Customer Satisfaction Sinks in Singapore’s Retail Industry

Since retail trends can be viewed globally, customer satisfaction with the retail industry in Singapore fell in almost all sectors, with department stores and furniture stores registering the biggest declines, according to the Customer Satisfaction Index for the first quarter of 2014 based on a survey conducted by the Singapore Management University’s Institute of Service Excellence (ISES).

The survey was comprised face-to-face interviews with 9,250 resident and tourist respondents between January and March.

According to the findings, customer satisfaction for the retail sector fell 3.5% on-year in the first quarter to 69.6 points out of 100. Among the eight retail sub-sectors, furniture stores saw customer satisfaction declining the most with an 11% dip, while department stores incurred a 9.1% drop.

The bright spot for the retail sector came from supermarkets, which saw customer satisfaction improving by 1.6% to reach a record 71.1 points, its sixth year-on-year increase.

According to ISES, the decline in retail customers’ satisfaction level was due in part to a dip in tourist satisfaction in all four of the sub-sectors–departmental stores; fashion apparels; jewelry stores; and clocks and watches–that took into account tourist responses.

“While both local and tourist respondents were less satisfied with these four sub-sectors compared to 2013, the difference in magnitude of the changes for each group was quite stark, with tourist satisfaction falling 12.2% while local satisfaction dipped 1.9%,” ISES Director Caroline Lim said in a release.

The link between improved satisfaction and increased spending is compelling, Lim said.

“Using this quarter’s departmental stores data for example, a highly-satisfied customer would have spent 23.3% more at the store over a one-year period than a less satisfied customer,” she added.

In the info-communications sector, the mobile telecoms sub-sector saw customer satisfaction drop 1.3%, while the broadband sector saw a decline of 3.3%. Two new sub-sectors were added this year: Pay TV, which had a customer satisfaction score of 66.5 points, and Wireless@SG which scored 61.5 points.

In the mobile telecoms, broadband, and pay TV sub-sectors, there was a notable difference in satisfaction and loyalty levels between new customers–those who have been with their telco for less than two years–and re-contracting customers–those who have been with their telco for two or more years.

In all three sub-sectors, re-contracting customers had greater levels of customer satisfaction and loyalty as compared with the new customers. Re-contracting customers also had much smaller gaps between their levels of expectations and the perceived quality of their telco.

“This finding is a useful reminder for our businesses to look beyond customer service and frontline employees as the sole measure of customer satisfaction,” Lim explained. “Rather, organisations could approach customer satisfaction more holistically by re-examining their offerings, policies, and business processes that will affect the customer experience. These may include service redesign, service innovations, new product mixes, or an improved value proposition.”

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