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Consumer Loyalty Study: Disappointment with Retailers Deepens
Pennsylvania Ag Connection - 08/12/2020

The COVID-19 pandemic has made a substantial impact on retail and, as a result, brands are continuing to strategize on how best to engage with customers as many shift to online spending. The Wharton Baker WisePlum Consumer Loyalty Study released today finds that consumers have not been forgiving in their expectations of retailers despite the global pandemic, putting consumer loyalty at risk.

"We are seeing brands looking for ways to improve customer experience, however our research shows there is still a lot of friction in the experience and the pandemic has made this worse. Customers are experiencing more issues with their online shopping experience, proving that not all retailers are suitably prepared for this digital shift," said Thomas S. Robertson, Joshua J. Harris Professor and Professor of Marketing at the Wharton School, University of Pennsylvania.

The study also found that while loyalty reward program benefits can protect retailers from damage that result from friction, they can also exacerbate customer problems and increase damage to the retailer brand--a true boomerang effect. "The global pandemic has intensified issues for consumers and calls for retailers to carefully explore their offerings while staying focused on the fundamentals of customer experience," added Robertson.

The study, developed by the Wharton School's Baker Retailing Center and WisePlum -- a Verde Group company, was initially commissioned in February 2020 and surveyed more than 5,000 customers, but as the world entered a global pandemic, a second wave of research was conducted in May with an additional 2,500 customers to identify changes to the retail customer experience.

"In our second study, we noticed that while customers generally experience similar issues, the economic damage associated with friction is now higher. And customers are significantly less loyal to retailers in a time when retailers are themselves struggling to survive," said Paula Courtney, CEO, WisePlum. "Consumers have spoken and they're looking for more from their retailers, proving to be less forgiving compared to pre-COVID-19. As we continue to monitor consumer loyalty, we're carefully watching the shift to online shopping across multiple retail verticals and consumer segments and tracking the performance of the retail sector to meet the demands of this digital consumer."

Key findings: Consumers feel left in the dust, questioning their loyalty to retailers:

- Overall loyalty decreased during the pandemic;

- The more problems customers have, the less loyal they are to a retail brand--66% of customers reported at least one problem on their last shopping trip, up from 60% reported in the initial pre-COVID study conducted in March;

- Consumers significantly increased their online shopping during the pandemic by 37%, 4 out of the top 5 problems experienced relate to issues with the online shopping experience, opening up more issues for consumers and in turn, damaging retailer's brands;

- Consumers who had problems were 35% less loyal than those who were problem-free;

- The appeal of loyalty program benefits stayed mostly the same pre- and mid-pandemic;

- Customers expect many of the same "must-haves" from their retailers;

- Despite problems, consumers are still expected to spend the same in the future.

Loyal consumers experience higher rate of problems:

- 47% of customers report being part of the retailer's loyalty program, with loyalty program members experiencing more problems due to higher engagement and frequency than non-members;

- Customers who attempted to return an item experienced a problem 69% of the time;

- 85% of Gen Z shoppers had at least one problem during their last purchase and had a significantly higher number of problems--11.5 problems--during their last purchase;

- Customers are aggrieved by stock availability and inventory problems, with "no in-store availability" at the top of the list.

Wharton School's Baker Retailing Center and WisePlum--A Verde Group company, conducted an online study with a national sample of US consumers. Two waves of surveys were conducted: 5,000 from February 4-23, 2020 (Q1) and 2,535 from May 13-20, 2020 (Q2). Consumers were asked about their most recent retail purchase experience (excluding grocery, liquor, and prescription drug purchases) regardless of channel.

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