Customer satisfaction in retail sector dips but rises in info-communications sector: SMU study
SINGAPORE – Takashimaya department store, supermarket chain Sheng Siong as well as fashion labels Uniqlo and Zalora got the thumbs up from consumers but a study shows that customer satisfaction in the retail sector has declined.
These findings, revealed on Wednesday (July 6), come from an annual study by the Institute of Service Excellence (ISE) at Singapore Management University.
The study shows that customer satisfaction in the retail sector – which comprises department stores, fashion apparel, supermarkets and e-commerce – fell by 1.5 per cent compared to last year, scoring 71.3 points out of a possible 100.
The other sector – info-communications – that was tracked saw customer satisfaction improving by 1.9 per cent, with 69.8 points, reversing two years of decline.
The study, which computes customer satisfaction scores at the national, sector, sub-sector and company levels, involved face-to-face and online interviews, with 4,800 local consumers polled between January and April this year.
Ms Neeta Lachmandas, ISE executive director, said the customer satisfaction index provides a compass for businesses on areas that they need to focus on, and what their customers find important to attract their patronage again.
“In all the studies that we have been doing, we actually do see that customer satisfaction studies have a positive correlation with the business performance of the company,” she added.
The findings come a day after the Department of Statistics revealed that retail sales surged 17.8 per cent year on year in May, extending a 12.1 per cent growth in April.
Ms Lachmandas, who noted that the retail sector has picked up in recent months, added that Singapore’s relaxation of Covid-19 measures has led to a lot of stores reopening.
The department-store sub-sector scored 70.9 points (a 2.4 per cent dip year on year) while the fashion-apparel one logged 72.1 points (a decline of 1.7 per cent).
Takashimaya headed the department-store sub-sector with 76.3 points (a 0.7 per cent increase). Uniqlo, which topped the fashion-apparel sub-sector, had 75.9 points (a 4.7 per cent rise).
The supermarket sub-sector’s 71.4 points marked a decline of 0.8 per cent while the e-commerce sub-sector had 70.8 points (down by 0.5 per cent).
Sheng Siong, which topped the supermarket sub-sector, scored 75 per cent (a dip of 0.2 per cent) while Zalora, which headed the e-commerce sub-sector, had 75.1 points (a 4.5 per cent increase).
The study shows that customers of department stores and fashion apparel outlets had lower levels of customer loyalty, with scores falling by 4 per cent and 3.5 per cent respectively.
Customer loyalty in the study is defined as the likelihood of consumers repurchasing from the store or brand, and their tolerances towards price changes, said ISE.
Some key drivers to improving customer loyalty include product-related attributes such as variety and quality as well as in-store experiences such as promotions, pricing and store design.
There are also large differences in customer satisfaction and loyalty levels between customers who did their shopping in a physical store and those who had an omni-channel experience via online and in-store.
For example, fashion-apparel sub-sector respondents who indicated that they had only physical store experience had a customer loyalty score of 70.2 points. However, those with an omni-channel experience achieved 76.6 points.
Another observation is the prevalence of cashless payments and its impact on customer experience.
The study saw cashless payment usage surge from 44.8 per cent in 2018 to 82.9 per cent in 2022.
Cashless payment is linked to the use of physical credit and debit cards, Nets or mobile wallets such as Apple Pay and GrabPay.
Although the growth in cashless payment had been on an upward trajectory before the pandemic, the outbreak seems to have accelerated the adoption, Ms Lachmandas said.
Retail customers who went cashless gave a satisfaction rating of 7.51 points, on a scale of 1 to 10, for the payment process, significantly better than those using cash, with an average rating of 7.17 points.
In the info-communications sector, the mobile telecommunications sub-sector logged 70 points (a 1.2 per cent rise) while the broadband sub-sector’s 68.3 points represented a 2.2 per cent increase.
The other two sub-sectors are video streaming service with 72.7 points (a 0.9 per cent dip) and pay TV with 69.6 points. The score for pay TV is not comparable to previous years due to a change in data collection methodology, moving from face-to-face interviews to online surveys.
Starhub topped the mobile telecommunications sub-sector with 70.8 points (a 0.8 per cent increase) and pay TV sub-sector with 70.7 points.
Commenting on the survey, Starhub said it is heartened and humbled by its customers’ rating. “With their continued support, we took pole position in both mobile and TV, while our broadband score held strong amid fierce competition, differentiated by small percentage points among all three operators,” it added.
Singtel headed the broadband sub-sector with 68.8 points (a 3.5 per cent increase) while Disney+, a new inclusion in this year’s study, topped the video streaming services sub-sector.
Within the mobile telecommunications sub-sector, the year on year increase in the satisfaction score was driven by significant improvements by mobile virtual network operators such as Circles.Life, Gomo and MyRepublic.
These operators saw marked progress in key drivers of customer satisfaction, such as product and service quality as well as perceived value.