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Retail Industry Updates

Message is Clear: Retailers Need to Step Up Online Service

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The message from a new report, the “Wharton Baker WisePlum Consumer Loyalty Study,” reveals that some retailers need to get their acts together when it comes to online shopping or risk losing consumer loyalty.

Online shopping, of course, has been booming during the pandemic, and experts expect it to keep growing. But according to the study, 66% of online customers reported at least one problem on their last shopping trip, which is up from 60% reported in a pre-COVID-19 study conducted in March. And the study found that the more problems customers have, the less loyal they are to certain retailers.

“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,” said Thomas S. Robertson, professor of marketing at the University of Pennsylvania’s Wharton School. “Customers are experiencing more issues with their online shopping experience, proving that not all retailers are suitably prepared for this digital shift.”

The study also found:

• While consumers significantly increased their online shopping during the pandemic by 37%, their problems doing so increased, too: Four out of the top five problems experienced related to issues with the online shopping experience, opening up more issues for consumers and in turn, damaging retailer’s brands.

• Customers who attempted to return an item experienced a problem 69% of the time.

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

• Customers were distressed by stock availability and inventory problems, with “no in-store availability” at the top of the list.

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

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, according to the study.

“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,” Robertson added.

The study, developed by the Wharton School’s Baker Retailing Center and WisePlum, a customer experience insights platform for retailers, was initially commissioned in February 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,” said Paula Courtney, CEO of WisePlum. “And customers are significantly less loyal to retailers in a time when retailers are themselves struggling to survive. 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.”

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