COVER STORY: Solving the mystery of success
* To view charts that accompany this story, click here for a .pdf download:
http://www.progressivegrocer.com/progressivegrocer/images/pdf/AUGUSTcoverstorycharts.pdf
In the words of management guru Tom Peters, "You can't manage what you don't measure." That was the philosophy guiding executives of Service Intelligence, Inc. when they suggested that the supermarket industry could use a benchmark study of the customer experience as measured by mystery shoppers.
Conducted by Service Intelligence shoppers at some 1,474 supermarkets run by 11 chains under 46 banners, the Benchmark Grocery Vertical Study is intended to provide a set of numbers against which other operators can measure their own performance, whether at the level of a department, a single store, or an entire chain. Even for those who don't do any measuring, the results can be helpful in any attempt to understand what consumers really experience in the stores they patronize.
Even for those who don't do any measuring, the results can be helpful in any attempt to understand what consumers really experience in the stores they patronize.
To some, who came out on top in the study may be all that matters. Overall, that was Safeway. But with 10 of the 11 companies ranking in the top three in at least one area, there appear to be no real losers. That's why the accompanying tables name only the top three chains in each attribute measured. The average, or composite, score is given for each area, as is the lowest score in order to show the full range of performance. Complete results have been disclosed to key executives of all the chains.
Besides Safeway, the companies whose stores were shopped include A&P, Ahold USA, Albertsons, Food Lion, Kroger, Save-A-Lot, Wal-Mart supercenters, Winn-Dixie, and the Canadian chains Loblaws and Sobeys. All were chosen because of their large size.
That the mystery shoppers ranked Safeway highest overall came as no surprise, according to Warren Porter, director of business and channel development for Service Intelligence. That's because the chain places so much emphasis on the customer experience. "To Safeway, this is so key to their strategy that it's the biggest thing that they do," says Porter. "They invest the most in it."
Commitment brings benefits
The study findings, he says, demonstrate that the companies that make the greatest commitment reap the biggest benefits. "But conversely, there's no reason why a chain with a high-convenience and low-cost strategy couldn't employ the same training and the same objectives and things that Safeway does, because these are things that don't cost anything other than training your people," Porter says.
"When you really look at the customer experience, the experience is an aggregation of a lot of different things, but in large part they're things that really don't have high costs associated with them. It's just determining that you want that to be part of your strategy, communicating that effectively down to the front line, and measuring it. And then from the measurement, creating an action, and then from the action, going back to a measurement, completing the circle."
The two unknowns going into the study, Porter says, were where the results would fall and which of the 11 chains used mystery shoppers. "The thing that came out as the most striking," he says, "was that the top six all utilized the methodology and the bottom five, with the exception of one, didn't."
Keeping customers
According to yearly research by Progressive Grocer, consumers for at least the last two decades have consistently ranked cleanliness as their chief reason for choosing a supermarket, and that was a key topic of the Service Intelligence inquiry as well. Some of the other significant areas also measured by Service Intelligence are pricing issues and the checkout experience. The most recent installment of the PG research, published in April in the magazine's 70th Annual Report of the Grocery Industry, is among the accompanying tables.
There's a truism in retailing that it's easier to keep a current customer than it is to win a new one, and the combination of the mystery shoppers' findings and the store selection criteria gives key insights into areas that can be improved to help prevent customer defections. Untidy stores can be cleaned up, inaccurate prices can be corrected, unpleasant staffers can be trained. But that's only if the retailer knows the customer experience falls short—and that knowledge can be gained only by measuring.
Clean, not so clean
The highest individual ratings given by the mystery shoppers were for cleanliness of the meat department and cleanliness of the checkout area, the only scores that came in above 98 percent. That's pretty good, but given the importance of cleanliness to shoppers, it has to be. And other areas were not as clean. Produce rated OK at 97.1, while grocery came in at 93.2. Perhaps closing that four-point gap could carry a competitive advantage for a retailer. The questions are whether it's even possible and whether the payback would be worth the effort.
Something that the study indicates would be worth the effort is to take a closer look at the restrooms. Restroom cleanliness benchmarked at only 75.9, the second-lowest score in the study. Supermarket retailers might do well to take a lesson from some service station operators who check their restrooms hourly and maintain logs that are signed and visible to the public. In the minds of some customers, a dirty restroom might easily cancel out a perfect produce department. (For more on the importance of clean restrooms to a store's image, see "Taking food safety further" on page 80.)
Accurate price scanning, another consumer hot button, benchmarked at 97.1 percent, which in the context of the study is quite low. The mystery shoppers' baskets averaged only $19.44, and nearly 3 percent of the shoppers had a price scanned incorrectly. Accuracy ranged from 99.3 percent down to a low of 92.9 percent. There is no technical issue to prevent accuracy from reaching 100 percent; only human communication failures do that.
Pricing information in both bakery and deli rated above 95 percent, while unit pricing in grocery reached 97.2 percent.
