Shop Talk

Check Out Line: Retailers need to step up the sucking up to consumers

Check out an American Express survey that shows that quality service matters more than ever, suggesting U.S. retailers may want to start sucking up to recession-wary consumers even more.      Sixty-one percent of Americans polled said quality customer service is more important in today’s tough economy and that they will spend an average of 9 percent more when they think a company is providing that. Important points when some analysts and investors worry the economy may be at risk of dipping back into recession.      In a disconnect, however, many businesses seem to be missing the message as 28 percent of those polled believe that companies are paying less attention to good service and 27 percent have not changed their attitudes, according to the American Express Global Customer Service Barometer (which sounds like a weather vane for customer service).   “Customers want and expect superior service,” AmEx executive vice president Jim Bush said in a statement. “Especially in this tight economic environment, consumers are focused on getting good value for their money. ”       “Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service – suggesting substantial growth opportunities for businesses that get customer service right,” he added.

Retailers might want to keep all that in mind given the fact that June same-store sales came in slightly below expectations and some analysts see the sector treading water.      The survey was conducted in the United States and 11 other countries.   In the United States, nine in 10 of those surveyed consider the level of service important when deciding to do business with a company, the survey said. However, only 24 percent believe companies value their business and will go the extra mile to keep it.      Contrary to “conventional wisdom,” the survey showed more are inclined to talk about a positive experience (75 percent) than complain about a negative one (59 percent).      And consumers said they are far more likely to give a company offering good service repeat business (81 percent) than they are to never do business with a company again after a poor experience (52 percent), according to the poll.      However, negative feedback online weighs more heavily as almost half of consumers gather others’ opinions about a company’s customer service reputation and they put greater credence in negative reviews (57 percent) versus positive ones (48 percent), according to AmEx.      “Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial,” Bush said. “Developing relationships with customers, listening to them, anticipating their needs, and resolving any issues quickly and courteously can help make the difference.”      In fact, 81 percent of Americans have decided never to do business with a company again because of poor customer service in the past, the poll said. Half of those surveyed said it takes two poor service experiences before they stop doing business with a company.      However, 86 percent will give a company a second chance after a bad experience if they have historically had great service before, according to the poll.      Woe to those who screw the experience up too, as 52 percent of consumers expect something in return after poor service beyond just resolving the problem. Seventy percent want an apology or some form of reimbursement.      So retailers, I expect red carpet treatment and a lot of sucking up this recession or you won’t get any of my limited funds!

Also in the basket:

Chrysler launches money-back guarantee

Hain Celestial to name two Icahn nominees to board

Study: Living Near Restaurants Makes You Fat (Wall Street Journal)

Industry Places Bets on back-to-School (WWD, subscription required)

Check Out Line: US online retailers dialing up mobile apps

Check out the increasing appetite for mobile applications among U.S. online retailers.

Nearly three-quarters (74 percent) of online retailers either already have or are developing a mobile strategy and one out of every five has a fully implemented mobile strategy already in place, according to a study from Forrester Research and Shop.org, the National Retail Federation’s digital division.

“It’s imperative for online retailers to stay on top of what their customers want and these days it’s all mobile all the time,” Scott Silverman, Shop.org executive director, said in a statement. “Mobile commerce has tremendous potential and will no doubt grow to become a significant part of overall sales volume in years to come.”

“It’s definitely the buzzword in the industry at the moment,” Daniel Latev, retailing research manager at Euromonitor International, said of mobile commerce.

Retail executives agree, saying at the Reuters Consumer and Retail Summit last week that they are taking the potential of this growth opportunity seriously at last.

Earlier this year, Forrester forecast U.S. online retail sales would total $173 billion in 2010.

“Mobile investment is modest now, but we see that it will pick up in the future, especially among the biggest brands that have already invested significant amounts in their mobile operations,” said Sucharita Mulpuru, a Forrester vice president and lead author of the study.

UPS to U.S. consumer: relax, have an app!

UPS expects healthy profits in 2010, no thanks to the U.S. consumer the company is trying to entice with iPhone and BlackBerry applications.

