Results of a couple of customer-satisfaction surveys described in news articles in these pages underscore the fact that success in food retailing goes disproportionately - but not entirely - to those who provide a dynamic experience to shoppers. Moreover, the surveys show that while competitive prices are required table stakes to play, price alone doesn't define a successful customer-satisfaction proposition. Let's take a closer look at which retail banners were rated best in survey results to see what might be learned.
One of the studies we'll look at has a long history. It's the American Consumer Satisfaction Index, which has been issued annually by the University of Michigan, Ann Arbor, since 1994. That survey was briefly described in the SN of Feb. 27, 2006. We'll also take a look at a new survey, issued in recent days by Cannondale, Wilton, Conn., which was described in the SN of April 17, 2006.
Before we turn to results concerning the food distribution channel, let's note that the ACSI survey shows that all forms of commerce registered a small increase in aggregate customer satisfaction during the fourth quarter of 2005, as compared to the previous quarter, although the full-year result was slightly below 2004 levels. The year-over-year decrease was attributed to a drop in satisfaction at gasoline stations, a reflection of increasing fuel costs. Other forms of commerce mentioned in the study, in addition to several forms of retailing, include financial services, e-commerce, finance and insurance. Scores are assigned to enterprises based on a weighted measure of how shoppers report their satisfaction with the shopping experience; factors include service, quality and price. A score of 100 would equal perfection.
As for the supermarket industry, the median satisfaction level for all stores was 74, up a point from 2004. In that universe, Publix Super Markets, Lakeland, Fla., led all brick-and-mortar retailers in the survey with a score of 81, flat against the previous year. Following Publix were Supervalu, 77; Kroger, 74; Winn-Dixie, 73; Albertsons and Safeway, 71 each; and Wal-Mart, 70. Judging by the last, then, there's not a total correlation between low price and satisfaction. Shoppers will reward a format for one attribute, such as price, if it swamps all other considerations. Still, how much better would Wal-Mart be if it could combine satisfaction and price, and how large an opportunity gap for all other retailers does this open?
Incidentally, turning to other retailing forms assessed in the survey, two e-commerce companies - Amazon and Barnes & Noble - both scored 87, the highest level of any enterprise surveyed.
Now let's look at the Cannondale survey that polled 5,000 shoppers online. Survey results grouped various retail banners as "routine replenishment," "big shops" and "experience makers." All listed in those categories registered above average in customer satisfaction. In the routine category were H-E-B, Wegmans, Publix, Kroger and others. Big shops were Costco, Sam's, BJs, Stop & Shop, Wal-Mart supercenters and others. Experience makers were Target, Whole Foods, Trader Joe's, Wild Oats and others.
It might be argued that some of these banners deserve mention in multiple categories, but what's common to all of them is their ability to break from the pack and offer a point of distinction that consumers perceive as value.