12 Retailers That Are Failing At Customer Service

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Photo: Flickr / nffcnnr

This post originally appeared 24/7 Wall St.

As recently as 2009, Netflix was the most beloved retailer on the Internet.

By the end of 2011, following the failed separation of its streaming and DVD by mail service and sharp price increases, the company had the sixth-worst customer satisfaction rating among all e-commerce companies, and one of the worst among all retailers including brick-and-mortar outfits, according to the American Customer Satisfaction Index.

See the 12 retailers flunking customer service >
24/7 Wall St. examined ACSI’s annual retail and e-commerce satisfaction report and identified the 12 companies whose customer satisfaction decreased in 2011.

Many of the companies whose customer satisfaction scores dropped the past year have simply cemented their already terrible service reputations.

Walmart, which debuted strong on the Index in 1994, dropped to among the lowest ranked companies by 1996, where it has remained since.

Winn-Dixie, a supermarket chain which does business in the southeast, is an example of a company that has never managed to break free of the lowest rungs of customer service. CVS Caremark and Staples, both on this list, have seen occasional improvements in customer service, but are among the worst.

For other companies, however, losing customer satisfaction is in conflict with their reputations. Amazon.com had a 1.1% decrease in its customer service score this past year, even though it still maintained the highest customer satisfaction score among retailers.

Charles Schwab’s customer satisfaction also dipped slightly, despite the fact that customers are more satisfied with the company than with any other online brokerage firm.

These are the American retailers with customer satisfaction scores fell in 2011.


12. Amazon.com

Change in the past year: -1.1%
Change since first rating: +2.4%
Industry: internet retail
Industry change in past year: +1.3%
No. of stores: e-commerce only

Although Amazon's customer satisfaction score has decreased over the past year, the website maintained the highest score among all e-commerce and retail trade companies.

In 2011, the average score for the internet retail industry was 81. Amazon's was 86. Since ACSI started tracking customer satisfaction for the company in 2000, Amazon's score has not dropped below the particularly high 84.

Source: 24/7 Wall St.

11. Charles Schwab

Change in the past year: -1.3%
Change since first rating: 3.9%
Industry: internet brokerage
Industry change in past year: -2.6%
No. of stores: 320 U.S. branches

Like Amazon, Charles Schwab's (NYSE: SCHW) customer satisfaction score has fallen slightly over the past year, yet still remained the highest in its industry. Charles Schwab scored 79 last year, making it tied for the highest among discount brokers along with E*Trade (NASDAQ: ETFC) and Fidelity. Additionally, while Charles Schwab's customer satisfaction score has decreased 1.3% since last year, the score of the entire internet brokerage industry decreased 2.6%. However, Charles Schwab was the only main player to lose customer satisfaction standing.

Source: 24/7 Wall St.

10. Winn-Dixie

Change in the past year: -1.3%
Change since first rating: -1.3%
Industry: supermarkets
Industry change in past year: +1.3%
No. of stores: 480 stores and 380 in-store pharmacies

Winn-Dixie (NASDAQ: WINN) is not only one of the lowest scoring supermarkets for customer satisfaction, but it is also one of the lowest scoring among all retailers, which have a customer satisfaction average is 76.1. However, the company's customer satisfaction score of 75 is an improvement from its 2007 low-point of 71, which occurred two years after the company declared bankruptcy. In December 2011, Winn-Dixie announced that it was being bought by grocery store chain Bi-Lo.

Source: 24/7 Wall St.

9. CVS Caremark

Change in the past year: -1.4%
Change since first rating: -1.4%
Industry: health and personal care stores
Industry change in past year: -1.3
No. of stores: 7,327 retail pharmacies

CVS Caremark's (NYSE: CVS) customer satisfaction has decreased 1.4% in the past year and 1.4% since the first time the ACSI began recording the metric for the company in 2005. It is now the lowest rated company in the health and personal care stores industry, behind both Rite Aid (NYSE: RAD) and Walgreen (NYSE: WAG). CVS Caremark now has the third-lowest customer satisfaction rating among all major retailers.

Source: 24/7 Wall St.

8. Office Depot

Change in the past year: -2.5%
Change since first rating: 1.3%
Industry: specialty retail stores
Industry change in past year: +1.3%
No. of stores: 1,147

Office Depot's (NYSE: ODP) customer satisfaction score has increased 1.3% since 2007. Since 2010, however, Office Depot's customer satisfaction has decreased 2.5%, even as it has increased 1.3% for the sector over the year. Still, it remains one of the highest-rated specialty retail stores. The company is in a tight spot -- trying to keep up with larger rival Staples (NASDAQ: SPLS) while facing increasing pressure from OfficeMax (NYSE: OMX).

