Discount department stores get customer boost

kmartAustralian consumers are becoming more satisfied with the service of discount department stores, new research shows.

Roy Morgan said in its latest Discount Department Store Satisfaction Report that in the 12 months to May 2018, 87.3 per cent of more than 50,000 customers surveyed were satisfied, an increase of 0.6 per cent points year-over-year.

According to the survey, Kmart and Target held the highest levels of customer satisfaction at 88.2 per cent each.

In third place was Costco, the winner of the Roy Morgan 2017 customer satisfaction award for discount department store of the year, at 87 per cent.

Big W (86.6 per cent), Best & Less (86 per cent), Target Country (84.8 per cent) and Harris Scarfe (83.3 per cent) followed soon after.

Only two companies had a decline in satisfaction: Harris Scarfe dropped by 5.2 per cent points and Costco by 2.1 per cent points.

“In this highly competitive environment it is a positive outcome that over the last 12 months, discount department stores have been able to increase customer satisfaction,” said Norman Morris, Roy Morgan industry communications director.

“This is in contrast to Myer and David Jones with a combined satisfaction rating currently of 85.9 per cent, having fallen by 1.9 per cent points over the last year, to now have a lower rating than the 87.3 per cent for discount department stores.”

Department stores facing difficulty “head on”

In late 2017, as part of the Department Stores Satisfaction Report, it was found that Myer customers were more satisfied than those at David Jones; the inverse of the year before.

The report said 88.6 per cent of customers surveyed were satisfied with the service at Myer, while David Jones landed at 85.1 per cent.

David Jones was still the favourite of customers aged 71 and older, known as ‘pre-boomers’, which account for almost 10 per cent of department store shoppers.

The remaining demographics all preferred Myer, including ‘Generation X’ (aged 42 to 46), which is not only Myer’s largest lead on David Jones, but also the most important demographic accounting for 26.5 per cent of the total customer numbers.

Russell Zimmerman, executive director of the Australian Retailers Association, noted that all retail in the discretionary spend category are seeing difficult trading times.

“As department stores tend to trade in this category they are facing this difficulty head on,” he said.

“No matter which platform you are selling on, physical or online, all retailers need to focus on customer service, ensuring their customer experience is excellent.”

Morris noted that, since department stores are generally aiming at serving a wider range of consumers, it’s incredibly important that they understand how well they are satisfying their customer base.

“Although we have seen some considerable overall gains in satisfaction over the last year, this is likely to need to move at an even faster pace as the industry faces very rapid change even in the short term,” said Morris.

Online boost

Much of this ‘rapid change’ has been the result of an ever expanding online market, growing off the back of the increasing number of Australians prepared to purchase goods online rather than in person at a department store a number reported to be 9.46 million Australians, a large percentage of the Australian population.

“Reports seem to show that department stores, by the likes of Myer and David Jones, are seeing an uplift in online sales,” said Zimmerman.

“Therefore, it is vital that retailers focus their efforts in the online space, especially in a 24/7 marketplace.”

Michele Levine, CEO of Roy Morgan, noted a “retail revolution” earlier this year when discussing the rapid growth of the online market.

“Understanding the technology-specific attitudes and behaviours…is a great way for online retailers to target their best prospects, approach their marketing decisions more strategically and ensure they’re ready for the challenges ahead,” said Levine.

Department stores, discount or not, have been increasing their online capabilities in an effort to allow the customer to purchase where and when they want to a change that is sure to drive satisfaction further upward.

This article first appeared in our weekly magazine, subscribe via the link below.

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