Consumers Likely To Encounter Sticker Shock

Shopping-Woman-Shocked-Shutterstock-A

The American Customer Satisfaction Index’s (ACSI) November report shows evidence of increased sensitivity to pricing, which may put pressure on retailers to offer earlier and bigger discounts in order to boost sales this holiday season.

In a challenged economy where real income growth remains sluggish, consumers are more sensitive to price than in a booming economy. As a result, falling prices tend to have a stronger positive impact on customer satisfaction, while rising prices have the opposite effect.

The report includes the annual measure of the consumer non-durable industries: food manufacturing, apparel, athletic shoes and pet food. Each of these industries demonstrates customer satisfaction trends that show evidence of increased sensitivity to pricing.

The November report also includes ACSI’s third-quarter National Index score, which is the macroeconomic indicator of consumer spending based on the aggregate of all measured industries. ACSI measures more than 230 companies across 47 industries, each annually.

It remains unchanged at 75.9 for a third consecutive quarter. While satisfaction remains high, don't expect a boost in consumer demand, said Claes Fornell, ACSI founder and a University of Michigan business administration professor.

“The numbers for economic growth continue to fall short of what is needed for a healthy recovery,” Fornell said in a release.“In an economy that depends heavily on consumer demand, it is hard to envision rapid growth given a flat trend in customer satisfaction that is coupled with only tentative improvement in wages and employment.”

Each measured industry this month illustrates increased price sensitivity from the consumer, and this may portend things to come during the holiday shopping season. Price stability helps food manufacturers improve customer satisfaction, while apparel drops to an eight-year low amid rising costs for raw materials.

Heinz maintains the category lead at a high level of 89. Among all companies in the 47 industries covered by the ACSI, Heinz ranks second from the top. Following Heinz, four companies earn satisfaction scores of 85 to 86, including three candymakers. Mars slips 1% to 86, while Hershey and Nestlé both gain 1% to 85. PepsiCo’s Quaker brand improves 2% to tie Mars for second place. Aside from Mars, Kraft is the only other company to buck the industry’s positive trend. It slides 2% to match its previous low of 81.

Apparel brands studied are Hanesbrands Inc., Jones Apparel Group, Inc., Levi Strauss & Co., Liz Claiborne, Inc. and VF Corporation. Athletic shoes brands in the report are Adidas AG and NIKE, Inc., while food manufacturers examined are: Campbell Soup Company, ConAgra Foods Inc., General Mills, Hershey Foods Corporation, H.J. Heinz Company, Kellogg Company, Kraft Foods Inc., Mars Incorporated, Nestle S.A., Inc., Quaker Foods, Sara Lee Corporation, and Tyson Foods, Inc. Pet food brands examined in the study are Del Monte Foods Company, Hill’s Pet Nutrition, Inc, Mars Incorporated, Nestle Purina PetCare Company and The Iams Company.

"Shocked Shopper photo from Shutterstock"

Recommend (1) Print RSS