Announced in November and December, the free applications enable users to create and track shipments, calculate rates and delivery times and find the nearest UPS location.

“People can browse the web on their phone as easy as on their home computer, so that’ll make it easier and easier to shop for holiday presents and birthday gifts,” Chief Financial Officer Kurt Kuehn told Reuters.

Online shipping is a sweet spot for both UPS and rival FedEx Corp, both considered economic bellwethers as they handle such a huge chunk of the world’s shipping. But it will be a whole lot sweeter when the U.S. economy catches up with the rest of the world and the U.S. consumer relaxes and starts to spend again. FedEx has iPhone and BlackBerry applications as well.

In the fourth quarter results it reported today, for example, UPS announced a 19 improvement in operating profit in its international segment compared with a drop in domestic operating profit of almost the same size.

“It’s easier than ever for them to shop now,” Kuehn said. “Whether they have enough money to shop, that’s another question.”

(Photo: Reuters)

Check Out Line: Snowstorm doesn’t drive shoppers online

Check out how the East Coast’s weekend snowstorm might not have been a boon to online shoppers.

A survey of 1,000 U.S. shoppers over the weekend found that the convenience of shopping from the warmth of their homes and the bask of their computer screens was not enough to lure them away from bricks and mortar stores even in whiteout conditions.

The survey was conducted Dec. 19-20 by America’s Research Group and UBS and found that about 57 percent of Americans were spending about as much on holiday gifts online this year, but about a quarter were spending less. Only about one fifth were ramping up their spending.

Part of what may have curbed online sites from picking up more business has to do with timing and service, ARG’s CEO Britt Beemer told Reuters: “As you get closer and closer to Christmas, people get worried whether if what they ordered on line will be delivered in time for Christmas.”  And people still like to touch things before buying them and the communal feeling of shopping, Beemer said, meaning online retail has a way to go to drawing even shoppers facing gigantic snowstorms.

Also in the basket:

Walgreen tops view, store comments weigh on shares

ConAgra profit beats Street; year outlook raised

Mission possible

Securing financing from a private equity company in the current environment may seem to many like trying to get blood from a stone.  Not so to Christian Heitmeyer.

The 43-year-old entrepreneur founded brands4friends two years ago and it has since become Germany’s largest online shopping club.

Heitmeyer has pencilled in sales of 85 million euros ($124.3 million) for this year — more than three times as much as last year.  Finding investors seems to be the least of his problems.

Private equity companies were calling him rather than the other way around, he said. “There’s not one week where there isn’t another one calling up,” Heitmeyer said.

“There aren’t that many healthy companies around and there is a certain pressure to invest. We are benefitting from that.”

Brands4friends has so far gotten most of its financial support from venture capital firms like Partech International, Mangrove Capital Partners and Holtzbrinck Ventures.

For the next financing round early next year, Chief Executive Heitmeyer wants to get private equity on board, aiming to raise a clear double-digit million euro sum.

Check Out Line: Online retailers upload some changes

Check out improved online shopping.   That’s the goal for a number of retailers who hope to keep online shoppers happy and, of course, increase sales.   According to Forrester Research Inc‘s The State of Retailing Online 2009: Merchandising Report, retailers have their sights on improving customers’ check-out experiences.  Companies also said they would try to show better images on product detail pages and site search filters to help shoppers find what they want.   According to the survey of 117 respondents, 79 percent of retailers said enhancing the checkout process was No. 1 on their list of things to do by the end of 2009.  Retailers also said they would try to be more clear about shipping charges to cut down on the online equivalent of walking away — shopping cart abandonment.   “Retailers realize that, particularly during an economic downturn, shoppers who understand shipping charges at the beginning of the checkout process are less likely to abandon their purchases,” said Sucharita Mulpuru, Forrester Research Vice President, Principal Analyst and lead author of the report.   As shoppers search for deals, 89 percent of respondents said they plan to introduce sale or clearance pages to their sites in the coming months.   The report is being released at a Shop.org event on Wednesday.  Members of the National Retail Federation’s Shop.org will also get the report, which others can buy online.  Forrester clients will be able to access the report as part of their subscription service in August.

