Business

Higher prices souring Americans’ attitudes about retailers

Shoppers wait at the Market Basket in Chelsea, Mass., last weekend. Higher prices are weighing on shoppers’ perceptions of American retailers, a new report has found.
Shoppers wait at the Market Basket in Chelsea, Mass., last weekend. Higher prices are weighing on shoppers’ perceptions of American retailers, a new report has found. AP

Higher prices are weighing on shoppers’ perceptions of American retailers, but good customer service helps buoy satisfaction with some companies.

According to a report released Wednesday from the American Consumer Satisfaction Index, shoppers’ overall satisfaction with the retail industry fell in 2014 for the first time in four years, dropping in every category except Internet retail.

Matthews-based Family Dollar ranked well below its competitor and future parent company Dollar Tree. Mooresville-based Lowe’s ranked well ahead of competitors Menards and Home Depot.

Satisfaction slumped the most for supermarkets and drugstores, where shopping is considered non-discretionary, according to the report, which randomly surveyed 8,738 customers last October and November.

“We’re looking at mostly pricing issues across retail, with the exception of gasoline recently,” ACSI Director David VanAmburg said, referring to higher food and raw material prices but lower gas costs. “It wasn’t really a big surprise that would end up spilling into retail as well. They have to pass those costs onto consumers.”

In the department and discount stores category, overall satisfaction was unchanged from 2013. Nordstrom ranked No. 1, followed by Dillard’s. Dollar Tree, which sells everything for $1 or less, ranked highest of the discount stores, above Dollar General and Family Dollar. Last month, Family Dollar shareholders approved the sale of the Charlotte-based retailer to Dollar Tree.

The deal may change Dollar Tree’s ACSI rank, though, VanAmburg said.

“Mergers and acquisitions usually lead to lower customer satisfaction,” he said. “There are significant challenges involved in combining operations of two large companies, at least in the short term. And for customers, bigger is not always better.”

In the specialty retail category, where year-over-year satisfaction declined 1.3 percent, wholesale retailer Costco came in at No. 1, followed by L Brands, the parent company of Victoria’s Secret and Bath & Body Works. Lowe’s ranked well above its competitors Home Depot, the largest home improvement retailer in the U.S., and Menards.

“For Lowe’s, it’s a history of doing customer service better than their competitors,” VanAmburg said. “It’s hard to be a pricing type of issue because they are so fiercely competitive. You’re going to find prices nearly identical at those stores.”

Beyond that, VanAmburg said Lowe’s also distinguishes itself by store cleanliness and efficient checkouts.

Kroger, the parent company of Matthews-based Harris Teeter, ranked highest in the pharmacy category, beating out places like CVS. Overall satisfaction of the category sank 2.5 percent since 2013.

Among the supermarkets, Wegmans took the top spot, followed by Trader Joe’s. In third place was Publix, which is based in Florida but is quickly expanding its North Carolina footprint. Kroger ranked about in the middle, right below Bi-Lo. Satisfaction in the supermarket category fell 2.6 percent in 2014.

Internet retail was the only category for which customer satisfaction improved in 2014 from 2013, and it grew 5.1 percent. Amazon ranked highest, followed by Newegg, which sells computer hardware and software.

Claes Fornell, ACSI Chairman and founder, pointed out that the dissatisfaction from customers showed up in weak holiday retail sales. Consumer spending makes up about two-thirds of the American economy, so if it lags, so, too, might the economy.

“Unless consumer spending picks up dramatically, we won’t see much – if any – increase in the pace of economic recovery,” Fornell said.

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