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Department stores offering online services see happier customers
IN an interesting new development showing the benefits of providing online shopping services on top of the in-store experience, local department stores offering digital platforms to customers have recorded higher customer satisfaction, loyalty, and average spend.
This has been revealed in the 2017 first quarter Customer Satisfaction Index of Singapore (CSISG) results for the retail and info-communications sectors just released by the Institute of Service Excellence (ISE) at the Singapore Management University.
The institute says that segmenting local department store customers into two groups - those who shopped at the stores only and those who experienced the stores' digital platforms, showed higher satisfaction, loyalty and average spending for customers who had experienced the stores' digital platforms like websites and mobile apps.
In addition, when compared to the e-commerce sub-sector's customers, this group of department store customers who had used digital platforms had similar levels of customer satisfaction and higher levels of customer loyalty. "This would suggest that traditional brick and mortar stores could be better served and complemented by developing a robust omni-channel presence if they have not already done so; it can potentially give them a competitive edge over the e-commerce retailers," says Chen Yongchang, head of research and consulting at the Institute of Service Excellence.
The institute surveyed 6,070 locals and 830 tourists through face-to-face interviews between January and April this year on their satisfaction levels with entities in the retail and info-communication sectors.
While overall customer satisfaction for the retail sector in the first few months of this year remained the same when compared with the corresponding period a year ago, customer satisfaction with the important info-communications sector in Singapore has risen in the first quarter of the year compared to the same period a year ago.
The institute says that the retail sector scored 72.1 points on a scale of 0 to 100 for the first quarter CSISG 2017, a performance similar to the same period last year. Of the four sub-sectors measured within the retail sector, fashion apparel, supermarkets, and e-commerce scored 72.5 points (an increase of 0.63 point year on year), 72.4 points (an increase of 0.90 point year on year), and 71.4 points (plus 0.35 point year on year) respectively. On the other hand, the department stores sub-sector scored 71.2 points, a marked improvement of 0.95 point over the previous year.
Neeta Lachmandas, executive director of the Institute of Service Excellence, says: "The retail sector has faced a period of slowdown in recent years due to a host of issues including manpower challenges, changing consumption patterns and competition from a growing number of e-commerce retailers. Findings from the CSISG 2017 Q1 study suggest that efforts at sharpening the value proposition of department stores in particular are paying off in the area of customer satisfaction. The sub-sector saw a rise in customer satisfaction by 0.95-point over the same period last year."
"The notable improvement in customer satisfaction with department stores stemmed largely from more satisfied locals. This increase could be related to the revamps of various stores and product offerings, as well as increased promotional activities targeted at boosting sales," she adds.
While the supermarkets sub-sector did not see any significant changes in its CSISG scores compared with a year ago, customers who had frequently used the 'self-checkout' counters expressed greater satisfaction levels compared to those who frequented the manned cashier counters.
Mr Chen says: "Offering retail customers more ways to shop, whether through online channels or self-checkout counters could enhance the customer experience, thereby positively impacting customer satisfaction and loyalty."
Cross-industry benchmarking also revealed lower satisfaction and loyalty for department-store customers who shopped only at the physical stores when compared to the e-commerce sub-sector's customers.
In contrast, department-store customers who had experienced the stores' digital platforms had similar levels of customer satisfaction and higher levels of customer loyalty when compared to e-commerce customers.
Among department stores, DFS continued to have the highest score at 73.6 points, much higher than the sub-sector's average at 71.2 points. Metro was the only store whose score moved up significantly to reach 71.7 points. "Customer satisfaction is vital to our business," Metro's head of human resources & administration, Esther Ang, tells The Business Times. "We are constantly looking at every angle of our business to drive change and innovate for growth with product design, quality and value and to constantly raise service standards."
Going online is a given, she adds. Customers have a choice now to decide when to shop and how to shop; to go online or offline to shop at the brick and mortar stores. At the moment, 90 per cent of Metro's online customers chose the 'Click & Collect Service'.
Metro's head of business analytics Erwin Oei says that online stores still account for up to a small proportion of the overall sales in Singapore. But as they are growing, they cannot be ignored.
At the heart of the DFS experience is its people, says Wilcy Wong, managing director, DFS Singapore & Indonesia. "They bring DFS alive for our customers. To ensure our teams have the tools and skills they need to deliver a luxurious shopping experience, we invest heavily in talent management programmes as well as learning and development through our own DFS University, to enhance our operations. We are extremely proud of our people and that the latest CSISG has ranked DFS the top department store in customer satisfaction." DFS has developed a keen understanding of its customers' journey to ensure that it provides a luxurious shopping experience, Ms Wong says. "Technology, especially, has been an essential tool for us. Not only has it allowed for increased customer engagement, but as a travel retailer it enables us to interact with our customers and helps them plan their experience with DFS even before they have left home."
Customers today want a seamless offline to online experience, says Ms Wong. "We see the digital space as an extension of the DFS in-store shopping experience, so while it is important that we strengthen our online presence, our in-store retail activities and customer engagement must continue to excel and exceed customer expectations."