For purposes of the study, scan accuracy was considered to be its own department, and its 97.1 percent score was the highest among the eight departments. The others, in order of rank, were meat (95.4), deli (94.3), produce (93.3), bakery (89.4), grocery (88.5), amenities (87.1), and checkout (85.8). The composite for all departments was 90.9 percent.
Tangibles and intangibles
It is also illuminating to combine individual scores in ways other than by department. Those combinations are divided into what can be called tangible and intangible store attributes. Combining the five questions about cleanliness produces a cleanliness score of 92.7 percent. It's quite tangible and results from relatively objective observation.
Putting together the three questions about price labeling generates a good score of 96.5 percent. Combining the five freshness and dating scores yields a freshness index of 90.9 percent, which probably can be improved. There are five questions concerning employee interaction, and they yield a composite of 82.6 percent. Improvement here is a matter of attention, awareness, and better training. The three checkout questions yield the lowest tangible composite of 74.7 percent.
All these tangible measures are a big part of the customer experience. They, along with the departments, create the store presentation or image and help customers satisfy their needs.
Other combinations measure items that are less tangible but are just as real and just as important in the customer experience. With the help of J.C. Williams, a retail consultancy to the grocery industry, each of the questions was rolled into one of three main categories: quality, efficiency, and environment. With much of retail success being dependent on differentiation in these and the more tangible categories, mystery shopping becomes a key component in determining whether a company is delivering on this aspect of its brand strategy.
In considering the customer experience, it's important to keep in mind that efficiency is not throughput but how quickly and easily the shopper can complete the trip. Combining ease of parking with price labeling, scan accuracy, grocery stocking, and the degree of help employees offered when asked where toothpicks could be found results in a 90.7 percent composite for efficiency.
Quality composite
The quality measure combines the freshness and dating questions from the meat and produce departments. The composite is identical to the 90.7 percent score for efficiency.
A more global composite concerns the entire shopping environment. This combines the staff measures with cleanliness and the checkout experience to produce a score of 83.4 percent.
As the old saw goes, "Retail is detail," and the customer experience is determined by the level of the retailer's attention to detail. The companies in the study that consider the customer experience an integral part of their strategy and act on it rose to the top, giving support to another Tom Peters maxim: "What gets measured gets done."
Says Porter of Service Intelligence, "If you're not measuring it, I can tell you that it's not happening. You can say it's your strategy, and you can tell people it's your strategy, but unless you're out actually checking that it's your strategy, it's not happening, so don't even bother. Unless you're going to measure it, don't bother instituting a strategy."
* To view charts that accompany this story, click here for a .pdf download:
http://www.progressivegrocer.com/progressivegrocer/images/pdf/AUGUSTcoverstorycharts.pdf
http://www.progressivegrocer.com/progressivegrocer/images/pdf/AUGUSTcoverstorycharts.pdf
In the words of management guru Tom Peters, "You can't manage what you don't measure." That was the philosophy guiding executives of Service Intelligence, Inc. when they suggested that the supermarket industry could use a benchmark study of the customer experience as measured by mystery shoppers.
Conducted by Service Intelligence shoppers at some 1,474 supermarkets run by 11 chains under 46 banners, the Benchmark Grocery Vertical Study is intended to provide a set of numbers against which other operators can measure their own performance, whether at the level of a department, a single store, or an entire chain. Even for those who don't do any measuring, the results can be helpful in any attempt to understand what consumers really experience in the stores they patronize.
Even for those who don't do any measuring, the results can be helpful in any attempt to understand what consumers really experience in the stores they patronize.
To some, who came out on top in the study may be all that matters. Overall, that was Safeway. But with 10 of the 11 companies ranking in the top three in at least one area, there appear to be no real losers. That's why the accompanying tables name only the top three chains in each attribute measured. The average, or composite, score is given for each area, as is the lowest score in order to show the full range of performance. Complete results have been disclosed to key executives of all the chains.
Besides Safeway, the companies whose stores were shopped include A&P, Ahold USA, Albertsons, Food Lion, Kroger, Save-A-Lot, Wal-Mart supercenters, Winn-Dixie, and the Canadian chains Loblaws and Sobeys. All were chosen because of their large size.
That the mystery shoppers ranked Safeway highest overall came as no surprise, according to Warren Porter, director of business and channel development for Service Intelligence. That's because the chain places so much emphasis on the customer experience. "To Safeway, this is so key to their strategy that it's the biggest thing that they do," says Porter. "They invest the most in it."
Commitment brings benefits
The study findings, he says, demonstrate that the companies that make the greatest commitment reap the biggest benefits. "But conversely, there's no reason why a chain with a high-convenience and low-cost strategy couldn't employ the same training and the same objectives and things that Safeway does, because these are things that don't cost anything other than training your people," Porter says.
"When you really look at the customer experience, the experience is an aggregation of a lot of different things, but in large part they're things that really don't have high costs associated with them. It's just determining that you want that to be part of your strategy, communicating that effectively down to the front line, and measuring it. And then from the measurement, creating an action, and then from the action, going back to a measurement, completing the circle."
