Sears Holdings may have problems that leave investors wondering whether it can survive, but consumers at least have a slightly better opinion of it than they do of some other retailers.
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Considering the decimation of Sears Holdings' stock price over the years, it's not surprising the disdain investors have for the retailer. Forbes recently detailed how Chairman and CEO Eddie Lampert has presided over a massive evaporation of shareholder value totaling more than $9 billion since he merged Sears and Kmart in 2004. The retailer hasn't posted a profit in more than five years, and the one analyst who still covers Sears thinks it's headed for bankruptcy.
Consumers also hold the retailer in low regard. In fact, women would rather shop at a Goodwill store than step foot in a Sears or Kmart, according to one survey. Over a decade of apparent neglect by Lampert has crushed this once iconic retailer.
Reputation is everythingSears is one of the lowest-rated stores in the annual survey taken by the American Customer Satisfaction Index, which conducts more than 70,000 interviews annually regarding different facets of consumer satisfaction with more than 300 companies in 43 industries and 10 economic sectors. It then assigns a score between 100 and -100.
According to the latest index results, Sears garnered a 71 rating, three points below the department and discount store average and well below department store leader Nordstrom , which got a rating of 82. It was also 2.7% below the score Sears got last year and fits in well with Nielsen'sannual Harris Poll on corporate reputations, which found Sears dead last once again among retailerslast year .
Yet despite the general (and largely much deserved) poor image the retailer has, it's actually not the worst of the bunch when it comes to customer satisfaction. While similarly stressed rivals like Macy'sand J.C. Penneyalso notched low index ratings in the ACSI -- though at 73 and 74, respectively, they were still better than Sears -- there was one retailer that managed to score even lower.
Wal-Mart ranked the lowest among department stores and discount chain retailers in the ACSI survey.
How low can you go?It's probably not much of a shock that the department store chain with the lowest customer satisfaction score was Wal-Mart . It got a dismal 66 rating on the index, a near 3% drop from last year's equally horrendous 68 score and well behind its main competitor Target, which scored a 75.
The retail king is in a funk. After giving out $1 billion in pay raises last year and with another $1.5 billion due this year, sales were flat in 2015, rather than the 3% to 4% increase the company had previously predicted, and profits fell 8% year over year. It also said sales in 2017 wouldn't be cheery because it was closing hundreds of stores as it exited its Walmart Express concept,a small footprint store that was meant to take on deep discount dollar stores like Dollar Tree, which got a better-than-industry average rating of 76 from ASCI (rival Dollar Generalmatched the average at 74).
Wal-Mart is also scrambling to recover by improving employee morale, enhancing the customer experience in its stores, competing even harder on price, and even operating its own gas stations.
Like turning a battleship, it won't be a quick U-turn for Wal-Mart. It operates more than 11,500 stores globally, almost 4,600 of which are located in the U.S., its largest market that accounts for 60% of its $482 billion in annual sales.
A bone to pickBeing such a behemoth, you're bound to upset more than a few people, but it seems Wal-Mart's problems run deep. Despite the pay raises, it's still routinely criticized as not treating its workers right. When it opens a store, it is attacked for driving out mom-and-pop stores and now that it's closing stores, it's being blamed for creating so-called "food deserts," areas where people can't conveniently buy wholesome food.
Wal-Mart has tried to improve the customer experience, such as by adding more registers during peak hours and launching its Savings Catcher tool to save customers more money after making a purchase, but its employees are still seen as not helpful nor particularly friendly, unlike at leader Nordstrom where they seemingly go out of their way to exceed expectations.
Sears Holdings may be in the twilight of its existence, but it can at least say that when someone finally does turn off the lights and locks the door, there was a retailer less satisfying than it. And that shouldn't bode well for Wal-Mart investors.
The article Consumers Dislike This Store More Than Sears Holdings Corp. originally appeared on Fool.com.
Rich Duprey owns shares of J.C. Penney Company,. The Motley Fool recommends Nordstrom. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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