Dive Brief:
- Costco has bested Amazon in consumer satisfaction among online retailers, according to the latest American Consumer Satisfaction Index report. Since 2010, Amazon has held the number one spot but dropped 4% this year to a score of 82 while Costco reached 83 out of 100. The report cites Costco's Kirkland brand as a key driver for the change.
- Among supermarkets, Trader Joe’s and Wegmans hold the top spots, despite satisfaction for the supermarket category falling 1.3%. Walmart received the lowest score for customer satisfaction in supermarkets.
- Consumer sentiment is down for six retail categories including department and discount stores, supermarkets, internet retail, gas stations, health and personal care stores and internet retail, according to the index. The combined categories fell almost 1% to 77.4. This is the second year in a row that numbers have dropped.
Dive Insight:
In all the hustle and bustle of e-commerce development and store transformations, some retailers are forgetting one of the most important factors for a retail business to succeed: customer satisfaction. Trader Joe’s, Wegmans and Costco have continued to make customer service a top priority, and it has paid off, based on the ACSI findings.
Customers enjoy shopping at Costco, according to the index, and 90% of members renew their subscriptions. The retailer’s high-quality, discounted products, particularly its private label Kirkland brand, are big selling points for customers. Costco overtaking Amazon in e-commerce satisfaction is significant, and reflects the club chain's ongoing investments in shipping and same-day delivery. It also shows that the warm feelings Costco's stores inspire is translating over to e-commerce.
Amazon did score higher than Walmart — its biggest competitor — in the internet retailer category. Although Walmart’s online business grew 43% in its Q4 earnings report, customer satisfaction has never been its strong suit. Walmart's Sam’s Club ranked well in the supermarket category, but Costco still has it beat.
Whole Foods' score fell 2% despite Amazon's attempts to lower costs to shed its pricey reputation and woo customers with Prime discounts. The Wall Street Journal recently reported that prices are creeping up across the chain, indicating the companies have an uphill battle on their hands.
Aldi, meanwhile, has remained in the number three slot for two consecutive years. Recently the retailer has been aggressively expanding in the U.S., remodeling stores and growing the perimeter in hopes of becoming the third-largest food retailer in the country. Aided by its transformation efforts, Aldi's customer satisfaction score was one of the few that did not drop in these latest rankings
Trader Joe’s, which ranked first in supermarkets, is known for its customer service so it’s no surprise that the retailer has ranked number one for customer satisfaction. Just last month, the grocer was named the top U.S. grocery retailer by consumer science firm dunnhumby. And it's doing so without an e-commerce or delivery presence — proving that the chain truly is an anomaly in the industry. Last month Trader Joe's shuttered its home delivery service in New York City — the only location where it was offered.
Overall, the supermarket category didn’t perform well. Ability to supply brand names, layout, cleanliness and frequency of sales fell one point and website satisfaction fell two points. This could signal that grocers are taking on too much without the resources to excel in all categories. Customers are also unsatisfied with the quality and freshness of produce and meat, which dropped two points from last year. This is crucial information for grocers because millennials and Gen Z'ers prize good food, and won’t hesitate to switch grocers if they are unsatisfied.
