With established household brands such as New Look, Maplin and Toys R Us struggling or losing the fight to stay afloat, economic pressure is causing fierce competition within retail.
The food retail sector is the most competitive of 13 in our UK Customer Satisfaction Index (UKCSI). There are just 6.3 points between the leader, Waitrose, and the lowest-scoring organisation. This is a clear indication of the potential for all retailers to make gains on their competitors – in order to survive on this competitive stage, organisations must differentiate themselves as a brand.
Aldi has quickly earned its place within the supermarket hierarchy, but needs to strengthen its customer service strategy in order to maintain this position. The budget supermarket was named the highest-performing food retailer in the July 2017 UK Customer Satisfaction Index (UKCSI). This stint at the top has been short-lived, however, with heritage brand Waitrose now taking its place.
It is clear that the spot for highest-performing supermarket is insecure and changeable. It is also by no means limited to Waitrose or Aldi. Retailers must react to customers’ ever-changing expectations. While Aldi is well placed to satisfy price-conscious consumers, as a brand it has also worked hard to become synonymous with quality.
“It is clear that the spot for highest-performing supermarket is insecure and changeable.”
The Index reveals that over half (55 per cent) of food retail customers are not prepared to compromise service levels in pursuit of the cheapest deal. Despite rising economic pressures, over a quarter (27 per cent) are even willing to pay a premium for better service: a clear indication of changing customer priorities within the sector.
Along with an increasing proportion of customers valuing service over price, however, comes more exacting demands of the experiences and value the consumer receives. This is particularly pertinent as greater pressure on incomes, consumer spending and margin cause the customer experience environment to become more challenging over the next year. Although crucial, focusing on the hygiene factors of customer experience is not enough. Supermarkets need to establish a coherent focus on integrating customer experience design, technology and employee engagement to deliver an overall experience that breeds customer engagement and trust.
Getting this right will be key to whether Aldi, Waitrose or, indeed, any other supermarket reigns in UKCSIs to come.
In a sector where the ever-changing number one spot is up for grabs, all organisations would be wise to take note of our eight key enablers of effective investment in order to build and maintain superior customer service performance:
“Supermarkets need to establish a coherent focus on integrating customer experience design, technology and employee engagement to deliver an overall experience that breeds customer engagement and trust.”
- Leadership commitment
- Employee engagement
- Customer experience design and process
- Relentless focus on problem and complaints and getting the basics right
- Effective measurement
- Innovation and improvement
Consistency, in particular, is vital to success, with further Institute research revealing a correlation between consistently achieving higher levels of satisfaction than competitors and stronger turnover growth, profit and employee productivity. Leaders and boards should take note: they have a clear responsibility to maintain consistency of purpose, relevance and impact amidst an increasingly complex economic and political environment.
Overall customer satisfaction within the food retail industry remains strong, but organisations should not become complacent. In order to maintain this success and benefit from long-term returns, high-performing supermarkets such as Waitrose should not rest on their laurels.
The temptation may be to hold back given environmental pressures, but with our ROI research revealing investments in customer service are worth £81.5 billion to the UK’s GDP through repeat custom and recommendation, consistency is key. Where momentum of customer satisfaction is maintained, supermarkets will be rewarded.