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Customers Are Still Satisfied, but Does It Matter?

Customers Are Still Satisfied, but Does It Matter?

Stocks are plummeting. Consumer confidence is tanking. Home prices are nose diving.

It's nice to know that at least one national index is relaying good news.

Customer satisfaction with grocery stores held steady last year despite rising food prices, according to the American Customer Satisfaction Index (ACSI), which is produced by the University of Michigan's Ross School of Business in partnership with the American Society for Quality and CFI Group.

Satisfaction remained at 76 on a 100-point scale, the same as in 2007, despite rising food prices. Publix led the list for the 15th year in a row with a score of 82 (click on "Publix Tops List" for the story).

But the details are a bit puzzling. Price-oriented retailers with robust sales last year, like Wal-Mart Supercenters and Dollar General, experienced reduced levels of satisfaction, while operators challenged on the sales front, like Safeway and Whole Foods, saw rising satisfaction.

Wal-Mart Supercenters was the biggest supermarket decliner, down 4% to 68. Yet, last year Wal-Mart recorded strong financial performance.

Here's the explanation from ACSI. Discount-oriented stores benefited on the sales side from customers trading down from supermarkets. But those same shoppers tended to be more critical of service levels. And the increased customer traffic made for more crowded stores, another reason for lower evaluations. That's not an explanation I would have guessed, but it makes a certain amount of sense.

What about satisfaction with the conventional supermarket side? How is it that Safeway advanced 4% to 75 and Whole Foods 2.7% to 75, even though sales for both were hurt by the downturn?

ACSI's interpretation is that customers were increasingly pleased by the greater amenities and service levels. In fact, to the extent that these operators lost customers in this economy, that development actually helped boost satisfaction because the ratios of associates to customers became more favorable, and the remaining shoppers tended to be the most loyal. That's a bit counter-intuitive, but fascinating nonetheless.

Now for the big question: Does rising satisfaction matter if sales aren't following?

The ACSI folks concede that satisfaction alone won't translate into sales now that many consumers don't have the means to spend.

However, David VanAmburg, ACSI's managing director, explained why these results still have meaning.

“When times improve and the edge comes off price and people think more about quality, if you let it lapse now, you'll really lose out then,” he said.

That's particularly true for operators that make their name in service, like Safeway or Kroger, and less so for discounters, he added.

Good point. Of course, retailers still need sales because they have to remain in business. So price becomes a far more important tool today. But clearly there's a danger to letting customer service wane.

Let's hope the government and business figure out good solutions to today's economic mess because without the means to spend, rising consumer satisfaction will be merely a footnote to the larger picture.