When it comes to satisfying customers, it appears as though online retailers have the edge, hands down, on brick-and-mortar operations.
The University of Michigan's (UM) American Customer Satisfaction Index (ACSI) for the fourth quarter of 2007 found that e-tailers scored an 83 on a scale of 100 compared to an overall rating of 71 for store operators.
"Online commerce delivers convenience that is unparalleled in the offline world ... and service quality and consistency is better because there is no unknown factor of a sales associate," Larry Freed, president and CEO of ForeSee Results, told the Detroit Free Press.
Amazon.com topped the list of online retailers in the UM Index with a score of 88 followed by Newegg (87), Netflix (84), eBay (81) and Overstock.com (80). Newegg, Netflix and Overstock.com were included in the ACSI for the first time.
Overall, consumer satisfaction with retail stores was down .3 percent with department and discount stores (- 1.4 percent) taking the biggest hit. Supermarkets were up 1.3 percent, according to the survey's results.
Among the physical store operators ranked in the UM study were Barnes & Noble (83), Publix (82), Borders (81), Costco (81), Nordstrom (80), Kohl's (79), Dollar General (78), Walgreen (78), Office Depot (78), Target (77), J.C. Penney (77), CVS (77), Staples (77), Sam's Club (77), Office Max (76), The Gap (75), Lowe's (75), Kroger (75), TJX Companies (74), Supervalu (74), Best Buy (74), Rite Aid (73), Whole Foods (73), Sears Holdings including Kmart (72), Safeway (72), Circuit City (71), Winn-Dixie (71), Wal-Mart (68) and Home Depot (67).
Wal-Mart's and Home Depot's ranking were the lowest ever for the companies in the ACSI rankings.
The current economic environment makes it all the more important for retailers, regardless of channel, to satisfy consumers, according to Claes Fornell, director, National Quality Research Center, Stephen M. Ross School of Business at the University of Michigan.
Prof. Fornell wrote, "The big question for the U.S. economy and, to a considerable extent, for the world economy, is how consumer spending will be affected by a barrage of problems, including increasing unemployment, plummeting house prices, tightening of credit, high levels of household debt, increasing cost of energy, and now also less customer satisfaction. Consumer spending is the largest component of U.S. GDP and it is particularly sensitive to changes in customer satisfaction and household debt ratios. When customer satisfaction declines, consumers have less enthusiasm for repeating experiences that no longer provide the same gratification. The experiences in question are the matters relating to shopping, buying, and consuming. If satisfaction affects consumers' willingness to spend, household debt ratios to income affect consumers' ability to spend."
Discussion Questions: Why do consumers give higher satisfaction ratings to online merchants than brick-and-mortar retailers? Is there anything stores can borrow from websites to improve the consumer experience?