CUSTOMER SATISFACTION DROPS, BUT PUBLIX DOES THE BEST

David Merrefield

What's in store for the economy when customer satisfaction in a wide range of enterprises takes a dive?

We may find out in upcoming quarters, since that very thing is happening.

The results of a research project conducted by the University of Michigan, and issued last week, show that customer satisfaction in 12 business sectors, including retail, financial services and e-commerce, fell precipitously in the fourth quarter of last year as compared to the previous quarter. Supermarkets are among the business sectors surveyed. Research shows that for all lines of business, the satisfaction index fell to 73.6 from 74.3 the previous quarter, or by nearly 1%. That's the largest drop since the first quarter of 1997. Let's take a closer look at what these numbers mean, what they imply, and how supermarket customer satisfaction compares to other lines of trade.

According to a university spokesman, the customer-satisfaction number is developed by means of a survey that queries shoppers about various aspects of the shopping experience, such as evaluations of quality, service and price. Findings are put into a formula that weights each according to the degree of influence it has on overall satisfaction. That yields the numerical score. The highest possible score is 100.

Much of the reason for the drop in the all-enterprise score, cited previously, has to do with retail gasoline stations. Satisfaction with that form of retailing dropped 5 points, or 7%, in a year's time. That's because satisfaction with fuel stations rises or falls in inverse proportion to fuel prices. Other forms of retailing also fell, but to a lesser degree. Those forms include department, discount and supermarkets. It's conjectured by the study's authors that discounting during the holiday season of the last quarter of 2004 drew large numbers of shoppers at the same time retailers were cutting costs by reducing in-store labor. That, too, eroded satisfaction levels.

In any event, it's predicted that the falling levels of customer satisfaction bode ill for the overall economy, since lower satisfaction means less consumer spending. Such spending represents 70% of the gross domestic product. So the implication is that less tax revenue will be produced, leading to greater budget deficits. Moreover, trade channels that increased their customer-satisfaction measures, such as membership clubs, home improvement and electronics, tend to sell imported goods. That implies the trade deficit will increase.

Now on to the best news. Publix Super Markets ranked the highest for all forms of retailing, apart from e-commerce, at 81. That is well over the retailing average, but represents a 1.2% drop in a year. Clearly, Publix has cracked the code on product, price and service. Here are a few other scores: Supervalu, 75; Kroger, 73; Winn-Dixie and Safeway, 72; Albertsons, 69. For the first time, the survey addressed Wal-Mart supercenters, which weighed in at a surprisingly low 70. Other scores related to Wal-Mart include its discount stores at 73, off 2.7% in a year; and Sam's Club at 75, off 2.6%. These scores point out the degree to which Wal-Mart depends on its low-price offer, and that it does so to the virtual exclusion of any other factor. The study's authors said Wal-Mart shoppers question its quality, selection and portfolio of brands.