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Customer experience is ‘tipping point’ for choosing a brand

BY Marianne Wilson

One bad experience can turn off a customer.

Sixty-four percent of consumers said they have avoided a brand because of a bad experience they had within the last year, according to a global survey by customer experience management firm Medallia. The findings reveal that customer experience is the top reason consumers cite for choosing a particular brand when making a purchase.

According to the “Customer Experience Tipping Point” survey, the demand for a positive customer experience is especially high in the United States, and while loyalty is on the decline, expectations are on the rise, particularly among younger groups of consumers. For example, 30% of Gen Z and 22% of Millennials surveyed indicated that their expectations of customer experience in online retail are higher today than they were two years ago.

Also, U.S. respondents reported significantly higher expectations than European consumers for personalized experiences, real-time response, and ability to chat with a live agent.

“They [consumers] expect to have a seamless and positive experience and if those aren’t met, consumers know they have options,” said Rachel Lane, solution principal, Medallia. “For companies looking to create a competitive edge, having a strong brand recognition, or even stellar product isn’t enough. Customer experience is the tipping point, and without a strong plan to create and maintain a positive experience, businesses will lose out.”

The study also revealed that:

• A single bad experience can cost a brand a customer. Forty-six percent of U.S. mobile network customers said they are likely to switch brands after having one bad experience.

• Every touch-point matters. Customers expect their experience to be seamless and efficient on and offline. For instance, 56% of online retail shoppers and 49% of retail offline shoppers expect consistent levels of service across physical and digital channels.

• Customers don’t want to be responsible for fixing a company’s mistake. According to the study, 70% of consumers report that they expect an immediate response when they submit a complaint.

Further, when customers believe they have put in more effort than a company to resolve an issue, they are twice as likely to tell friends, family or colleagues about the bad experience, and four times more likely to stop purchasing from the company, switch brands, or use the company less frequently.

• Consumers expect a personalized experience. Thirty percent of customers expect call center agents to be instantly familiar with their contact history, and 40%, on average, expect to be offered personalized experiences based on their interests, buying behavior, demographics and psychographics.

• Brands may be forgetting an important group of buyers. Many companies tailor to younger generations, but the 55+ age group is the fastest growing adult demographic in the US. This group of consumers indicated their expectations were exceeded in the last 12 months at a lower rate than any other group surveyed.

• Women and younger generations are more likely to avoid a brand because of a bad experience. Sixty-six percent of women (vs. 62% of men) globally have avoided a brand because of a bad experience (with 64% being the global average for both men and women). In addition, this behavior is even more pronounced for Millennials and Gen Z.

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Walmart ‘shocked’ its former store is now detention center for migrant kids

BY Marianne Wilson

Walmart used social media to respond to the fact that one of its former supercenters in Texas has been converted into a detainment center for migrant children.

In a tweet, Walmart stated: “We had no idea our former store would be used for such a disturbing purpose, A.L. We are just as shocked and disappointed as you are.”

The retail giant’s tweet was in response to a tweet that said: “@walmart THESE CHILDREN ARE HOUSED IN @walmart !! #Boycott!!”

The 250,000-sq.-ft. facility, in Brownsville, Texas, formerly housed a Walmart Supercenter. The store closed in 2016. It houses nearly 1,500 migrant boys between the ages of 10 and 17, some of whom were separated from their parents at the Mexico border.

 

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Study: Lidl not very disruptive so far

BY CSA STAFF

German discount grocery giant Lidl is not shaking things up to the extent that many had feared.

That’s according to a report by shopper intelligence firm Catalina, which found that the opening of U.S. stores by Lidl was less disruptive to competing supermarkets than some grocers had originally feared. Catalina found that nearby incumbent supermarkets lost close to 7% of overall sales during the first month of a Lidl store opening, but the impact on those same stores declined rapidly, falling to less than 2% of store sales by the fourth month.

The report, “Defending Supermarket Share When Lidl Comes to Town,” also shows that name brand products provided a significant competitive advantage for incumbent grocers versus Lidl’s heavy emphasis on private label. The percentage of sales declines among name brands was approximately 3.4 times less than for competing grocers’ private-label products. Three departments — produce, beer and wine — accounted for the majority of the total sales decline.

Meanwhile, center store aisles (shelf stables and general merchandise) were far less impacted. Demographically, Hispanic and African American shoppers and larger households were much more likely than the average shopper to shift spending to Lidl. The study found no meaningful variance among income groups.

“This study demonstrates the importance of shopper analytics in helping retailers keep pace with new competitive threats and changing shopper behavior,” said Tom Corley, chief global retail officer and president of US Retail. “It is also clear that well-recognized brands can provide a strong competitive advantage against new retail models, including Lidl, that emphasize private labels over name brands.”

Among the findings of the study:

• During the 16-week study period, incumbent stores lost a total of 4.3% of sales. Trips declined 3.6%, and shoppers declined 5.0%.

• Sales declined by 6.8% in the first month, but were down only 1.9% by month four.

• Three departments — produce, beer and wine — accounted for 60% of the total sales decline, even though those departments account for just 16% of overall store sales.

• The center store accounted for just 7% of total losses, although they are approximately 40% of overall store sales.

• Private-label products represented 58% of lost sales, although they account for only 28% of store sales. Name brands represented just 42% of the sales loss, although they account for 71% of store sales.

The study examined shopper behavior at 83 incumbent supermarkets within three miles of 30 Lidl stores that opened in 2017. The study tracked shopper behavior across different grocery departments and demographic groups during the first 16 weeks of a Lidl store opening.

To download the full report, visit Catalina.com/whenlidlcomestotown.

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