disgruntled employee can tarnish the customer experience. Sam's Club employees should be proud because they received a 5
2018 Retail Reputation Insights Report
Top brands square off in a head-to-head battle to become retail champion
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Table of Contents
Why This Report Matters ......................................................................................... 2 Our Process .................................................................................................................... 3 The Power of Pulse ..................................................................................................... 3 Head-t0-Head Comparisons ................................................................................. 4
Macy’s vs. Nordstrom............................................................................................ 5
Payless vs. Footlocker .......................................................................................... 7
Costco vs. Sam’s Club .......................................................................................... 9
Saks vs. Neiman Marcus ...................................................................................... 11
Toys R Us ................................................................................................................ 13
Beating them with BOPUS ....................................................................................... 15 Review Ratings .............................................................................................................. 17 Most and Least Improved Ratings ...................................................................... 18 Review Quantity ............................................................................................................ 19 Review Site Comparisons ........................................................................................ 20 Competing During the Holidays and Beyond ................................................ 21
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Why This Report Matters Long awaited by both consumers and retailers, the holiday shopping season is one of great importance. During the two-month period from November to December, hordes of previously dormant shoppers hit their local retail stores in hopes of finding the perfect gifts. For many retailers, this rapid uptick in consumer spending drives as much as 30% of their annual revenue and can often spell the difference between financial success and failure. Many have been calling for “Death of retail” due to Amazon and e-commerce options, but that’s definitely not what we are seeing. The holidays were another all-time high for retailers as revenue grew by 4.9% total, the highest growth since 2011. Online sales accounted for less than 20% of the total $691 billion spent by consumers - a far cry from the prediction of 51% which some industry analysts had forecasted. It’s very clear that traditional brick and mortar businesses need to capitalize on their advantages, that include great in-store experiences, the ability to shop online and pick up in store, as well as check inventory in advance of going to the store. These advantages unique to brick-and-mortars allow them to compete and you’ll see those doing it successfully in our report. Amazon continues to chomp at the bit, capturing nearly ⅓ of the online sales during the Thanksgiving holiday, resulting in $4.3 billion in revenue that week. The next closest revenue generators that week were Best Buy, at a mere 7%, and Target, who earned 4.9% of total online sales, clearly showing the majority of their sales are in the store today. Traditional retailers still have a number of advantages and need to continue to use real customer data to determine areas of opportunity in providing value and great customer experiences both online and offline. Using review data and real customer feedback, we examined in-store experiences provided by brick and mortar retailers to determine the winners and losers of the holiday season as told by their customers.
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Our Process To capture the scope of the brick-and-mortar retailing industry, we took a list of the top 100 retailers and narrowed that down to a list of 21 by selecting key retailers that were the leaders in their category (department stores, electronics, clothing retailers, footwear, etc.), plus one deep dive into every kid’s favorite stop during the holidays, Toys R Us. We put some of the biggest brands in the country in a head-to-head battle, and are reporting on the winners and leaders in each segment. The retailers we selected to be included in this report are: Apple Store, AT&T, Best Buy, Costco, CVS Pharmacy, Foot Locker, Gap, Home Depot, Lowe’s, Macy’s, Neiman Marcus, Nordstrom, Payless ShoeSource, Saks Off 5th Avenue, Sam’s Club, Target, TJ Maxx, Toys R Us, Verizon Wireless, Walgreens, and Walmart.
The Power of Pulse We ended up with thousands of stores to examine, and hundreds of thousands of reviews to read….boy were we tired! Seriously, like many of our clients, we found that impossible to do manually. We then enlisted Pulse, Chatmeter’s own built-inhouse sentiment analysis engine, to analyze the massive number of reviews that were left by customers between the months of November and December voicing their praise or concerns about these top retailers. Pulse breaks up reviews into individual statements about specific topics (topics will be bolded and italicized throughout the article). Using Artificial Intelligence (AI), it assigns positive, negative, and neutral sentiment scores using Natural Language Processing (NLP) for those key topics. We then analyze the quantity and quality of topics and compared them with pre-holiday metrics and industry averages to determine who was doing well, who needs improvement, and why. The decision to use data that included November is because shoppers started earlier than ever before. Sales in the first three weeks of November were 18% higher than they were in the same period in 2016.
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Head-to-Head Comparisons Creating a successful in-store experience during this time of year has become all the more critical, not only for driving revenue, but for building an online reputation that influences other’s holiday shopping decisions and sets the tone for the new year. Managing reviews and your online reputation then become a powerful asset for influencing future customers. Customer reviews have also helped us determine why one retailer succeeded where the other failed, strong points that had customers raving, and shortcomings that left them ranting. Here we have placed the top players from each industry in a head-to-head comparison to see who came out on top during the 2017 holiday season.
