As per ACSI data, customer satisfaction in the United States is at its lowest since 2005. Let’s look at what supermarkets can learn from the benchmarks
Walmart sits in the last place in the general merchandise retail and supermarket category. The retail chain, which boasted a total of 4,742 stores in the US as of January 2022, scored a 71 whereas the average score for most retail stores sat at 75. The American Customer Satisfaction Index (ACSI) for the retail and consumer shipping industry 2021-2022 is based on interviews with 36,517 customers, chosen at random and contacted via email between January 11, 2021, and December 20, 2021. Customers were asked to evaluate their recent experiences with the largest companies in market share.
Based on the index, clear winners for customer satisfaction in the general merchandising category include; Costco (81), Nordstrom (79), Kohl’s (78), Sam’s Club (78) and Target (78). It’s interesting to note that Sam’s West, Inc. is an American chain of membership-only retail warehouse clubs owned and operated by Walmart Inc. In the supermarket category, the top five brands include; Trader Jose’s (85), H-E-B (82), Aldi (81), Costco (81) and Wegmans (81). Here, Walmart stood at a score of 70, down a point from the previous year.
Customer experience benchmarks used for the supermarket survey included; convenience of the store via location and hours of operation, quality and reliability of the mobile app, layout of the store, variety of merchandise, inventory in stock, ability to provide brand names, quality and freshness of produce, courtesy of the staff, speed of checkout, frequency of sales or promotions and call center satisfaction.
The ASCI is based on customer interviews and an econometric model developed at the University of Michigan’s Ross School of Business. The model maps the relationship between customer expectations, perceived quality, perceived value (the drivers of satisfaction), satisfaction, and customer complaints and customer loyalty (the results of satisfaction).
The changing supermarket landscape
News from large and emerging supermarket players is hotter than ever. Stores are using retail innovation to solve existing consumer challenges like out-of-stock inventory and checkout lag, take on industry problems like labor shortages, and incorporate delight by aligning with causes that consumers care about like zero-emission through last mile delivery partners.
Traditional supermarkets can leverage retail technologies to elevate the experience and blend online and in-store shopping. For example, retail technology company Clerk is working to unlock potential in brick-and-mortar grocery stores. It does this through Grocery TV, a product whereby brands can advertise on small in-store screens, as well as a new software-as-a-service (SaaS) AI-powered merchandising platform featuring a range of shelf-stocking data analytics capabilities. Currently, it has more than 14,000 displays in grocery stores like ShopRite, Bashas’ and Cub Foods. Clerk announced that it had raised $30 million in its Series B funding round last week.
Supermarkets are also seeking such benefits via partnerships. Take for example, Uber Technologies and Albertsons Companies that announced their partnership to drive operational excellence across 2,000 banner stores. Consumers will now be able to order items for delivery through ‘express’ lanes within the convenience section of the Uber Eats app.
The index does not include Amazon, which is still making a place for itself in the category, but this is something competitors will need to keep a keen eye on.
Amazon is a disruptive force
In August 2020, Amazon opened its first Amazon Fresh store, a 35,000-square-foot property in California. It now has 29 Amazon Fresh supermarkets in six states in the US. Amazon promises to be a disruptive force, evolving the grocery experience into a seamless, omnichannel offering. In-store, when shoppers exit Amazon Fresh they need not wait in long checkout queues thanks to the Just Walk Out technology where an app automatically debits their Amazon account for the items they take.
Despite its five years of owning Whole Foods Market, Amazon claims, it is still in the learning phase when it comes to grocery retail. What it does have is a vast wealth of market intelligence relative to its customer base. The company believes in using data to drive decisions, embraces technology to innovate on existing customer journeys, and it has experience with handling loyalty programmes like Prime. Take the example of the Amazon Dash Cart, a “smart” shopping cart that uses computer vision algorithms and sensor fusion technology to identify items that customers place in its basket. The items are selected and the transaction is processed using the credit card on the user’s Amazon account without a stop at the register. It has the added advantage of integrating in-house products like the virtual assistant Alexa can be accessed via Dash Cart or at in-store stations to help manage shopping lists and find items easily. It also provides food-related information.
But it’s not only big players, mid-sized ones are looking to solve customer challenges like access, a major deciding factor when choosing a grocer. For example, BJ’s Wholesale Club unveiled BJ’s Market, a smaller-format store, roughly half the size of a full-sized property, where members will find all the benefits of a full store. BJ’s Market announced that it will be testing new product assortments, displays, product sampling and demonstrations, and convenience initiatives.
Walmart plays the right moves
When it comes to geographic advantage, Walmart is clearly ahead of the rest. With 90% of the US population living within 10 miles of its stores, only Target comes close with 1,931 locations and claims that 75% of the US population lives within 10 miles of a Target store. In comparison, Costco has only 573 warehouses.
Much like Prime, Walmart launched its Walmart+ subscription service in 2020. The aim was to boost customer experience and loyalty. This week, the retailer even announced a major expansion of gas discounts for Walmart+ members. It’s working to identify and offer customers more sustainable options with the “Built For Better” product label introduced last year. Further, in light of the labor activism in the US, Walmart announced last year that it would raise wages for 425,000 employees.
Overall fiscal 2022 net sales at Walmart U.S. climbed 6.3% to $393.25 billion from $369.96 billion in 2021. Comp-store sales grew 6.8% and were up 6.4% excluding fuel, with the gain at 15% over two years. Walmart Chief Financial Officer Brett Biggs pointed out that the 2022 fourth quarter marked the first-ever $100 billion-plus sales quarter for Walmart US.
Walmart’s Every-Day-Low-Price strategy seems to be doing fine when it comes to profits. It’s clear customers see the value and enjoy the ease of access. So, what’s got customer satisfaction stuck in a rut?
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