Improvements in the retail sector have driven UK customer satisfaction to its highest level in two years. All retail categories have improved; electrical retailers increase the most, while supermarkets department stores, petrol stations and e-commerce make smaller gains.
Electrical Retailers
Customer satisfaction with electronics stores improves by 4% to 78. According to customers, electrical retailers offer more value for money than they did a year ago, but service lags behind department stores. Nevertheless, customer service is improving, and is the strongest driver of customer satisfaction for the sector. If these improvements are sustained, the threat to domestic retailers by competition from US giant Best Buy would be somewhat mitigated.
The aggregate of smaller electrical retailers remains well ahead of all large competitors (up 3% to 81). Among the large companies, Argos leads with a 3% gain to 77, followed closely by Comet, up 3% to 76. While still below others in the category, Currys shows the largest gain for a second consecutive year, rising 4% to 75, following a similar improvement in 2009.
Supermarkets
Customer satisfaction with supermarkets rises slightly to an NCSI score of 75, but remains lower than other retail categories due to rising prices and weak customer service. The improvement is almost entirely due to smaller supermarkets and food stores, which also saw a 3% increase in sales in the past year.
The big supermarkets have not changed much in terms of customer satisfaction. John Lewis’s Waitrose brand remains far above the others with an NCSI score of 85. Asda is unchanged from a year ago (79). Waitrose and Asda have maintained strong customer satisfaction with very different business models. Waitrose relies on high quality merchandise and strong customer service, while Asda, like its US parent Wal-Mart, concentrates on low priced products. Waitrose customers do pay a premium, but the quality of goods and service has a greater impact on customer satisfaction than low price. Therefore, Waitrose enjoys much higher customer satisfaction and customer loyalty than Asda.
The aggregate of smaller grocery stores shows a massive improvement (up 11% to 78). Morrisons remains at 77, Sainsbury’s is at 73 and Tesco at 72. Despite Tesco’s increased emphasis on its own brands and low pricing, customers rate value for money below the industry average.
Ever since The Co-operative Group acquired Somerfield stores, customer satisfaction with the combined supermarket chain has increased. After three years of NCSI scores in the low 60s, by far the lowest of any retailer, The Co-operative improves 11% to 70. While this rise does not lift The Co-operative from last place in the supermarket category, the gap has narrowed considerably. For the first time, the Co-operative is now positioned within striking distance of Tesco and Sainsbury’s.
Department Stores
Customer satisfaction with department stores rises 1.3% to an NCSI score of 79, due to customer service, product quality, variety of merchandise, promotional pricing, and few complaints. John Lewis remains the customer satisfaction leader, up 1% to 84. According to customers, John Lewis offers the best shopping experience in terms of both merchandise and service.
Marks and Spencer advances by 3% to 79, followed by the “all other” aggregate of smaller department stores (up 1% to 78). House of Fraser is unchanged at 76. Debenhams is up 1% to 75, but remains at the bottom of the category, with weaker customer service than its competitors.
E-Commerce
Customer satisfaction with e-commerce improves slightly for a second straight year, up 1.2% to an NCSI score of 84, the highest score of any sector. Internet sales continued to grow rapidly and accounted for nearly 11% of all retail sales during the holiday shopping season. Customers regard online retail as the best way to shop, with greater convenience and value, not only for the pure online retailers, such as Amazon and eBay, but also for the multi-channel retailers in the “all others” aggregate.
Amazon is the leader (up 1% to 88) of the e-commerce category, and holds the highest customer satisfaction score of any retail company, both in the UK and the US. Play.com loses the top spot (down 2% to 86). eBay is up 3% to 82, and iTunes moves up 1% to 81. The payoff for high customer satisfaction is evidenced by eBay sales growth, up 25% in the fourth quarter, a faster rate than for e-commerce overall. Ticketmaster improves slightly, up 1% to 77 at the bottom of the e-commerce category. While customer satisfaction has improved over the past two years, service costs such as surcharges and delivery fees have damped customer satisfaction with Ticketmaster.