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VS. Department Store Battle
Competition among department stores is fierce as many continue to struggle to turn a profit and drive offline sales. We’ve analyzed two of the most ubiquitous department stores, Macy’s and Nordstrom, for the ultimate department store showdown. Nordstrom lead the way this year in both review quality and quantity. On average, Nordstrom had nearly twice as many reviews per store as Macy’s during the holidays, and their rating during the season was much higher at 4.1 stars compared to Macy’s 3.7 stars. Cleary Nordstrom is winning by giving great experiences and their customers are shouting it from the rooftops.
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Known for its attentive service and well thought out design, there’s no surprise that sentiment in Nordstrom reviews remained relatively high for both service and store topics. One Nordstrom’s customer described their service experience by stating “I always leave there content and with a smile on my face...the customer service is outstanding”. Additionally, the store environment was often touted as “clean”, “stocked” and “well organized.” However, even Nordstrom had its share of employee complaints, compared to other retailers, reiterating that a few bad apples can hurt the overall brand. Macy’s left a lot to be desired this season. A well rounded and pleasant atmosphere at Macy’s locations seemed to be lacking as we saw a number of negative references to the store environment regarding it as “messy”, “cluttered” and “trashed”. Another aspect that had customers speaking up was the lack of a quality service experience. The disappointment in the decline of service can be felt as one customer writes “I used to love going here but the customer service has deteriorated to the point of rude”. Both brands could benefit from using review management software to determine where to fix its issues. By looking specifically for those locations with bad apples (Nordstrom), and messy stores (Macy’s), they can easily fix those problems and improve their customer experiences and local reputation overall.
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VS. Footwear Retailer Battle
With Payless in the midst of their comeback and Footlocker still attempting to recover from sluggish sales, we were excited to see the outcome of the headto-head competition for best footwear retailer. The holiday season was a much anticipated time for both and in-store success was necessity in order to win back loyalty, boost sales and improve customer advocacy online.
On all accounts, Payless knocked it out of the park earning a higher average review rating and greater percentage of positive reviews for each of the top 3 topics addressed in customer reviews. What really drove Payless’s success during the holiday season was the human touch they added to the in-store experience. It was clear that the Payless employees and the service they provided left customers feeling content and satisfied as they consistently raved about “genuine employees” and “great customer service”.
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Unfortunately, where Payless succeeded, Footlocker did not. Footlocker seems to be struggling in the fight against online. They are not using their stores to create great experiences, so why go in the first place? Customers comments of the employees were often along the lines of “rude” or “disengaged”, while the service was referred to as “horrible” and even “nonexistent”.
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VS. Wholesale Retail Club Battle
The age-old question within every family, Costco or Sam’s Club? Despite the 63 store closures at the start of 2018, Sam’s club still outsizes Costco, 597 locations to 518. Both wholesale retail clubs had an increase in the volume of reviews this holiday period; however, Costco’s increased review volume by 28 reviews per store per month, compared to Sam’s club who only increased review volume by extra 3 reviews per store per month. While Costco received a greater share of the review volume, and potentially greater store traffic/revenue, both saw a boost in their average rating. Indicating that both customers left relatively pleased during the holidays; but, in a tough market where memberships are easily cancelled it’s still essential to define where these wholesale retailers excelled and where they could have made improvements.
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The majority of customers, when talking about the service, had a positive experience. However, surprisingly, Costco had a negative reaction to their employees as they received 54% negative feedback for this topic. Specifically, the sentiments towards this topic had an emerging theme of Managers, Cashiers and even Food Court Employees being rude. Again, this shows that while the service can be great for most of the customers, a few unfortunate encounters with a disgruntled employee can tarnish the customer experience. Sam’s Club employees should be proud because they received a 52% positive response by their customers. Customers had great experiences with Sam’s employees, leaving stellar employee callouts like “The manager on duty, Tyler, went above and beyond tonight with his customer service!”, “Sharon the manager is awesome”. and “Staff and managers are always friendly and helpful”. Costco did a fantastic job handling the holiday rush and accomplishing great customer service. On multiple occasions, customers were leaving comments that described their service experience as “outstanding” and “unmatched”. Unfortunately, Sam’s Club had a very negative response with their card members when it came to service. “I canceled my membership and went to Costco, their service is better.”, said one heated customer. Using Pulse, we could clearly identify why customers were very upset with the “poor” and “horrible” service they received.
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VS. Clothing Retailer Battle
Saks and Neiman Marcus offered another head-to-head showdown between two high-end trendy clothing retailers. On the surface, it looked like there wasn’t much to separate the success of one from the flop of the other. Both stores are considerably more expensive than your average clothing store, which means the expectation of customer service is higher and more challenging to meet. Both had trouble rising to the occasion and hovered around the same average review rating of 3.5 stars, while receiving a relatively similar increase in review volume. However, upon digging deeper into the sentiment of the reviews, we were able to see what went right and what went wrong.
