• Consumers shopping around and switching in tough climate
• Half of retailers have placed themselves at a competitive disadvantage
Retailers are facing a tough Christmas as consumers draw the purse strings tighter for a season of austerity, according to research by the Institute of Customer Service (ICS).
As the Chancellor cuts his growth forecasts for the UK economy, today’s research reveals consumer confidence still falling, another year on from 2008’s credit crisis.
Retailers fear a war for customers as increasingly price sensitive consumers shop around more for the best deals.
The study is based on research among 1,000 consumers and senior decision-makers at 250 of the UK’s largest firms in retail and other consumer industries.
The retail war for customers looks set to intensify over the crucial Christmas season and into the New Year as customers are increasingly willing to switch.
All retailers are experiencing a growth in switch mentality, with more than half (52%) suggesting this has grown significantly among their customers in the last three years.
This is supported by consumers: more than a quarter (27%) suggest they have switched their usual supermarket in the last 6 months and a significant amount have switched food and household goods (41%) and clothing brands (27%).
This new breed of increasingly discerning consumer will present a challenge for firms to retain customers.
Two thirds of retailers (66%) fear a significant threat of revenue loss as a result of
this increased customer churn while a third (32%) see customer churn as the greatest threat to their business.
In this context, three quarters (75%) of retailers claim that customer service will be a critical market differentiator in the current climate.
The research sounds a sobering warning for firms’ customer service operations.
Nearly all retailers (94%) admit to cutting customer service back to some degree – 52% to a large extent.
Exactly half admit to having significantly damaged customer service.
Yet as a switching mentality takes hold, customer service is becoming all the more important. The great majority (83%) of consumers suggest that the quality of service they receive is important to their loyalty as a customer.
ICS Chief Executive Jo Causon comments: “In a fiercely competitive high street, environment where all retailers are slashing prices, service will be the critical differentiator.
“Yet, half of retailers have placed themselves at an immediate competitive disadvantage by not safeguarding their customer service operations.
“Service has always driven bottom line performance, and will be a key battleground in the war for customers this Christmas.”
For further information or an interview with Jo Causon, please contact Lauren Greatorex at Man Bites Dog.
01273 716 820
Notes to Editors
About the Study
The forthcoming study from the Institute of Customer Service is based on opinion research among:
1. 1,000 consumers.
2. Senior decision-makers at 250 of the largest UK firms by revenue, from the retail, consumer banking and finance, consumer telecoms and utilities industries and other consumer sectors.
About the Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance.
The Institute is a membership body with a community of more than 300 organisational members - from the private, public and third sectors - and over 6,000 individual memberships.
For more information about the Institute of Customer Service go to: www.instituteofcustomerservice.com