Source: 24/7 Wall St.

7. Staples

Change in the past year: -2.5%
Change since first rating: 2.6%
Industry: specialty retail stores
Industry change in past year: +1.3%
No. of stores: 2,281

Staples, like smaller competitor Office Depot, had a 2.5% drop in customer satisfaction in 2011. Customer satisfaction has increased slightly for the company since 2007, when ACSI began tracking it. Incidentally, the company also has a current consumer satisfaction score of 79, the same as Office Depot.

Source: 24/7 Wall St.

6. Dollar General

Change in the past year: -2.5%
Change since first rating: 0.0%
Industry: department and discount stores
Industry change in past year: 0.0%No. of stores: 9,800

Dollar General (NYSE: DG) is a Tennessee-based discount store with locations in 35 states. In 2010, Dollar General's customer satisfaction score peaked at 80. It has since decreased 2.5% to 78 -- not especially low, but not great. This score lands Dollar General right in the middle of the ranking for the department and discount stores industry. However, customer satisfaction concerns have done little to slow sales.

Source: 24/7 Wall St.

5. Expedia

Change in the past year: -2.5%
Change since first rating: -3.8%
Industry: internet travel
Industry change in past year: 0.0%
No. of stores: e-commerce only

As recently as 2009, Expedia (NASDAQ: EXPE) was the number one online travel company when it came to customer satisfaction. It has since slipped behind Travelocity. The company still is better rated than Orbitz (NYSE: OWW) and Priceline (NASDAQ: PCLN). Although overall customer satisfaction with the internet travel industry did not change over the past year, Expedia was the only company in the group where satisfaction decreased.

Source: 24/7 Wall St.

4. Walgreens

Change in the past year: -2.6%
Change since first rating: -1.3%
Industry: health and personal care stores
Industry change in past year: -1.3%
No. of stores: 7,811

Walgreen's 2.6% decrease in customer satisfaction is much more than the health and personal care stores industry decline of 1.3% over the same time. The company's stock value fell approximately 15% in 2011. Walgreen started 2012 off poorly as well, after refusing to do business with pharmacy benefit manager Express Scripts (NASDAQ: ESRX). Company revenues have already been hurt, and same-store sales for January dropped 4.6%.

Source: 24/7 Wall St.

3. Barnes & Noble

Change in the past year: -3.7%
Change since first rating: -4.8%
Industry: specialty retail stores
Industry change in past year: +1.3%
No. of stores: 704

Barnes & Noble's (NYSE: BKS) customer satisfaction score dropped 3.7% last year, after falling 2.4% the year before. Despite this, the company has one of the higher scores among the specialty retail stores industry. Still, the company's score of 79 is significantly lower than major competitor Amazon's score of 86. Barnes & Noble'sbusiness falls behind Amazon in a number of ways aside from customer service, including online sales, e-reader market share, and overseas presence.

Source: 24/7 Wall St.

2. Walmart

Change in the past year: -4.1%
Change since first rating: -12.5%
Industry: department and discount stores
Industry change in past year: 0.0%
No. of stores: 633

Walmart (NYSE: WMT) is the largest retailer in the world, with 2.1 million employees and revenue of just under $422 billion in 2011. Despite this, the company leaves customers extremely unsatisfied. Since 1994, when ACSI began tracking the company's customer satisfaction levels, Walmart's score has decreased 12.5% -- the largest drop among all retailers. Walmart has the second-lowest score among all retailers in the department and discount stores sector. Its presence in the supermarket industry appears separately in ACSI's data. Walmart has the absolute lowest score among supermarkets, with a score of just 69.

Source: 24/7 Wall St.

1. Netflix

Change in the last year: -14.0%
Change since first rating: -11.9%
Industry: Internet Retail
Industry change in past year: +1.3%
No. of stores: e-commerce only

Just last year, Netflix (NASDAQ: NFLX) had the second-highest customer satisfaction score among retailers, behind only Amazon. Since then, the company has experienced a massive 14% drop in customer satisfaction, leaving its score down among the lowest. In October 2011, Netflix announced that it would spin off its DVD-delivery service into a company called Qwikster, causing a huge public outcry. Although the company quickly gave up on the idea, with CEO Reed Hastings posting an apology on the company's website, it continued the unpopular practice of charging customers additional fees to continue receiving both DVD-delivery and streaming services.

Source: 24/7 Wall St.

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