Three Arkansas-based retailers— Wal-Mart, Sam’s Club and Dillard’s — were sitting high on the 18th annual list of Brand Keys 2014 Consumer Loyalty Engagement Index (CLEI).
Retailers are finding that winning favor among fickle, demanding consumers is no easy feat, and maintaining that loyalty is even harder, according to Robert Passikoff, president of Brand Keys, a New York-based consumer marketing firm.
Passikoff told The City Wire that Bentonville-based Wal-Mart continues to dominate the discount category moving ahead of Target, following the massive data breach which occurred during the height of the holiday season. He said Target was resembling a wobbly table in the midst of a marketing shift from “cheap chic” to “always onsale.”
“When the data breach hit Target, it knocked one of the legs out from under the wobbly table. It’s likely going to take three quarters or so, for Target to repair the damage with its customers, who are shopping elsewhere in the meantime.” Passikoff said.
Despite the love/hate relationship with Wal-Mart, Passikoff said the retailer continues to engage loyalty from its customers who have come to depend on the low price guarantee.
“Coupons and discounts won’t save a retailer today and they certainly won’t differentiate it,” Passikoff said.
He adds that Wal-Mart has done a good job merchandising “believable brands” that consumers can see as “value” in their purchases.
In the crowded department store category, Passikoff said Macy’s garnered the highest loyalty ranking in the survey. But, the much smaller Little Rock-based Dillard’s also scored high marks, ranking just below Macy’s, according to the index results.
“In the department store category, brands are the buzz that resonate with consumers but it’s the value proposition of those brands that most encourages consumer loyalty,” he said.
Perhaps Macy’s does the best job helping its customers make an emotional connection to the brands it sells, but Passikoff also said Dillard’s scores high in emotional connections and perceived value among its customer base.
In the warehouse club category, Sam’s Club ranked ahead of Costco and B.J.s for brand loyalty engagement in 2014. Sam’s Club is known as a “house of brands,” and it’s the value associated with the top name brands that helps the Wal-Mart subsidiary maintain high levels of customer loyalty engagement, the expert said.
Costco ranked a close second to Sam’s Club in the 2014 loyalty index. But a real differentiator between the two competitors is that the Costco experience is mostly a brick and mortar trip. Sam’s Club continues to engage its members using online and mobile connections and in the past year has offered special coupons for instant savings on branded products.
Passikoff said the entire retail sector will continue to face operating challenges as consumer demands escalate. He calls this phenomenon “zappofication” – a term Passikoff coined several years ago to describe escalating consumer expectations.
“It came from the online retailer Zappos. Most think they are a shoe company but they are really in the customer service business. Zappos figured out they could sell more shoes and make their customers very happy if they offered reduced shipping costs and free returns for unwanted merchandise. Now that has become the online industry standard,” Passikoff said.
He said there will always be someone bigger and willing to up the ante to win favor with consumers. In the 2014 index, Amazon.com ranked the highest among online retailers for customer loyalty and engagement, followed by Ebay.com, Overstock.com and Zappos.