiday shopping season, three of the six categories exhibit deteriorating customer satisfaction. Department stores and specialty retailers lose the most ground as consumers now prefer to shop online. However, even internet retailers show signs of strain, particularly among smaller companies and the online businesses of traditional brick-and-mortar stores. Nevertheless, internet retail outperforms all other retail categories and ranks in the top five of all industries tracked by the ACSI.

The news is better for supermarkets, which rise to an all-time high level of customer satisfaction. Drug stores also post gains, returning the industry to its best score since 2013. Gas stations are the only business that is unchanged, stable at an ACSI score of 76 in 2017.

DEPARTMENT AND DISCOUNT STORES

As online competition gets even stronger, foot traffic continues to decline, and many traditional mall outlets are closing stores. Customer satisfaction with department and discount stores is down 1.3% to an ACSI score of 77.

With few exceptions, nearly every large retailer in the category faces weaker customer satisfaction this year. It’s very challenging for brick-and-mortar retailers to weather the online onslaught without also providing a superior in-store customer experience. Costco leads the category by maintaining a high score of 83. In second place, Nordstrom gains 1% to 81, tied with the average of all other, smaller stores (+3%).

Three superstores tie near the top of the category. BJ’s Wholesale Club inches up 1%, while Sam’s Club and Fred Meyer each slip by 1% to meet at 80.

A year ago, Dillard’s took first place, but a 5% drop places the department store on par with JCPenney, Kohl’s, and Meijer (all 79). Kohl’s is stable, but JCPenney is down 4%, and has closed 139 stores in the last year. Meijer, on the other hand, bucks the trend—gaining 3% to its highest score to date (79) in a second consecutive year of improvement. The regional chain remodeled 22 stores during the past year, updating layouts and enhancing prepared food sections.

Supermarkets and Drug Stores Strengthen Customer Satisfaction; Department Stores and Specialty Retailers Weaken

ACSI Retail Report 2017

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Several retailers cluster together at the industry average. Belk and Dollar Tree each fall 4%, while Macy’s and Target both drop 3% to match at 77. A notch below, Ross is unchanged at 76, while Big Lots sinks 4% to 74.

Dollar General posts the biggest decline, sliding 6% to 73. Sears falls nearly as hard, losing 5% to 73. The company closed 400 stores in 2017 and more closures are planned for this year. Sears has been slow to adapt to online retail, but according to customers, its physical stores also leave a lot to be desired. In an effort to generate more revenue, Sears recently started selling brands on Amazon.

At the bottom of the category, Walmart slips 1% to 71. The company is building its online channels and appears to be acquiring better shipping capabilities, but according to customers, it still lags competitors in many aspects.






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Industrywide, almost all elements of the shopping experience have declined. As store closures continue, locations and opening hours are becoming less convenient (81). Clearly, online retailing is setting a new standard for comparison here. On top of that, shoppers report that stores are less clean and not well laid out (79), and that staff members have become less helpful and courteous (78).

According to shoppers, sales and promotions have become much less frequent compared with the prior year (down 4% to 75), but the low point of the in-store experience remains the checkout process (73).

Nevertheless, 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).






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SPECIALTY RETAIL STORES

Customer satisfaction with retailers specializing in products such as clothing, home improvement, and office, automotive, or pet supplies is down 1.3% to an ACSI score of 79. L Brands emerges as the sole leader after a 5% gain to a score of 85—setting a record high for the company and the category.






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L Brands—which includes Victoria’s Secret and Bath & Body Works—is also the most improved specialty retailer in 2017. The company has been reinvigorating its brick-and-mortar stores, devoting 70% of its investments into renovations and expansions. According to customers, the investment is paying off.

Outdoor recreation store Cabela’s debuts in the ACSI in second place with a score of 82. Another ACSI entrant, O’Reilly Auto Parts, comes in at 81, ahead of both Advance Auto Parts (79) and AutoZone (-3% to 78).

Barnes & Noble is unchanged at 81, just ahead of the combined score of all other, smaller stores (80). Bed Bath & Beyond (+1%) and Menards (+1%) join TJX (unchanged) at 80, which is just above the industry average.

