Two new surveys show customer satisfaction with the bankrupt US retailer to be below the industry average. Kmart will have to work hard through 2002 to improve its image and hit the goal of profitability in 2003. The turnaround will inevitably involve addressing the in-store consumer experience, as well as creating a strong brand independent of price.
The American Customer Satisfaction Index (ASCI) study, published on Tuesday, showed that customer satisfaction for Kmart rose by 10% in Q4 2001 from Q4 2000. The ASCI is a quarterly survey conducted by the National Quality Research Center at the University of Michigan business school. Kmart's score rose to 74 out of 100, from 67 the previous year.
Kmart's BlueLight Always program will have been a major driver of the increase. Launched in September 2001, it cut prices on 38,000 items. The company says that a new program to track customer satisfaction, combined with new self-service checkout scanners at 1,300 stores, also helped boost its rating.
However, these improvements did not help December sales - down 1% on a year earlier - and neither could they stop Kmart from filing Chapter 11 for court protection from creditors in January 2002.
The bigger picture shows that although Kmart's saw the biggest improvement among the department and discount stores tracked, its actual score remained below the industry average of 75, which itself rose 4.2% on the previous year. Another 2001 study by online consumer feedback service PlanetFeedback showed that Kmart customers consistently mentioned cluttered aisles, unhelpful staff and long waits at the checkout. 73% of the comments on Kmart were 'viral', meaning consumers spread word of their experiences with others.
Kmart clearly has a long way to go if it is to reach its goal of profitability in 2003. Key steps will be to focus on improving the customer experience within the stores and building an identity independent of price. "BlueLight" cost cutting initiatives failed to prevent the company from bankruptcy - and they will not be the sole key to long-lasting customer satisfaction.