Nine retailers with the worst customer service

Customer satisfaction with retailers is at an all-time high. However, while the industry improved overall, according to the American Consumer Satisfaction Index (ACSI), not all retailers received high marks. At the positive end of the spectrum, while traditional brick-and-mortar retailers set a record, e-commerce scored better still. At the negative end, traditional retailers received the most negative assessments.
Despite a positive multiyear trend, many traditional retailers’ scores remain average at best — especially those that are struggling to keep up with growing online rivals. 24/7 Wall St. reviewed the ACSI data to find the companies with the worst satisfaction scores in retail.

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In the most recent ACSI study, the averages for all retail companies peaked at 76.6 on a 100-point scale in 2012. The exception was Internet retail, which the ACSI groups with e-commerce. This part of the industry had an average score of 82 last year. Of the nine retail companies with the worst ACSI scores, just one was an online retailer.

But even average ACSI scores actually weigh negatively on retailers. Larry Freed, CEO of consumer analytics firm ForeSee, which works with ACSI on Internet retailer rankings, told 24/7 Wall St. that consumer expectations are an important part of a company’s or an industry’s score. According to Freed, consumers are not expecting a better experience stores. “The bar’s not getting any higher; it’s getting lower, if anything.” Meanwhile, “In the online world, it’s getting higher every day,” Freed said.

Some of the companies that failed to impress consumers in 2012 have struggled to satisfy customers for years. Safeway, which had among the lowest scores among all retailers, has underperformed in customer satisfaction every year for the past 10 years.

For one company, underperforming its industry benchmark is a relatively new development. Netflix outperformed the average Internet retailer in customer satisfaction for four years, and in 2009 it was the top retailer. But in 2011 and 2012, the video streaming company has been the lowest rated internet retailer.

Although brick-and-mortar retailers have struggled to keep customers happy, they still account for the majority of sales. However, if online retailers continue to outperform traditional retailers in satisfying consumers, they are likely to continue to erode brick-and-mortar market share. A February U.S. Census Bureau release noted that, while only 5.4% of retail sales came from e-commerce, this is up from 4.8% the year before.

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To identify the nine retailers with the worst customer satisfaction, 24/7 Wall St. reviewed the customer satisfaction scores published by the American Customer Satisfaction Index (ASCI) for e-commerce and retail trade companies. Additional information on corporate performance came the U.S. Securities and Exchange Commission, and from corporate websites. More information on customer service ratings came from the MSN Money/JZ analytics 2012 Customer Service Survey.

These are the nine retailers with the worst customer service.

9. Walgreens
AP Photo/Richard Drew> Customer satisfaction score: 76
> 12-month revenue: $70.79 billion
> One-yr. share price change: 22.42%
> Industry: Health and personal care stores

Walgreen Co. (NYSE: WAG) is the operator of drugstore Walgreens and one of the nation’s largest companies. As of December 2012, the company had more than 8,500 locations. But its wide reach has not helped the company appeal to consumers. In 2012 Walgreen received an ACSI score of just 76. However, not all measures of customer satisfaction were as negative for the company. A 2012 poll from MSN Money and JZ Analytics showed that more than 30% of customers thought the company’s service was “excellent,” while another 49.4% described service there as “good.” Whether customer service was actually any good, the company was struggling to attract consumers. Sales at stores open at least a year declined 2% in the most recent quarter, while revenue for the company declined 4.6% and earnings declined 25.5%.

8. TJX Companies
> Customer satisfaction score: 76
> 12-month revenue: $25.88 billion
> One-yr. share price change: 20.18%
> Industry: Specialty retail stores

The TJX Companies Inc. (NYSE: TJX), which owns discount retail stores T.J. Maxx, Marshalls and HomeGoods, has underperformed the specialty retail store sector’s ACSI score in five of the past six years. According to the MSN Money/JZ Analytics 2012 Customer Service Survey, less than 18% of consumers described service at the company’s T.J. Maxx chain as “excellent” — among the lowest of all businesses surveyed. But mediocre reviews did not hurt the company’s bottom line. Sales at The TJX Companies were up 12% in the most recent year from the year before, while net income for the retailer rose from $1.5 billion in the previous year to $1.9 billion in 2012.

7. The Gap
AP Photo/Elise Amendola> Customer satisfaction score: 76
> 12-month revenue: $15.65 billion
> One-yr. share price change: 45.84%
> Industry: Specialty retail stores

Gap Inc. (NYSE: GPS) owns a number of well-known retail chains, including the Gap, Banana Republic and Old Navy. In the most recently available 12 months, the company was extremely successful. Gap reported a net income of $1.1 billion, up from $833 million the year before. But consumers were likely less satisfied with Gap than investors. Of the 10 distinct specialty retailers rated by the ACSI, Gap rated as the worst for customer satisfaction — tied with TJX. Additionally, 2012 marked the fifth consecutive year in which Gap has underperformed the average specialty retail store in terms of customer satisfaction.


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