Abercrombie & Fitch jumps 4% to 79 thanks, in part, to a strategic brand overhaul that appears to be more inclusive, with updated designs for a broader range of body types. Ascena, which includes Ann Taylor and Loft, inches up 1% to 79, overtaking Gap (-3% to 77). PetSmart also advances 1% to 79, ahead of Petco (-1% to 77). Foot Locker, included in the ACSI for the first time, posts a score of 78, on par with Dick’s Sporting Goods (-1%).

Lowe’s drops slightly to 78, a 1% decline, but what’s relevant is the much larger drop for Home Depot (-5% to 76). As a result, Home Depot now takes last place in the entire specialty retail category. Rival Menards (80), however, beats both Lowe’s and Home Depot.

New to the ACSI, Michaels (78) ties with several other specialty retailers, including Best Buy (+%1), which inches up to match its all-time high. Office suppliers backtrack for customer satisfaction, with Staples (-3% to 78) just ahead of Office Depot (-3% to 77). Toys “R” Us edges up 1% to 78 even as it attempts to—and perhaps needs to—emerge from bankruptcy. Despite steady improvement for two years, the beleaguered retailer has yet to score above the industry average. A notch below, GameStop sinks 4% to 77, together with Burlington (-3%).

According to customers, staff at specialty stores provide excellent service and outperform every other retail category. 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).

Customers view specialty retail stores as very clean and well laid out (83), more convenient (81), and having a good selection and variety of merchandise (81). While shoppers report that items are sometimes out of stock (80) and brand names less available (80), the scarcity of sales and discounts is much more vexing (down 3% to 74).






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HEALTH AND PERSONAL CARE STORES

Customer satisfaction with health and personal care stores rises 1.3% to an ACSI score of 79, even as satisfaction with many of the larger drug stores depreciates. Fear that Amazon may enter the pharmaceuticals market is rampant, but for now, smaller drug stores capture the lead. In a second straight year of improvement, small stores climb 2% to first place with a combined score of 84.

Meanwhile, Kmart pharmacy drops 5% to join Kroger (-1%) at 80, while Albertsons (which includes Safeway) plunges 6% to 78. Albertsons has recently agreed to buy a portion of Rite Aid. The move, if approved, may not help boost satisfaction for the combined entity as mergers often present customer service challenges, at least in the short term.






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CVS, on the other hand, is moving forward for customer satisfaction. It is one of only two large chains to improve, gaining 3% to an ACSI score of 78—matching its company best. The health care retailer may be trying, and not without success, to preempt the Amazon threat, shoring up both customer and employee satisfaction as it also goes ahead with its planned merger with Aetna.

Walgreens also advances, inching up 1% to tie Rite Aid (-1%) at 77. This leaves Walmart pharmacy (-1% to 75) unaccompanied in last place—the same position the company holds in the department and discount store category and among supermarkets.

Store closures over the past year have affected pharmacy customers, particularly those in rural areas, but the convenience of drug stores in terms of location and hours still ranks high (85). In-store staff are consistently helpful and courteous (83), but the quality of pharmacy services rates slightly lower in 2017 (83). Service over the phone is not nearly as good, however, as it deteriorates 5% to 79.

Compared with a year ago, shoppers say that brand names are more available (81) and merchandise more frequently in stock (79), but that the stores themselves are showing some wear (83). Shoppers always want more sales and discounts, and drug stores are working to oblige (77).






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SUPERMARKETS

Customer satisfaction with supermarkets edges up 1.3% to 79 as nearly every food retailer makes gains. The threat of competition from Amazon’s entry into the market appears to have spurred grocery stores to bolster their offerings. Supermarkets in just about every price range now focus more on organic and natural products. They have also expanded the selection of prepared food. Higher quality products and better customer service is driving customer satisfaction up nearly across the board for supermarkets.

