Shoppers are most loyal to retailers with unusual offerings such as child care and online author chats, an IBM survey of more than 19,000 consumers has found. The most-loved retailers are also highly profitable. Surprisingly, consumers were most passionate about grocery stores and the least passionate about apparel retailers.
This story first appeared in the January 17, 2008 issue of WWD. Subscribe Today.
The survey found that only 21 percent of all consumers are “advocates” for a particular retailer. To be an advocate, a consumer would need to meet three stringent criteria: Recommend the retailer to friends and family, increase their purchases if the retailer added products found at other stores and stay with the retailer even if another store were to sell an identical product more cheaply. In contrast, fully 78 percent of consumers surveyed said their primary retailer meets their expectations.
“You can move some nonadvocates to become advocates,” said Karen Lowe, general manager of IBM’s Retail Industry group, by giving the customer a unique experience in areas such as quality, store atmosphere and assortment. “If you can’t compete on a differentiated experience, it all goes to price,” she said. The unique offerings must be customer-focused, she said.
The study also found that in most retail segments, the retailers with the most advocates also had the greatest comp-store sales or gross margin return on inventory.
“When retailers focus on customers who are advocates, they tend to perform well as a company,” said Lowe.
Wegman’s was the number-one retailer overall and also in the grocery category, with 53 percent of its customers falling into the advocate category. The store offers reserved parking near the door for parents, one-hour child care, in-store cooking classes and high-quality groceries and prepared foods, Lowe explained. Nordstrom was the leader in large-format apparel, with 28 percent advocacy. Costco led pharmacy with 27 percent, The Children’s Place topped mall-based specialty apparel with 22 percent and barnesandnoble.com swept the online category with 27 percent. Nordstrom has been known for years for outstanding customer service, individual store assortments and a large shoe department.
The store experience — “pleasant, enjoyable and easy to shop” — was most highly rated by advocates in apparel. Assortment was also important at large-format apparel retailers, and a Web store with easy online and in-store returns was important at mall-based specialty apparel retailers. Convenience was the main factor in online shopping and drugstores, whereas quality was most important in grocery. (Advocates were asked to rank what their primary retailer did best.)
Advocates spend more than other shoppers, particularly in apparel. For example, advocates of mall-based specialty apparel retailers bought 32 percent more with their primary retailer than did “antagonists.”
The study also noted that favorite retailers tended to be the smaller ones, such as independent, regional and specialty stores.