The retail industry isn’t what it used to be.
Customers are demanding more than ever. Loyalty is declining. There’s the cost of living crisis. And then there’s the small matter of increasing customer returns and inconsistent product sizing.
So, which retailers are winning?
Our CRO Luke Moore and senior CX specialist Romy Saville took a deep dive into the retail market to find out.
Using hundreds of thousands of data points to dig down into each key area of customer experience – from returns to delivery - we found out who the real winners and losers are.
Here’s what to expect in this roundup:
- An in-depth look at CX in the retail industry as it is today
- The impact and scale of customer returns (and the consequences of charging for them)
- An analysis of what’s driving customer retention across retail brands
- Which brands suffer the most from product sizing issues (and what they can do about it)
- An investigation into delivery issues (and which carriers are the worst for customers)
Read on for the key takeaways from the webinar. As always, the full discussion – as well as the Q&A – is available to watch below.
LIVE CX Teardown: Retail - Chattermill
The state of the retail market: where are we at?
In our research, we observed a significant decline in customer loyalty across the retail industry as a whole.
This decline is continuing. Returns are costing more to retailers than ever before – around $10-$20 per item. And this means for cheaper products, many businesses are actually making a loss on each return.
To make up for these losses, some brands, including Zara and Next, have opted to charge customers for their returns.
This can, of course, have an impact on the relationship between the brand and the consumer at a time when it is already strained. If the experience of actually returning the clothes isn’t satisfactory either, it’s easy to see how these pain points add up.
The overall economic situation is affecting retailers too. Customers have less disposable income, meaning brands have to fight hard to retain them and are finding it difficult to acquire new prospects.
‘The only scalable long-term solution to this is to better understand what customers want,’ Chattermill’s Luke Moore says, ‘and provide experiences that at least match but preferably exceed their expectations.’
A top-level look at retail brands’ CX
To get a general overview of how our market leaders are performing, Saville talks us through each of their average Trustpilot scores.
We found that New Look and ASOS are performing best here. ASOS has received consistently high scores over the past 12 months, while New Look is seen to be on an upward climb once more after a relatively low period.
Diving into the negativity index, Saville finds that across brands, the leading driver of negative sentiment is around ‘order accuracy’ (i.e. the product not being what the customer expected) and ‘no delivery’ (things just not turning up).
Customer care issues come up a lot too. With ‘quality,’ ‘responsiveness,’ ‘contact methods’, and ‘problem resolution’ all being drivers of negative feedback.
‘It’s really important to nail your customer care,’ Saville says. ‘If you’re not, your customers will definitely let you know.’
Saville turns to the recommendation index to see what drives consumers to recommend these brands to their friends and family.
Of course, delivering a great customer care experience is really important here.
‘Customer care quality’ and ‘customer care problem resolution’ are the two most important attributes for driving those recommendations, followed by ‘delivery speed and timeliness’ and ‘app CX.’
Analysing the returns experience
When it comes to returns, H&M and Zara are seeing consistency with the amount of negativity they are receiving while others are seen to be making improvements.
‘When people are talking negatively about returns,’ Saville says. ‘Often they will talk about how long it took to receive refunds.’
Digging down into how each brand is tackling refunds, H&M are performing best, and Zara are performing worst. Saville points to customers complaining of waiting for more than two weeks for refunds as well as trying to get in touch with customer support and not hearing back for as long as four days.
When leaving feedback on returns, Zara customers most often talk about trousers, dresses, and jeans. Saville highlights that the brand has an approach to its sizing (two size guides), which can be confusing to shoppers.
How brands compare for size and fit
When it comes to size and fit, unsurprisingly Zara is performing worse for net sentiment compared to the other brands in the analysis. New Look, on the other hand, is the leader here.
‘I think if they [Zara] would solve these issues they’d most likely get fewer returns,’ Saville says. Consequently, they might not have to pass on return costs to their customers.’
By looking at real feedback examples, Saville points to customers complaining about having to order clothes that are one or two sizes bigger as a rule from Zara, as well as XL when they know they are M.
Digging deeper into the size and fit negativity index, there is a real spike of poor feedback for Zara around Christmas. Saville notes how much of this is to do with returns windows ending over the festive period so gifts that are bought in early December are no longer able to be returned if they are found not to be adequate on Christmas Day.
Analysing one of the biggest issues for retail customers: delivery
Delivery is another potential pain point for retail brands – and this is reflected in customer feedback.
When it comes to net sentiment, H&M are at the bottom of the pack, while New Look and ASOS do much better.
Speed and timeliness are key contributors to the negative sentiment H&M receive.
Saville notes how complaints frequently centre on the fact the website states a limited number of days for delivery (2-4) but items regularly aren’t arriving within that period.
‘It causes a lot of negativity due to misaligned expectations,’ she says. ‘As a company, you’ll set expectations and customer perceptions that it will arrive within that window.’
‘If it arrives one day late, maybe people wouldn’t have minded so much if that was within the window that was given, but because their expectations have been set differently it can cause a lot of disappointment.’
It is easy to see how this ultimately can have a big impact on retention and the likelihood that customers will go on to recommend the brand.
Unsurprisingly, Saville also points to negative sentiment around courier-specific services.
Evri (formerly Hermes) receives the highest proportion of this negative sentiment compared to other couriers like DHL and Yodel. As is reflected in the data, this negativity carries over to the brands that use them.
H&M and ASOS – who use Evri – are seen to receive the most negative sentiment around delivery. Saville points to complaints such as customers describing paying for premium next-day delivery but not receiving the product within the expected timeframe.
Driving customer loyalty and retention
Saville links all of this aforementioned data back to loyalty, highlighting how these CX issues can directly impact retention rates.
She notes how New Look’s retention rates have improved over the last 6 months. But going back to their low retention period, all of the negative sentiment centred around customer care experience.
Responsiveness and attitude of staff have since improved, and so has retention and loyalty.
Comparatively, ASOS’ customer retention has steadily declined, and Saville shows us how this tracks with a drop in net sentiment around customer care. Consumers, here, have regularly mentioned bad customer care and how slow the brand is to give refunds in the feedback they provide.
‘You can see that customer care really is a big piece of this puzzle,’ Saville concludes.
Why Unified Customer Intelligence Matters for retail brands
This teardown analysis focused only on publicly available app reviews. This data is a useful barometer but is only really a snapshot of the full retail ecosystem. Imagine how deep the insights could be if we unified data from across every customer touchpoint, and analysed it in the way that we have here.
Unified Customer Intelligence (UCI) platforms such as that offered by Chattermill allow us to pull in data from elsewhere, too. For example, surveys, tickets, live chats, reviews – so you can understand the full customer journey and pinpoint the touchpoints causing the most friction for customers.
If you would like to learn more about how Chattermill can help you or compare your own data with those we’ve looked at here, book a demo here.
Customer experience in retail is full of nuances and variables. But the voice of the customer is there, and brands need to be listening to ensure they can compete as the competition continues to grow.