Traditional retailers' Web sites making customers happier

After getting a slow start moving their established businesses online over the past few years, several large brick-and-mortar retailers such as Sears, Roebuck and Co., J.C. Penney Co. and Old Navy Inc. are showing signs of progress this holiday shopping season in attracting new online customers and keeping them happy.

In a new study released today by Ann Arbor, Mich.-based research firm ForeSee Results Inc., the three retail chains showed the highest overall increases in customer satisfaction among the nation's top 40 online retailers. The customer satisfaction increases for Sears, J.C. Penney and Old Navy outperformed those of established online businesses such as Amazon.com Inc., Overstock.com Inc. and Buy.com Inc., according to the seven-page study.

On a 100-point scale, Sears.com had a customer satisfaction score of 73 this holiday season, up 7.4% from last year's score of 68, according to the study. JCPenney.com had a score of 76, up 7% from last year's 71, while OldNavy.com had a score of 79, up 6.8% from last year's 74. In comparison, the customer satisfaction score was 84 for Amazon.com this year, up 2.4% from last year's 82. Buy.com had a score of 72 -- which was unchanged from 2005 -- and Overstock.com had a score of 71, which was also unchanged from last year.

"It was surprising to see traditional big brick-and-mortar retailers have such large increases," said Larry Freed, president and CEO of ForeSee Results. "These retailers are starting to do a better job of leveraging that alternate channel" where customers can buy an item online and pick it up easily at their local stores, he said, adding that "Amazon can't do that. Technology has come a long way to overcome these gaps."

The ForeSee online customer satisfaction survey, which is in its second year, shows that if online retailers do a good job serving the needs of their customers, then the customers will return and even expand their business relationships, Freed said. "If they did badly, they're going to see a downward trend," he said. "A dissatisifed customer is going to go elsewhere."

The study looks at several key factors to measure customer satisfaction, including the customer experience using and navigating the retailer's Web site, as well as what merchandise is offered, prices for goods and shipping, and the reputation of the retailer's brand image.

The 40 featured retailers in the list are taken from the sales figures listed annually in the Top 500 Guide compiled by Internet Retailer magazine, Freed said. FGI Research in Chapel Hill, N.C., conducts research on customer satisfaction from a nationwide panel of 1.6 million consumer households. Some 10,500 households participated in the study about online customer satisfaction.

Several retail analysts said the study data shows that consumers are becoming more savvy about shopping with online retailers that make it easier to find and buy what they need during the holidays. And as consumers find online stores where they can feel safe and be satisfied, more of their shopping could be done online, they said.

"I expected the holiday season [online satisfaction and sales] to be up as more and more people ... have become more comfortable" shopping online, said Gene Alvarez, an analyst at Gartner Inc. Much of the increase in customer satisfaction with online shopping comes from Web sites that have been improved to offer faster performance, better navigation and easier-to-use search functions, he said. "On Black Friday, it was a lot easier to be online shopping at 4 a.m. than it was to be in a crowded store parking lot," Alvarez said.

Carol Baroudi, an analyst at Hurwitz & Associates, said the trend is not a surprise but is the result of a continuing increase in shoppers having greater fluency using online technologies for their purchases.

"Online customers don't have to fight crowds, don't have to look for a parking place and don't have to pay the rising cost of fuel to go to stores," Baroudi said. "They may like brick-and-mortar shopping, but not at this time of year."

Regards,
Kumar Thirumal.