Customer Satisfaction Dipped in Q4

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Customer satisfaction experienced its biggest drop since 1997 during the fourth quarter of 2004, according to the American Consumer Satisfaction Index being released today by the Ross School of Business at the University of Michigan.

The national survey is part of an annual study of 80,000 customers who rank their experiences with 200 companies in 41 industries. It is updated quarterly.

The fourth-quarter ACSI measured department/discount stores, specialty retail stores, supermarkets, gas stations, banks, insurance companies and e-commerce companies including e-retail, online brokerages, auction/reverse auctions and online travel sites.

Overall, customer satisfaction dropped 1 percentage point from the third quarter to 73.6 percent.

Such a large drop "does not bode well for the economy," said professor Claes Fornell, director of the research center at the Ross School.

When the ACSI fell 1.3 percent in the first quarter of 1997, consumers spent less in the following quarter.

The retail sector experienced a 3 percent decline to 72.6 percent. Only specialty retailers such as wholesale warehouse clubs, home improvement outlets and electronics stores showed improvement. The decline for department and discount stores was also 3 points, to 74 percent.

Fornell cited two reasons for the decline in customer satisfaction related to the retail sector: higher gasoline prices and unsatisfactory in-store experiences during the holiday season.

The price of gasoline affects the index because it is such a large sector, but also because consumers have less money to spend on shopping, he said.

During the holiday shopping season, retailers were quick to introduce discounts on merchandise when it looked early on like shoppers weren't very eager, Fornell continued. Though this strategy brought in shoppers, many stores lacked the resources to meet the increased demand, leaving customers dissatisfied with the experience due to crowding, long lines and slow service.

On an individual basis, Kohl's rating remained 79 percent. Costco kept its lead over other specialty retailers despite a 1 point decline to 79 percent. Federated improved its rating by 4 points to equal the industry average of 74 percent. This is an all-time high for the chain. Kmart fell 4 points to 67 percent.

Wal-Mart is represented in three industry categories. In the department and discount store categories, the chain fell 3 points to 73 percent, its lowest score since 2000. Wal-Mart's Sam's Club stores fell 3 points to 75 percent. Wal-Mart Supercenters entered the ACSI supermarket industry for the first time with a score of 70 percent, almost at the bottom of the industry.

In e-commerce, lost ground for the first time. The online retailer fell 5 points to 84 percent, still a high score. Fornell attributes the decline to Amazon's recent expansion into new product categories, which has made it tougher for the company to maintain high levels of customer service.

EBay's score dropped 5 points to 80 percent.


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