Also in the basket:

Gas prices push consumer prices up in June

Two Eddie Bauer creditors look to liquidate stores, sources say (New York Post)

Discounter Daffy’s promotes NYC apartment rental bargain (New York Times)

Levi Strauss swings to loss on currency, soft sales

(Reuters photo)

Check Out Line: Signs of brighter days ahead?

Check out hopeful signs that the recession may be abating.

While recent reports showed slumping sales at many big-box retailers, there are other signs that the economy may be bottoming.

U.S. retail sales rose in May and the number of workers who filed new applications for jobless benefits last week fell for the fourth straight week.

The Commerce Department today reported that U.S. retail sales rose 0.5 percent in May, thanks partly to gasoline sales that jumped 3.6 percent. Meanwhile, the Labor Department said initial jobless claims fell to their lowest levels since Jan. 24.

Discount retailer Target has increased its quarterly dividend, Clorox did the same while also affirming its 2010 profit outlook and financial targets for 2013, and Del Monte posted far stronger-than-expected quarterly earnings and provided a better-than-expected 2010 forecast.

Not all the news has been hopeful, however.

While last month’s U.S. foreclosure activity ebbed from April’s record high, homeowners were still struggling to keep up with house payments and May foreclosure filings were the third-highest on record.

Online shoppers are FIT

Online shoppers, or those who received their gifts, are ready to ring in the New Year with new workout equipment.

According to comScore, online sales in the sport & fitness category rose 18 percent from Dec. 1 through Christmas Eve, the largest rise for any category.  (OK, so maybe they didn’t buy wooden weights like the ones being used by this woman in Tokyo last fall.  Perhaps they were buying pricey treadmills or other equipment.)

Next came video games, consoles and accessories, whose sales were up 14 percent.  The only other rise, at a much weaker 4 percent, came in apparel & accessories, driven by big discounts and bad weather, which may have triggered shoppers to buy from home rather than heading out to malls.

Overall it was a dismal online selling season, with sales down 3 percent.  The weakest showing came in the music, movies & videos category, where sales fell a sharp 32 percent.  Office supplies were next, down 30 percent. Even toy sales fell, down 7 percent.

The comScore report compared sales from Dec. 1-Dec. 24, 2008 with sales from Nov. 26-Dec. 19, 2007.  The findings also showed that households with lower incomes bought less online.  Those earning less than $50,000 a year cut their online spending by 13 percent, while those earning more than $100,000 a year actually spent 7 percent more than in 2007.

(Reuters photo of a woman exercising with wooden dumbbells during an event to mark “Respect for the Aged Day” in Tokyo Sept. 15, 2008)

Check Out Line: Online shopping woes

Check Out the drop in online sales.   Even online retailers are ready for 2008 to end. After we heard about the abysmal holiday season at stores, comScore said online sales for the holiday period up to Dec. 23 dropped 3 percent. It was the first decline in online spending since comScore started tracking online sales in 2001.   The end of 2008 will also mark the first quarter that online sales fell. From Oct. 1 through Dec. 28 e-commerce spending fell 4 percent to $36.8 billion, according to comScore.    So who were the biggest winners and losers in December? Through Dec. 24, Hewlett Packard‘s online traffic in the U.S. rose 28 percent to more than 19.4 million unique visitors.  Apple, with more than 35 million visitors, saw its traffic rise 19 percent.  Meanwhile, traffic to Circuit City‘s site fell 21 percent.  Presumably shoppers were spooked after it filed for bankruptcy protection and said it would shut some stores. Dell‘s traffic was down 17 percent.  EBay was still the most popular site, though its traffic fell 4 percent to 85.4 million visitors.  

Also in the basket:

Jobless claims drop by much more than expected

China dairy boss pleads guilty in melamine case

Bratz dolls to get reprieve, manufacturer says

Walmart Pulls Out of Nielsen’s PRISM (Advertising Age)

(Reuters photo)