Costco and Target May Be Flying High, but Their Web Sites Aren't Closing the Deal With Consumers

Some otherwise well-regarded retailers, including Costco (COST), Target (TGT) and CVS (CVS), are poised to fall behind in the battle for online sales because they aren't taking proper care of the consumers who visit their sites.
ForeSee Results' just released Online Retail Consumer Satisfaction Index study tracks how consumers feel about their experiences with e-tailers, but it also looks at what the market research firm characterizes as purchase intent, a gauge of how ready a particular website's shoppers are to spend when they visit. Satisfaction is predictive, ForeSee notes, of where consumers are most likely to do their online spending in the future.

Amazon (AMZN) has few worries. Number two in the satisfaction scoring at 86, it was number one in purchase intent with a score of 92 out of 100. Walmart (WMT) and Kohl's (KSS), which earned a place in customer satisfaction elite by scoring an 80, also were among the tops in purchase intent, both posting an 89.

In the middle was Costco, with a 90 purchase intent rating but a satisfaction score that only came in at an average 78. With a higher-than-average purchase intent of 88, CVS and Target registered average satisfaction ratings.

In Costco's case, what works in the store may work against it online. Costco's treasure hunt approach to merchandising -â€" with various bargain-priced discretionary products such as recliners and canoes displayed to entice customers on their monthly visit for paper towels and burger patties -â€" may not be cutting it on the Internet where people are used to finding whatever they seek.

In its last completed fiscal year, Costco's online sales were down by four percent to $1.6 billion. Target, too, took an e-commerce hit in its last fiscal year. In contrast, Kohl's, with its strong customer satisfaction and purchase intent scores, had a 38 percent e-commerce revenue increase in fiscal 2009.

Costco and Target carry more big-ticket items online than Kohl's, it's true. Yet, if their Web results are trailing, they might consider an approach that includes fewer expensive discretionary items, particularly as competition becomes more intense. As noted, Walmart, which has stated that it is pursuing online dominance, broke into Elite 80 satisfaction status this spring and so is part of the group that tends to win considerably more future purchasing than those who come in lower on the ForeSee scale. Customers dissatisfied today may be unrecoverable tomorrow.