NCSI-UK News Fourth Quarter 2013
National Customer Satisfaction Index Results: Department Stores, Supermarkets, Electrical Retailers, Petrol Stations, Pharmacies and E-Commerce
LONDON (March 4, 2014) – UK customer satisfaction reached a new high in the final quarter of 2013, according to a report released today by the National Customer Satisfaction Index (NCSI-UK). Higher customer satisfaction with retail pushes the national benchmark up .5% to 75.6 on a 0 – 100 scale. Even though this is first increase in customer satisfaction over the past year, the improvement is large enough to propel NCSI to a record level.
The NCSI fourth quarter report covers results for supermarkets, department stores, electrical retailers, internet retail, petrol stations and pharmacies. For most retail categories, customer satisfaction is stronger than it was a year ago. Only department stores and e-commerce register declines, but online retail remains the highest-rated industry tracked by NCSI.
“Internet retail has improved dramatically over the past few years in terms of making it easier to find information, to navigate web sites, comparison shop, order, pay, and to complete purchase transactions,” says Claes Fornell, American Customer Satisfaction Index (ACSI) Chairman and founder. “As a result, demand continues to grow, but now the weakest part of the chain seems to be logistics: shipping the products to their buyers so that they arrive when promised. There were quite a few mishaps over the Christmas season that contributed to a worldwide drop in customer satisfaction for internet retail. If you buy a Christmas gift, chances are that you’re going to be less than pleased if it shows up in January.”
Customer satisfaction with supermarkets is up 1% to 76, the first increase in three years. Most chains have improved the customer experience, but competitive promotions have not been quite enough to create high customer satisfaction or loyalty and grocery remains the lowest-scoring category in retail.
Waitrose climbs 2% to an NCSI benchmark of 85 - the highest score of any brick-and-mortar retailers. Smaller supermarkets (including Aldi and Lidl) are next in the rankings with an aggregate score of 80, up 1%. Asda also advances 1% to 78, having reduced its dependency on vouchers to refocus on quality and consistently low prices.
Only two supermarkets show deteriorating customer satisfaction: Morrisons and the Co-operative. Morrisons is down 3% to 76 and registers the worst Christmas sales slump of the large supermarket chains. Sainsbury’s inches up 1% to tie Morrisons at 76 – which is Sainsbury’s highest customer satisfaction score to-date. Tesco shows the greatest improvement, a 4% boost to 74. Though it remains below the industry average, Tesco is no longer in last place. The Co-operative falls to the bottom of the category with a 3% downturn to 71.
The Internet is becoming a major battleground for supermarkets as consumer preferences shift further towards online channels. Online food sales are rising, but it is particularly challenging for food retailers to balance delivery logistics with profit margins – all while maintaining a seamless customer experience. Scores for individual companies vary widely, but the industry benchmark for supermarket website satisfaction of 72 is far below any other retail category.
Customer satisfaction with department stores slips 1% to 77 despite heavy discounting early in the season. Quality trumps price most markedly for this industry. John Lewis – one of the few retailers to refrain from discounting before Christmas – is also the only large department store chain to improve customer satisfaction (up 1% to 84). House of Fraser and Debenhams both match the industry average at 76, but Marks & Spencer slumps 4% to 74. This marks the third consecutive year of declining customer satisfaction for M&S.
Customer satisfaction with electrical retail rebounds to an NCSI score of 79, boosted by Apple Stores and the widespread availability of tablets at other shops. At an NCSI score of 84, Apple maintains a strong lead, rising 1% from a year ago. Argos is steady at 78 for the third consecutive year and seems to be successfully bringing its business online while maintaining its brick-and-mortar presence through “click and collect” services.
In order to compete with e-commerce giant Amazon, electrical retailers across the board have enhanced online offerings and overall website satisfaction (78) is the highest of any retail category.
Customer satisfaction with e-commerce is down 2% to an NCSI score of 81. With more customers choosing to shop online, internet retailers may have struggled to maintain high levels of customer service during the 2013 holiday season. Despite the downturn, customers are still far more satisfied with e-commerce than traditional stores. The UK also does better than the US in this category: according to the American Customer Satisfaction Index (ACSI), Internet retail is down to an ACSI score of 78.
Amazon maintains the lead in customer satisfaction despite a small decline to an NCSI score 85. Apple’s iTunes advances by 3% to 82, and Asos debuts in the NCSI with a score of 81.
Customer satisfaction with Ebay is down 2% to an NCSI benchmark of 79, matching the aggregate score of all other e-commerce sites, including the websites of traditional retailers (79).
The NCSI includes data on health & beauty retailers for the first time this year. Pharmacies make a strong entrance with an overall customer satisfaction score of 78. Customers prefer smaller, local pharmacies (82) to any of the larger retailers, but there is very little differentiation among the largest chains. The Co-operative Pharmacy leads by a narrow margin at 77, but the Co-op Group is exploring options to divest its pharmacy business, which relies mostly on NHS prescriptions. Notably, the Co-op Pharmacy scores far better than its grocery stores (71), which are managed separately. Boots, Superdrug and Lloyds Pharmacy all follow closely behind at 76.
The National Customer Satisfaction Index (NCSI-UK) is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United Kingdom, and is produced by the American Customer Satisfaction Index (ACSI). Results are based on survey data from more than 6,799 customers collected via online panel during Q4 of 2013.
This methodology was developed at the University of Michigan and has been adopted worldwide as a leading macro- and micro-level indicator by universities, governments, and countries including the United States, the United Kingdom, Sweden, Singapore, Korea, Turkey, South Africa, Mexico, Colombia, Dominican Republic, Indonesia, Kuwait and Barbados.
According to research from the University of Michigan, customer satisfaction – as measured by the NCSI-UK and ACSI – is directly linked to stock market performance. Companies with high scores on the ACSI and NCSI-UK produce higher stock returns than competitors and greatly outperform market indices.