Wal-Mart Again Ranks Lowest in Customer Satisfaction Survey

For the second time in three years, Wal-Mart scored the lowest of any retailer on the American Customer Satisfaction Index from the University of Michigan. Wal-Mart’s customer service has been the subject of both outrage and ridicule, as the company has gained notoriety for its disgruntled employees. Wal-Mart’s personnel practices only compound problems with store format and product quality. Low wages, poor health care, erratic scheduling for store employees and years of union-busting have made Wal-Mart a leader in employee turnover and, now, poor customer service.

Wal-Mart Ranks Lowest Among Discounters in Survey [Bloomberg News]

Wal-Mart Stores Inc. ranked lowest among U.S. discounters and department store chains in an annual survey of customer satisfaction as shoppers said they found less value in the world’s largest retailer’s prices.

Wal-Mart fell to 68 from 72 last year on a scale of 1 to 100, according to the University of Michigan’s American Customer Satisfaction Index, released today. Minneapolis-based Target Corp., the second-largest discounter, held steady at 77. The average score for department and discount stores was 73, the lowest since 2001.

Customers may be increasingly dissatisfied with the goods Wal-Mart is carrying, said Claes Fornell, the professor who led the study. Chief Executive Officer H. Lee Scott has turned the company’s focus back to groceries and household items after an ill-fated attempt to boost sales by luring fashion-conscious shoppers with silk camisoles and distressed jeans.

“It’s perceived by the customers that quality is declining but price is not coming down correspondingly,” Fornell said. Wal-Mart’s score for customer service was also the lowest among discounters and department stores, Fornell said.

Scott discounted more items earlier in the holiday season to drum up revenue last year. The Bentonville, Arkansas-based retailer’s sales at stores open at least a year rose 1.7 percent during the fourth quarter, outpacing Target for the first time in 3 1/2 years.

“We survey more than 2 million customers every quarter, and they’re indicating new highs in all five of the areas we measure, including faster, friendlier and cleaner stores,” spokesman John Simley said.

‘Customer Service’

“Certainly with about 140 million Americans shopping at our stores every week, Wal-Mart remains the most popular shopping destination in the country, and our attention to customer service is an important reason why.”

Fourth-quarter profit rose 4 percent to $4.1 billion, or $1.02 a share, compared with $3.94 billion, or 95 cents a share, a year earlier, the retailer said today. Revenue climbed to $107.4 billion.

Wal-Mart rose 30 cents to $49.74 at 10:45 a.m. in New York Stock Exchange composite trading. The shares gained 2.9 percent in New York trading in 2007 for the first increase in three years. The Standard & Poor’s 500 Retailing Index fell 18 percent during that time.

Target said Feb. 7 that fourth-quarter same-store sales rose 0.2 percent.

Bargains Vs. Service

Growing customer dissatisfaction probably will have less impact at Wal-Mart than other retailers because shoppers visit its stores for bargains, not service, said George Whalin, president of Retail Management Consultants in Carlsbad, California. Consumers have trimmed spending in the face of falling U.S. home values and rising food and energy prices.

“The customer just doesn’t stop at Wal-Mart because they know they’re going to get this great Neiman-Marcus experience,” Whalin said. “They’re going to get a big selection and low prices and they’re going to get in and out of there.” Whalin isn’t affiliated with the University of Michigan survey.

Consumers in the survey gave Nordstrom Inc. a score of 80, placing it first in customer satisfaction among discount and department stores. Wal-Mart’s grocery business tied with Winn- Dixie Stores Inc. for last place among supermarkets, with a score of 71, up from 69 a year earlier.

Wal-Mart has been at the bottom of the supermarket category in all of the four years that the university began tracking it. In the year ended Jan. 31, 2007, groceries comprised 31 percent of the discounter’s sales, according to its annual report.

The survey analyzes data from interviews with at least 250 customers at each of about 200 companies studied. The University of Michigan surveys about 65,000 shoppers every year, according to its Web site.

Posted by Alex Goldschmidt on Tuesday, February 19, 2008

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