You are here: News / Retail Viewpoint - Churn rates should turn grocers' stomachs
Retail Viewpoint - Churn rates should turn grocers' stomachs
Archived article dated Monday April 21st 2008
Despite all the talk of customer loyalty among the global grocers some pretty shocking statistics were dished out the other day that rubbish the claims made by many supermarkets that they are having a meaningful relationship with their customers.
by Glynn Davis
A report by Pitney Bowes Group 1 Software on customer churn found that the supermarkets had experienced the highest growth in customer defection rates between 2005 and 2007, compared with other sectors, with an increase from 19.8 per cent to 27.4 per cent - a massive 38 per cent jump.The main reasons it cites for churn are - not being recognised as a valuable customer, unhelpful staff, and ineffective call centres. It's my guess that all the UK supermarkets would lay claim to being good in all these areas but these numbers suggest otherwise.
And guess which country has the greatest churn rates - Britain. With 22 per cent churn per annum it has the most promiscuous shoppers in the West. This is put down to things like its crowded geography and national wealth per capita. But whichever way you cut it the report is pretty damning of the UK grocers and their inability to hang on to their customers.
What makes matters worse is that 2008 will possibly show even higher churn rates because we are in the midst of a great movement of shoppers between the major grocers. Many are returning to Morrisons after previously losing them to Tesco following the troubled acquisition of Safeway, Asda has been shouting about its continued attraction to more upmarket customers, and Waitrose seems to be tempting people from a broader demographic as it continues to expand its estate around the UK.
We await with interest next year's survey but in the meantime try showing a little bit more loyalty to your friendly local supermarket - as painful as that might be.
Brand value is increasingly about own-brand
Interbrand published its first 'Top Performing European Retail Brands' report last week, which ranked the top 25 companies based on various criteria defined by the branding specialists. In addition to the surprise of finding that H&M had topped the table was the fact that own-brand products play a large part in the businesses of many of the constituents in the list.
A sizeable 60 per cent of the top 25 have own-brand accounting for over 30 per cent of their total revenues and even more amazing is that three of the top five brands sell only private label goods - these being H&M, IKEA (in third place) and M&S in fifth spot. And the other two retailers in the top five - Carrefour and Tesco - both continue to develop their own-brand offers with the latter pushing the Tesco name ever-further into non-food products and services too.
This indicates just how significant a contribution own-brand product makes to a retailers' overall brand value and how they are now regarded as a brand weapon. They are also able to help a merchant create a much clearer value proposition to customers.
It will be no surprise whatsoever to find that this trend continues as own label not only makes its presence increasingly felt within the European retail market but also spreads further into the US and Asia where it is much less developed.
Tagged as: retail viewpoint | glynn davis
Share this article:
Should your colleagues be reading the Retail Bulletin?
Let them know about us.
