Among the brick-and-mortar retail categories, supermarkets and grocery discount retailers are hit hardest amid the upheavals of the pandemic. After four years of near-stable customer satisfaction, the industry’s American Customer Satisfaction Index (ACSI) score dives 2.6% to 76. As with other retail categories, the decline is widespread, with 17 of 20 major grocers posting lower scores year over year.
Prior to the pandemic, many traditional grocers were already moving into the online grocery space, facing stiff competition from Amazon and Walmart. Post-COVID-19, online shopping, pickup, and delivery all gained popularity. U.S. sales of grocery delivery and pickup grew from US$1.2 billion in August 2019 to US$5.9 billion in November 2020. Moving into 2021, Kroger continues to build automated customer fulfillment centers for filling online grocery orders in partnership with Ocado. Meanwhile, Ahold Delhaize recently completed its acquisition of the majority share in New York City-based online grocer FreshDirect.
Still, many shoppers continue to patronize physical stores, even during the pandemic. With the onset of COVID-19, consumer shopping patterns morphed almost overnight. In some cases, grocers encountered declines in store visits, but average transaction sizes grew. Panic buying caused shortages of household items like hand sanitizer and toilet paper. In grocery carts, nonperishable staples took over as consumers stocked pantries. As shelves emptied, shoppers took notice. ACSI data show that customer opinions about merchandise availability take the biggest hit in 2020. Overall, shoppers find less to be happy about across the entire range of grocery retail customer experience elements.
Nevertheless, the grocery retail industry remains home to some of the highest-scoring companies in the Retail sector. Most of the grocers that led in customer satisfaction in 2019 are weathering the challenges of 2020 better than many lower-scoring chains. The top of the supermarket industry and indeed the top of the entire Retail sector belongs to Trader Joe’s (owned by German discount chain Aldi Nord) with a high and stable ACSI score of 84. The areas where Trader Joe’s does particularly well show no signs of strain. The company continues to knock it out of the park for staff courtesy and helpfulness, and its checkout speed stays best in class.
Four companies tie for second place with scores of 82 that also place them ahead of all other retailers in the sector. Costco, H-E-B, Publix, and Wegmans display stronger levels of customer satisfaction and less satisfaction erosion than most chains in 2020. Among these stores, Publix ticks off the most wins across the customer experience, including store cleanliness and layout.
The remaining top-tier performer from 2019, Aldi, runs into some headwinds, dropping 4% to tie with a stable Sam’s Club (Walmart) at 80. Like Trader Joe’s, hard-discounter Aldi offers a limited assortment of mostly private-label brand products, and the two chains remain the industry’s value leaders. Their lack of name brands isn’t an issue for these chains’ customers who are among the most loyal, along with Publix and H-E-B shoppers.
Like Aldi, seven other companies endure significant declines in customer satisfaction. The grocery business of BJ’s Wholesale Club tumbles 5% to 78, losing its 4% gain (and more) from 2019. BJ’s also declines in the department and discount store category. The company reported a strong fiscal 2020 second quarter, with elevated rates in membership growth. For BJ’s, one challenge will be improving customer satisfaction to retain those new members.
Kroger and ShopRite retreat by 4% and 5%, respectively, to match the industry average of 76. For both grocers, customer satisfaction has not been this low since 2015.
At the low end of the industry, a trio of big decliners now languish further behind the industry average than they did in 2019. Southeastern Grocers slides 4% to 73, while Giant Eagle plummets 5% to 72. Southeastern Grocers is in the process of divesting its Bi-Lo brand to focus on its remaining banners, including Winn-Dixie.
Albertsons Companies also shows a steep ACSI drop, losing 5% to hit rock bottom at 71. Together, the Safeway and Albertsons banners account for roughly 60% of the company’s interviews in the 2020 ACSI survey. The bad news for Albertsons Companies is that some of its other measured brands score even lower than 71 for shopper satisfaction. Overall, the company exhibits the steepest year-over-year decline in customer perceptions of value.
Among the traditional retail categories, the supermarket customer experience is hurting the most. Every aspect is less pleasing than a year ago, and 8 out of 13 customer experience elements worsen by 4% or more. The industry’s top ratings are convenience of hours and locations (both 81). Most other elements slide below the excellent level of 80 and above seen in 2019.
Store layout and cleanliness suffers, as does the freshness of meat and produce (both -4% to 79). Brand names are scarcer (-2% to 79) and merchandise selection is less robust (-3% to 78). Merchandise availability, or lack thereof, is even more irksome to customers (-5% to 76). Sales and promotions fail to hit the mark as well (-4% to 76).
As more supermarket customers turn to mobile apps during the pandemic, they are more disappointed than customers in other brick-and-mortar retail categories. Mobile app quality falls 2%, while mobile app reliability descends 4% to meet at 79—the lowest scores in the sector.
Personalized customer service erodes as staff courtesy drops 4% to 78, and call center satisfaction backpedals 4% to 75. Checkout speed remains unsatisfactory (75) but the worst part of the customer experience diminishes further. Customer assessments of the quality of pharmacy services plunge to a score of 71 (-4%). This is well off the mark compared to the health and personal care store industry’s score for pharmacy quality (79).