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While both had about 50% of reviews referring to the store experience as negative, Saks won out on the topics of both service and employee. They received 69% positive response to their service where Neiman Marcus customers were less than thrilled, with only 43% of them having something positive to say. For example, in terms of the staff, Saks employees had 52% positive sentiment. Conversely, Neiman Marcus employees could have left a better impression, receiving a 61% negative response from customers. Many Neiman customers described the staff as “rude” and “unwilling to help”, which is a problem when customers are expecting a high-end retail experience.
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What would be a holiday report without an analysis on the retailer whose name just screams “holiday shopping”. After all, the holidays are all about the kids! Despite being filled with every toy a child could write down on their wish list, it’s clear that Toys R Us didn’t have the best holidays this year. Just a few days after the end of the season, they announced they were closing 182 doors, about 23% of all US locations. Unlike the rest of retail, they were down 10% in revenue this holiday compared with last year. Keep in mind, nearly 20% of all toy sales still come from Toys R Us. Certainly, while online is a continued threat, toys are a category in which retail should be able to use their stores to create great experiences. As a kid, there’s nothing better than when your parents say, “Great job, we’re going to Toys R Us and you can pick out anything in the store!” The in-store experience isn’t just great for kids either, it gives parents the peace of mind of closely inspecting any products they are going to give their kids before purchasing.
“I was pleasantly surprised with how friendly the staff was in the hustle and bustle season of christmas” - Toys R Us Customer While the revenue report didn’t show it, we saw in the reviews that people’s experiences are positive. Their overall rating went up to a 3.9 (from 3.8) during the busiest time of the year. They showed the highest increase in revenues during the holiday season, but that should be expected since approximately 40% of their revenue is generated at this time. Their employees seemed to excel, with 45% of the reviews mentioning them being positive. Customers consistently described Toys R Us employees as “friendly” and “helpful”. A plus for the retailer who is responsible for helping potentially stressed out parents find the perfect gift for their children.
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If they are giving great experiences, why the downturn in revenue? According to the recent reports, consumers were concerned about the bankruptcy news in the first place, not knowing if the store was still open or if they would be able to make any returns. In addition, with a lack of web presence, they continue to lose the battle to Amazon and others who are succeeding in the online toy space. By investing in a great buy online, pick up in-store experience, Toys R Us could have avoided their downturn and had a great holiday season as consumers continued to spend record amounts this year.
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Beating Them With BOPUS What’s BOPUS? If you ask any retailer, they’ll know this all too well. Buy Online, Pick Up In Store. If you’re a brick-and-mortar retailer, then you better offer this option or you’re already behind. Not only do consumers want the option, but it can provide a competitive advantage over other online-only retailers. Drive customers to your stores and you’ll find they are even buying more. Our clients have reported that BOPUS drives an increase in basket value since the customer will usually do a little browsing and then check out. This has become an essential part of a successful OmniChannel marketing strategy. However, many retailers are doing it wrong. Overall, our sentiment analysis revealed that there is a largely negative sentiment with customers navigating from a store’s online website to their physical locations. A major criticism this holiday season were people mentioning the disconnect in product availability. An interesting discovery was the number of shoppers using the website as a resource to figure out inventory or to make purchases and then pick them up in store. However, numerous customers reported their frustration when they arrived and were informed of the incorrect online information or unfulfilled purchase orders. With retailers fighting to compete with online, it’s critical for there to be a cohesive online to in-store transition.
“I placed my order online only to arrive and be told ‘Not here, come back tomorrow’” - Best Buy Customer
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A prime example of this was with Best Buy. They had the most reviews discussing online, and customers were clear that their online experience didn’t go well. Best Buy, earning a negative 62% sentiment, had a lot of customer complaints about instore pickup and product availability; “I placed my order online only to arrive and be told ‘Not here, come back tomorrow’”, said a frustrated customer. Best Buy wasn’t the only retailer with this customer complaint. Across the board this holiday season, we saw let down customers complaining about incorrect inventory information and longer than expected waits for pickups. Therefore, retail stores have a huge opportunity on their hands to use their location as an asset over online retailers. Just a few years ago, our clients were pushing more and more business to their website for e-commerce transactions, but now they are rethinking that strategy to refocus on the store experience. It’s very difficult to differentiate online. But they can differentiate completely with great online and in-store experiences.
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Review Ratings Analyzing review ratings and their increases and decreases helps us determine the winners and losers of the holiday season. Customers responded with positive and above average star ratings for those who delivered an exceptional customer experience despite the rush and craziness of the holidays, while they were quick to let those who could not meet their demands and expectations know. Below is a chart of the overall winners and losers based on their average star ratings during the holiday seasons.
