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2009-03-23
Ann Arbor, MI. Wal-Mart Superstores Rank At Bottom for Customer Satisfaction

At Wal-Mart, the customer is boss. But apparently the boss is not very satisfied with Wal-Mart supercenters. According to the latest report from the National Quality Research Center at the University of Michigan's Ross School of Business, Americans overall were more satisfied with the goods and services they bought in the last three months of 2008. The 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 index is updated each quarter with new measures for different sectors of the economy. The overall ACSI score for a given quarter factors in scores from about 200 companies in 44 industries and from local and federal government services over the previous four quarters. The overall index bumped up slightly towards the end of 2008, but as the reports explains, "as the current recession has deepened, consumer behavior has changed much more than in earlier economic slowdowns." Consumer spending has continued to weaken while savings have gone up, suggesting that at least for the short term there will be less revenue for sellers and more pressure on profit margins and for cost reductions. The ACSI report says that customer satisfaction is looking up, but this does not necessarily translate into increased consumer demand. In the retail sector, the ACSI examined department and discount stores, specialty retail stores, supermarkets, gas stations, and health and personal care stores. The retail index overall gained 1.3 percent to 75.2. This was attributed to lower gas prices, which pushed the ACSI score for gas stations up by 5.7 percent to a score of 74, which contributed to the overall improvement for retail. Department and discount stores also showed a small gain (+1.4% to 74) along with specialty retailers(+1.3% to 76). In the department and discount stores sector, Nordstrom and Kohl's led with an ACSI score of 80. Deep discount store Dollar General fell 4 percent to a score of 75, not from a decline in service, said the ACSI, but from "a migration of a higher socio-economic group of consumers to the retailer -- another effect of the recession -- a group that tends to be harder to please." But the biggest retailer in the world, Wal-Mart, showed mixed results on the satisfaction index. Its supermarket business -- part of every supercenter format -- dropped 4 percent to a score of 68, which ACSI called "well below the industry average." Wal-Mart discount store business rose by 3 percent, to 70. Wal-Mart's Sam's Club had the highest customer satisfaction rating of the company's divisions, rising 3 percent to 79. In the supermarket category where Wal-Mart scored below average, higher rankings were given to Publix (82), which has had the highest customer satisfaction rating for 15 straight years. Safeway (75) also handily beat Wal-Mart. The ACSI reports says that despite rising grocery prices, "supermarkets appear to have been able to absorb these increases without suffering any negative effects on customer satisfaction by improving the quality of the shopping experience through redesigned stores, better variety of merchandise, and longer hours." Several supermarkets improved, among them Safeway. Other chains that made more modest gains include Kroger, Whole Foods and Winn Dixie, all up 3% to 77, 75 and 73 respectively. Wal-Mart, the report found, "continues to be an exception to the rule." The largest food store in the country "remained at the bottom in ACSI for a fifth straight year. Its score dropped 4% to 68, an all-time low and the lowest score ever for any chain in the supermarket category." ACSI rationalizes this low customer satisfaction score by noting that "Wal-Mart competes on price and less on customer satisfaction. Although price has a positive effect on satisfaction, it is dwarfed by quality of service and quality of merchandise. But in a recession, price becomes a more important driver of demand. Wal-Mart is one the few retailers with increasing sales." ACSI notes that despite its poor supermarket ratings, the fact that its non-grocery discount store business showed rising customer satisfaction, and because of its "unbeatable prices," Wal-Mart is "an awesome force in a struggling economy."

What you can do: ACSI reports scores on a 0-100 scale at the national level. It also produces indexes for 10 economic sectors, 44 industries, including online businesses, and more than 200 companies and federal or local government agencies. The measured companies, industries, and sectors are broadly representative of the U.S. economy serving American households. According to ACSI, "very few economic indicators show positive signs these days. The American Customer Satisfaction (ACSI) is one of them. After a year and a half of a downward trend, ACSI turned upward in the fourth quarter of last year. "For the immediate future," the report concludes, "the implications are clear. There will be less revenue for sellers and more pressure on profit margins and cost-cutting. More jobs will be lost. For consumer spending to rebound, at least two conditions must be met. First, consumers' expectations about the gratification from future discretionary spending must be high and/or rising. The good news is that this condition is met. The bad news is that in order for strong customer satisfaction to translate into demand, it is also necessary that consumers have the means - cash and credit - to spend. Thus far, this condition is wanting." In the retail sector, the study notes that even with increasing levels of customer satisfaction, "most retailers are facing a very difficult time. Sales during the holiday season plunged. "It is important to understand that a good part of the sales decline was due to falling prices," ACSI says. "Despite heavy discounting during the holiday season, the bulk of the improvement in ACSI was actually due to better customer service. It is likely that sales staff tried harder to please customers because of the economic situation and fear of unemployment. It is also possible that store traffic decreased to the point that there were more personnel per customer than usual. Both effects are rarely sustainable and will be even more difficult to build on as many retailers have since eliminated more jobs. Although Wal-Mart was one of the few retailers to be gaining ground in this struggling economy, the retailer appears to have its own battle with customer satisfaction in the grocery industry. Wal-Mart may be up in food market share -- but it remains last in line for shopper satisfaction, for the 5th year in a row. To review the complete ACSI report, go to http://www.theacsi.org/index.php.










 
 
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