Department and Variety Discount Retail Stores
After two years of customer satisfaction stability, the department and discount store industry ebbs 1.3% to an ACSI score of 75. While customer satisfaction improvement is hard to come by among department and discount stores, this is the only retail category where two companies eke out small gains. Nevertheless, 13 out of 19 major store chains experience downturns in customer satisfaction year over year.
Even before the COVID-19 pandemic hit the United States in earnest in March 2020, the world of brick and mortar had been long giving way to e-commerce. Predating stay-at-home orders and social distancing that kept customers away from physical stores, consumer preference for online shopping had already put a dent in foot traffic, especially at malls that house many traditional department stores. As in prior years, department and discount stores fall behind both internet retailers (78) and brick-and-mortar specialty retail stores (77), categories that also compete for the value shopper as well as vie for consumer dollars in spaces like fashion, home furnishings, electronics, and appliances.
In the ACSI, scores of 80 or above are deemed excellent. The top of the industry shows that some brick-and-mortar competitors know how to please their customers, even amid the challenges of the pandemic. Costco holds first place for customer satisfaction for a fifth straight year, despite a 2% drop to 81. Costco remains the value leader in the category, and customers appreciate the cleanliness and layout of its stores, a factor that has gained new importance since COVID-19. Costco continues to outpace both Walmart’s Sam’s Club (-2% to 79) and BJ’s Wholesale Club (-3% to 77), although all three warehouse clubs score well above the industry average for shopper satisfaction.
In second place, Nordstrom (which includes Nordstrom Rack) manages to gain a point in 2020, up 1% to an ACSI score of 80. Nordstrom is one of the few retailers to show improvement across several aspects of the customer experience, including staff courtesy and helpfulness where it now rates best in class. Nordstrom continues to push an omnichannel approach, including the expansion of its online pickup services to hundreds of Nordstrom and Nordstrom Rack outlets. According to ACSI data, however, the off-price Nordstrom Rack brand, which the company considers its biggest source of new customers shows ample room for improvement. Indeed, customer satisfaction for the company overall would be much higher if not for Nordstrom Rack’s far lower ACSI score.
In third place, Dillard’s inches up 1% to 79. Besides Nordstrom, Dillard’s is the only retailer in the entire sector to post an ACSI gain, albeit a slight one. Customers consider Dillard’s an industry leader when it comes to both variety and availability of merchandise. Next in line, Kohl’s and TJX (Marshalls and TJ Maxx) both slip 1% to scores of 78, while Macy’s follows closely behind at 77 (-1%). Kohl’s strength remains its ability to provide discounted merchandise. The company stands head and shoulders above all other stores for its frequency of sales and promotions, according to customers.
A logjam of retailers post scores of 76, including the group of smaller stores (-4%). Along with Target, two of the industry’s oldest department store banners, Belk and JCPenney, fade 3% to scores of 76. JCPenney filed for bankruptcy in May 2020 and then emerged under new ownership in December with plans to close up to 200 stores. Customers are already much less happy with JCPenney’s locations and store hours, factors that will only continue to worsen. Belk’s plans to reinvent its store model to appeal to younger buyers while retaining its loyal customers were shelved when the pandemic hit. With customer satisfaction now reaching a low point, the company is restructuring under Chapter 11 bankruptcy.
Among the low-end performers, variety discounter Dollar Tree suffers the biggest decline—down 4% to its all-time low of 74. While the company has been investing in store renovations to improve the variety discounter Family Dollar side of its business, ACSI data show that Family Dollar still lags the namesake Dollar Tree brand for customer satisfaction. Rival variety discounter Dollar General also loses ground with customers in 2020, falling 3% to share the bottom of the category at 71.
Walmart, with two decades of below-average performance, stays in last place with an unchanged score of 71. For Walmart, service quality remains a serious issue. The company rates worst in class for both staff courtesy and checkout speed by wide margins.
For the department and discount store industry, the customer experience is a mixed bag in 2020, with some elements worsening while others improve.
As more customers shift to online shopping during the pandemic, the industry’s mobile apps continue to perform well. With scores of 81 for both quality and reliability, mobile apps are the best part of the customer experience. Website satisfaction worsens, however, falling 3% to 77.
Customers still find the industry’s store hours to be convenient, although less so with the pandemic restrictions of 2020 (-2% to 80). As in 2019, shoppers find store locations (78) less satisfying than store hours—a situation that is unlikely to improve as store closings are expected to continue in 2021.
Store layout and cleanliness continues to lag specialty stores (81), but customers see slight improvement as department and discount stores enforce new standards under COVID-19 (77). While inventory stocks are more disappointing (74), brand names are somewhat more available (76).
After a large drop one year ago, the courtesy and helpfulness of staff is dismal at 74—by far the lowest score among the retail categories. Sales and promotions remain a sore point, dipping further to 73.
Call centers struggle, falling 3% to the low score of 72. And while emptier stores may have helped speed up the checkout process, this remains the worst aspect of in-store shopping (72).