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Most and Least Improved Ratings
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Least Improved
Best Buy, who, out of all the retailers and industries we analyzed, had the biggest improvement in review ratings during the months of November and December jumping up an average of .3 stars. In comparison, Apple saw the largest decline across all industries and retailers - dropping .3 stars when compared to the previous period. With the consumer electronics industry consistently reaching peak sales during the holiday season, this was high time for Best Buy and Apple to cash out. After a bumpy run in years past, 2017 was a welcomed relief for Best Buy shareholders as they saw stock prices jump 15% in December alone. The markets confidence in Best Buy was not misplaced as our data shows they wowed customers with great service and excellent in-store experiences. When looking at Pulse, our sentiment analysis engine, it became clear that service was the key differentiator between Apple and Best Buy this holiday season. The majority of Best Buy’s reviews that mentioned service were either positive or neutral, whereas 50% of reviews mentioning service at Apple had something negative to say.
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When diving into the reviews, it was obvious that Best Buy didn’t let the holiday rush get the best of them, as they continued to make providing excellent service a priority. Customers used words like “fast”, “friendly”, “unbeatable” and “informative” to describe the service at Best Buy. With one customer specifically stating that “Customer service was good considering how busy the store was for holiday shopping season”.
“Customer service was good considering how busy it the store was for the holiday shopping season’” - Best Buy Customer
Apple, on the other hand, left customers with much to be desired. Customer’s consistently described their service experience as “rude”, “terrible” and “slow”. The service alone was so bad in one instance that it provoked a customer to write this review: “I don’t normally rate businesses, but my service here was so terrible I had to”. It just goes to show that service is not something customers will let fall by the wayside, even during the flurry of the holiday shopping season.
Review Quantity All stores saw an increase in the number of reviews over the holiday shopping season. The average review quantity increase was 57% meaning only 4 companies performed better than average, Toys R Us, Macy’s, Neiman Marcus, and Best Buy.
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Review Site Comparisons Is quantity better than quality? In the 2-month period of this study, we found that Google received 90% of all reviews. However, out of those reviews, only 48% of them had content in them meaning the majority of these reviews were simply a star rating. Yelp on the other hand, received 3% of all reviews except 99% of those reviews contained valuable content for other readers. This is a concerning industry trend. We are seeing that Google is driving a massive number of reviews that have little content and create less trust in consumers from reviews that have no text in them. It’s very hard to tell if that is a legitimate review and thus could corrupt the consumer trust in reviews overall. Facebook and Yelp users are creating more valuable reviews and interestingly, they were more critical than Google users during the holidays with review ratings lower during this period. • • • •
89.2% of all reviews 30X more reviews than yelp & 22X more than Facebook 52% of reviews didn’t have text Average rating of 4.0, stayed consistent through holidays
• 4.10% of all reviews • 68% of the Facebook reviews left over the holiday season had review text • Average review rating of 3.7 stars over the holidays which is down from the overall average of 3.9 stars
• 2.9% of all reviews • 99% had text making them more informational and valuable • Average rating of 2.7 stars over holidays down from overall average of 2.9 stars
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Conclusion With intimidating headlines claiming the Death of Retail and the hype of online shopping increasing every year, fake news is more prevalent here than many other stories. The retail apocalypse is not here as many headlines in the press make it out to be. Certainly, 2017 was a rough year for many retailers, but not all. There are quite a few industry analysts stating that many retailers became overzealous in their store growth and a proper resizing was necessary. Retail is hardly dead and in-store shopping still accounts for 88% of retail sales. In addition, Amazon even sees the value of brick and mortar with their recent acquisition of Whole Foods. Furthermore, the greatest irony are the recent openings of Amazon bookstores, the same category in which they crushed when they came on the scene.
*The new Amazon Bookstore at the UTC Mall in La Jolla, CA
The world of retail is now all about having a seamless experience from online to instore. Retailers are just now realizing that they need to shift their online strategy and deliver on technology that is not replacing storefronts, but enhancing it. Consumers are now expecting retailers to incorporate new and exciting experiences that may start online or on their phones and then deliver experiences that are only possible inside stores. Those that can properly execute such experiences will reap the rewards in revenue and growth!
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`In our day and age, 84% of consumers trust reviews as much as a friend’s opinion and reviews are plentiful. This gives retailers a unique opportunity to be able to know exactly what is happening inside every individual store location, interact with their customers, and make key operational changes based off of reliable data. Attempting to compete online is not the solution. Instead, retailers should focus on understanding and improving the entire customer experience. Utilizing a review management software can help retailers understand consumer trends, quickly determine which locations to celebrate and where to improve. No matter if you have 20 or 2,000 locations, 100 or 100,000 reviews, you must listen to your customers. There are platforms out there like Chatmeter that can provide you with the proper tools to get you started by easily analyzing those experiences, telling you specifically where to improve, and allowing you to quickly engage with your customers to create loyal, lifetime customers.
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