The two unknowns going into the study, Porter says, were where the results would fall and which of the 11 chains used mystery shoppers. "The thing that came out as the most striking," he says, "was that the top six all utilized the methodology and the bottom five, with the exception of one, didn't."
Keeping customers
According to yearly research by Progressive Grocer, consumers for at least the last two decades have consistently ranked cleanliness as their chief reason for choosing a supermarket, and that was a key topic of the Service Intelligence inquiry as well. Some of the other significant areas also measured by Service Intelligence are pricing issues and the checkout experience. The most recent installment of the PG research, published in April in the magazine's 70th Annual Report of the Grocery Industry, is among the accompanying tables.
There's a truism in retailing that it's easier to keep a current customer than it is to win a new one, and the combination of the mystery shoppers' findings and the store selection criteria gives key insights into areas that can be improved to help prevent customer defections. Untidy stores can be cleaned up, inaccurate prices can be corrected, unpleasant staffers can be trained. But that's only if the retailer knows the customer experience falls short—and that knowledge can be gained only by measuring.
Clean, not so clean
The highest individual ratings given by the mystery shoppers were for cleanliness of the meat department and cleanliness of the checkout area, the only scores that came in above 98 percent. That's pretty good, but given the importance of cleanliness to shoppers, it has to be. And other areas were not as clean. Produce rated OK at 97.1, while grocery came in at 93.2. Perhaps closing that four-point gap could carry a competitive advantage for a retailer. The questions are whether it's even possible and whether the payback would be worth the effort.
Something that the study indicates would be worth the effort is to take a closer look at the restrooms. Restroom cleanliness benchmarked at only 75.9, the second-lowest score in the study. Supermarket retailers might do well to take a lesson from some service station operators who check their restrooms hourly and maintain logs that are signed and visible to the public. In the minds of some customers, a dirty restroom might easily cancel out a perfect produce department. (For more on the importance of clean restrooms to a store's image, see "Taking food safety further" on page 80.)
Accurate price scanning, another consumer hot button, benchmarked at 97.1 percent, which in the context of the study is quite low. The mystery shoppers' baskets averaged only $19.44, and nearly 3 percent of the shoppers had a price scanned incorrectly. Accuracy ranged from 99.3 percent down to a low of 92.9 percent. There is no technical issue to prevent accuracy from reaching 100 percent; only human communication failures do that.
Pricing information in both bakery and deli rated above 95 percent, while unit pricing in grocery reached 97.2 percent.
For purposes of the study, scan accuracy was considered to be its own department, and its 97.1 percent score was the highest among the eight departments. The others, in order of rank, were meat (95.4), deli (94.3), produce (93.3), bakery (89.4), grocery (88.5), amenities (87.1), and checkout (85.8). The composite for all departments was 90.9 percent.
Tangibles and intangibles
It is also illuminating to combine individual scores in ways other than by department. Those combinations are divided into what can be called tangible and intangible store attributes. Combining the five questions about cleanliness produces a cleanliness score of 92.7 percent. It's quite tangible and results from relatively objective observation.
Putting together the three questions about price labeling generates a good score of 96.5 percent. Combining the five freshness and dating scores yields a freshness index of 90.9 percent, which probably can be improved. There are five questions concerning employee interaction, and they yield a composite of 82.6 percent. Improvement here is a matter of attention, awareness, and better training. The three checkout questions yield the lowest tangible composite of 74.7 percent.
All these tangible measures are a big part of the customer experience. They, along with the departments, create the store presentation or image and help customers satisfy their needs.
Other combinations measure items that are less tangible but are just as real and just as important in the customer experience. With the help of J.C. Williams, a retail consultancy to the grocery industry, each of the questions was rolled into one of three main categories: quality, efficiency, and environment. With much of retail success being dependent on differentiation in these and the more tangible categories, mystery shopping becomes a key component in determining whether a company is delivering on this aspect of its brand strategy.
In considering the customer experience, it's important to keep in mind that efficiency is not throughput but how quickly and easily the shopper can complete the trip. Combining ease of parking with price labeling, scan accuracy, grocery stocking, and the degree of help employees offered when asked where toothpicks could be found results in a 90.7 percent composite for efficiency.
Quality composite
The quality measure combines the freshness and dating questions from the meat and produce departments. The composite is identical to the 90.7 percent score for efficiency.
A more global composite concerns the entire shopping environment. This combines the staff measures with cleanliness and the checkout experience to produce a score of 83.4 percent.
As the old saw goes, "Retail is detail," and the customer experience is determined by the level of the retailer's attention to detail. The companies in the study that consider the customer experience an integral part of their strategy and act on it rose to the top, giving support to another Tom Peters maxim: "What gets measured gets done."
Says Porter of Service Intelligence, "If you're not measuring it, I can tell you that it's not happening. You can say it's your strategy, and you can tell people it's your strategy, but unless you're out actually checking that it's your strategy, it's not happening, so don't even bother. Unless you're going to measure it, don't bother instituting a strategy."
* To view charts that accompany this story, click here for a .pdf download:
http://www.progressivegrocer.com/progressivegrocer/images/pdf/AUGUSTcoverstorycharts.pdf