Study: Amazon, Trader Joe’s and Costco Tops With Consumers

Online players show strength in elements traditionally dominated by brick-and-mortar retailers, Trader Joe’s and Costco Wholesale Corp. came out on top with consumers in a survey by global consulting firm OC&C Strategy Consultants. Rounding out the top five were Zappos and iTunes.

Respondents in the “OC&C Retail Proposition Index” rated retailers they had shopped at on the overall strength of their offer, and also on the following individual elements: low prices, value for money, fashionability, quality of products, wide choice of products, products that are suited to me, service, trust, and store look and feel (or, if online only, quality of website).

Amazon ranked first in the overall segment of the Index, and also came out on top in several individual elements: value for money, wide choice of products, products that are suited to me and online shopping. The online retail powerhouse was rated No. 1 across all consumers, regardless of gender, household income or price sensitivity.

When it comes to low prices, Dollar Tree came out on top, followed by Aldi and Ross Dress for Less. In fashionability, the leader was Zappos, followed by Zara and Forever 21. In store look and feel, Williams-Sonoma was rated highest, followed by Crate & Barrel and Nordstrom. Williams-Sonoma also claimed the top spot in quality of products, followed by Whole Foods Market and Apple Store.

Trader Joe’s was the leader in service, followed by Zappos and Bath & Body Works. Zappos ranked as the most trusted retailer, followed by Amazon and Costco.

TAKE-AWAYS: Rambaut Fairley, associate partner in OC&C’s retail practice in Boston, summed up one of the biggest take-aways for retailers from this year’s Index: Pick your battles.

“It would be easy for competitors to become obsessed with combating Amazon’s broad set of strengths and look for ways to beat the retailer on all fronts simultaneously,” he said. “However, the challenges in setting strategy are not just about choosing what to do, but also include selecting what not to do.”

Fairley noted that a review of leading retailers reveals that those who are successful in building strong customer propositions are aggressively pursuing the key areas in which they want to compete and win — even if that means making sacrifices in other areas.

“As a result, the leading contenders to Amazon’s crown produce much more polarized performances than the online giant, with Trader Joe’s and Zappos investing in service at the expense of price, Costco sacrificing choice to compete on value for money, and Whole Foods and Williams-Sonoma focusing on product quality ahead of value for money,” he explained.

As to the overall strength of online retailers, Fairley said the reason it should be so concerning for brick-and-mortar players is that while online companies have always had the structural advantage in areas such as price and range, they are now also beginning to outperform in areas that were traditionally the store’s key strengths, most notably service.

“While Trader Joe’s took the overall prize for service in this year’s Index, both Zappos (2nd) and Amazon (6th) are in the top 10 for this key proposition element, which is often cited as the store’s last remaining source of advantage,” he explained.

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