Trader Joe’s, unable to sustain its record high from last year, ebbs 1% to 85. Despite the slip, customer satisfaction with Trader Joe’s is still extremely high for a brick-and-mortar retailer—in fact, it matches Amazon’s score in the internet retail category. Publix captures the lead from Trader Joe’s, climbing 2% to an ACSI score of 86. The employee-owned grocery chain is now the top-scoring company among all retail categories.






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With matching 1% hikes, Aldi and Wegmans tie for third place among grocers at 84, just ahead of Costco and H-E-B (both 83) and Sam’s Club (82). Hy-Vee, Kroger, and the aggregate of smaller supermarkets all gain 3% to 81, while BJ’s Wholesale Club comes in at 80.

Whole Foods is unchanged at 81, and it is too soon to gauge the effect of its acquisition by Amazon. Amazon only began rolling out Whole Foods deliveries this month in select areas, and the service is available only from a handful of locations.






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Among the four supermarket chains tied at 79, Ahold Delhaize is the most improved (+4%), followed by Target and Meijer (both up 1%) and ShopRite (unchanged). One-percent bumps move Southeastern Grocers to 78, Supervalu to 77, and Albertsons to 76. Giant Eagle rises 3% to 76, joined by Save-A-Lot in its ACSI debut. Walmart lags the entire category, sinking 1% to 73.

Customers find supermarket locations and hours to be very convenient (85). Across the industry, shoppers have noted better quality food from supermarkets (+2% to 83). Retailers are doing a better job of providing name brands (+3% to 82) and have improved the look and feel of stores (82). Shelves are better stocked (+3% to 81) and there is a wider variety of merchandise (81). Supermarket staff get excellent marks, both in-store (82) and on the phone (80).






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With supermarkets also making online shopping more available, their website satisfaction is up 3% to 82. Competitive pricing is also helping to boost customer satisfaction, and shoppers say sales and promotions have become more frequent (+3% to 79). However, waiting in line remains the most irksome part of grocery shopping, and checkout is still as slow as it was a year ago (76), according to customers.

INTERNET RETAIL

Customer satisfaction with internet retail dips 1.2% to 82, but online remains by far the most satisfying place to shop. The industry’s decline is the result of weaker scores for companies at either end of the size scale. The largest individual company, Amazon (accounting for 43% of the total online sales), recedes 1% to 85. The bulk of the category, however, is made up of smaller online retailers and the websites of brick-and-mortar stores. These companies also slip 1% to a combined score of 81.

Newegg and eBay are both unchanged at 83 and 81, respectively. Overstock, one of the first retailers to accept bitcoin, is also the most improved, gaining 3% to 81.

For the industry overall, customers say checkout and payment isn’t as easy as it was a year ago (87), but this remains the most satisfying part of the online experience. Navigation and site performance is stable, but product images aren’t as useful (84) nor are customer-generated reviews (down 2% to 79). Variety (84) and availability of merchandise (82) are down, and buyers aren’t as happy with shipping options (-2% to 81). Still on the low end, customer support is waning as well (78).

The least appreciated aspect of online shopping, site-generated product recommendations, shows ample room for improvement (down 4% to 75).






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ABOUT THIS REPORT

The ACSI Retail Report 2017 on department and discount stores, specialty retailers, drug stores, supermarkets, gas stations, and internet retail is based on interviews with 50,186 customers, chosen at random and contacted via email between January 5 and December 13, 2017. Customers are asked to evaluate their recent experiences with the largest brick-and-mortar and online retailers in terms of market share, plus an aggregate category consisting of “all other”—and thus smaller—companies in these industries.






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No advertising or other promotional use can be made of the data and information in this report without the express prior written consent of ACSI LLC.

The survey data are used as inputs to ACSI’s cause-and-effect econometric model, which estimates customer satisfaction as the result of the survey-measured inputs of customer expectations, perceptions of quality, and perceptions of value. The ACSI model, in turn, links customer satisfaction with the survey-measured outcomes of customer complaints and customer loyalty. ACSI clients receive confidential industry-competitive and best-in-class data on all modeled variables and customer experience benchmarks.

ACSI and its logo are Registered Marks of the University of Michigan, licensed worldwide exclusively to American Customer Satisfaction Index LLC with the right to sublicense.





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