The top specialty and department store retailer brands ranked by Brand Keys' Customer Loyalty Engagement Index.
Consumers are being offered a greater variety of brands at different price points than ever before — making them more fickle as well. So how to capture and maintain customer loyalty? "Loyalty strength relates directly to how well consumers behave toward their favorite brands," said Robert Passikoff, president of New York-based Brand Keys, which has issued its biannual Customer Loyalty Engagement Index. The index weighs everything from shopping experience and convenience of locations to perceived value, uniqueness and style of merchandise, and the brand's overall reputation or buzz. Loyalty strength is indicated by an index number, with 100 as the benchmark — anything higher than 100 is above average — and the top stores scored well above that.
Specialty Apparel Stores
1. H&M* Customer Loyalty Engagement Index score: 118 Two drivers are contributing to this loyalty leader, according to Brand Keys: the customers' shopping experience and satisfaction with the retailer's unique, stylish merchandise. In fact, H&M has been successful in pulling some of the biggest celebrity and designer names to create exclusive collections, including Karl Lagerfeld, Stella McCartney, Madonna, Kylie Minogue, Viktor & Rolf and, most recently, Roberto Cavalli. Last week, the brand revealed plans to use vintage prints from Finnish textile firm Marimekko for a special capsule collection arriving in stores in 28 countries next April. "Our design team has long admired Marimekko's vivid prints and colors," H&M head of design Margareta van den Bosch told WWD.
2. VICTORIA'S SECRET* Index score: 118 "It goes without saying that Victoria's Secret's lineup of unique merchandise appeals to its customers," said Brand Keys' Robert Passikoff. "If you know this store, where else would you go?" He added customers like their shopping experience within the roughly 1,000 Limited Brands-owned stores nationwide. "The buzz is big with this retailer, too — its reputation ranks high, thanks to smart advertising and their use of plenty of well-known supermodels." The Victoria's Secret Fashion Show, taped last week and set to air as a one-hour special Tuesday on CBS, showcased creative styling, said WWD, and of course, top models, including Heidi Klum, Karolina Kurkova, Adriana Lima and Jessica Stam.3. J. CREW Index score: 116 New York-based J. Crew is a classic case of a brand that has reinvented itself and enjoyed tremendous success in a second life, said WWD in October. J. Crew Group Inc. chairman and chief executive Mickey Drexler's strategy has been to invest in the right product and inventory and reinforce the merchandise the company believed in. The chain completely turned itself around and had one of the most successful initial public offerings in retail history: Since it went public at $20 a share in July 2006, J. Crew's stock has appreciated to as high as $57.17, and closed Wednesday at $40.64. Said Passikoff, "Reputation, convenience and value rate highly for this brand. People want a J. Crew button-down shirt, not just any button-down. The retailer's loyal followers regard this as a high-quality name for men and women — and for kids, too."
4. PACSUN Index score: 114 Though PacSun's parent company, Pacific Sunwear of California Inc., has experienced a bit of a roller-coaster ride over the past year, consumers are still finding plenty good to say about the Anaheim, Calif.-based specialty retailer. "PacSun ranks highly on its specific merchandise being unique and stylish for the customer, and the buzz is really good," said Passikoff. Along with restructuring some key management positions, the company has initiatives in place to turn around its performance: For example, the brand is continuing to roll out its "Refresh" program, an initiative introduced last year to modernize — but not completely renovate — high-performing PacSun stores.
5. AMERICAN EAGLE OUTFITTERS Index score: 113 Though its most recent quarter ended Oct. 28 saw net income drop slightly to $99.4 million from $100.9 million the prior-year quarter, American Eagle has been busy: The retailer aired its new original series, "It's a Mall World," earlier this year and relaunched its Web site in July. The brand has also added workout and fitness wear to its aerie collection: Aerie f.i.t., which stands for fun, inspirational and technical, includes leggings, shorts, sports bras and wind stoppers, among other exercise apparel and accessories. Said Passikoff, "These guys ranked highly on unique and stylish merchandise — this is definitely their strength for the specialty apparel category."Department Stores
1. MACY'S Customer Loyalty Engagement Index score: 119 "This is an interesting case for us, because the brand didn't show up in our rankings for a while," said Passikoff. "But nowadays, Macy's is everywhere." The brand received high marks for convenience and value, and also for its advertising and promotional campaigns, which Passikoff pointed out help to bond customers to the brand. "Consumers want everything, so expectations are high for Macy's, which heavily promotes its wide range of merchandise." WWD reported Monday that, on Black Friday weekend, cashmere sold well in apparel, as did coats, scarves and boots because of the cooler weather. Home also is starting to turn around, said Terry Lundgren, Macy's Inc. chairman, ceo and president.
2. SEARS Index score: 118 The strong point for this midtier department store giant is entirely related to its wide range of merchandise. "And it's not just apparel that interests consumers," said Passikoff. He pointed out that respondents immediately thought of several other departments within the store, primarily its Craftsman tools, Kenmore appliances and electronics, when they were asked to describe the brand. "But keep in mind, too, that the brand also pulled in average scores for both location and value," he added. This holiday season, Sears has been creating a buzz with various ad blitzes, like its "Super Saturday" sales, which offer shoppers deep discounts on apparel and home goods.
3. MARSHALLS Index score: 115 Value and reputation both had a hand in keeping this off-price retailer high in the rankings. "It's actually the reputation for value that keeps customers loyal to this brand," said Passikoff. While merchandise offerings aren't as impressive as Sears or Macy's, Marshalls is all about the deals: "The actual prices of their products are resonating well." Owned by Framingham, Mass.-based TJX Cos. Inc., Marshalls' 750 stores offer designer and brand name apparel, accessories and housewares items for up to 60 percent off regular prices.
4. J.C. PENNEY Index score: 113 "Location convenience and value help to rank J.C. Penney highly, as does its range of merchandise," noted Passikoff. "The brand is working hard to sell itself to everyone, but the store reputation is lower than average." He did point out that the company's longevity within the industry makes it a well-known household name nationwide, however. The company, which has been on a campaign to reinvent its image by embarking on initiatives like the integration of Sephora stores inside its units, cited a strong Black Friday performance across all merchandise categories, notably in expanded "redbox gifts" offering fine jewelry, housewares, juniors, young men's and children's assortments.5. DILLARD'S Index score: 110 This apparel and home furnishings department store chain has annual revenues exceeding $7.7 billion. "The merchandise range of this brand ranks well," said Passikoff. Both convenience and value pulled in average rankings, as did consumers' shopping experiences with the brand. Perhaps there is also something to be said for the longevity of the chain as well: It dates back to 1938, when founder William Dillard opened his first small store in Nashville, Ark. Today, Dillard's operates 330 locations spanning 29 states.
SOURCE: BRAND KEYS’ CUSTOMER LOYALTY ENGAGEMENT INDEX STUDY; THE STUDY IS CONDUCTED TWICE A YEAR AMONG 26,000 MEN AND WOMEN 18 TO 65 YEARS OF AGE ACROSS NINE U.S. CENSUS REGIONS; NEARLY 8,000 CONSUMER RESPONSES ARE SPECIFICALLY REPRESENTED WITHIN THE RETAIL BRAND CATEGORIES; RESPONDENTS WERE ASKED, “IN THE PAST MONTH, HAVE YOU SHOPPED AT A RETAIL APPAREL STORE MORE THAN ONCE? IF THE ANSWER WAS YES, THEY WERE TO INDICATE WHICH RETAILERS AND WHY; *INDICATES A TIE
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