ANN ARBOR ? Higher food prices helped drop the University of Michigan?s American Customer Satisfaction Index for the first time since early 2005, making it likelier that consumers will spend less during the Holiday sales season than they did a year ago.
The Index slides 0.1 percent to 75.2 on its 100-point scale, but it remains 1 percent higher than it was a year ago. Still, even the slight decline does not bode well for consumer spending in the holiday season.
?The dip in ACSI is largely attributable to higher food prices, and despite employment growth and holiday discount pricing, consumer spending is unlikely to match last year?s fourth quarter growth,? said Professor Claes Fornell, head of ACSI at the U-M.
Every third quarter ACSI measures consumer non-durables, one of the highest scoring sectors of the Index. Consumer non-durables consistently achieve high customer satisfaction scores because competition between products is high, switching costs are minimal, and prices are relatively low. Though most industries improve this quarter, it is not enough to offset the ACSI decline in food manufacturing, by far the largest industry in consumer non-durables.
The Index is still very near its all-time high (and still 1 percent above where it was a year ago); but that it’s taken its first slide in two years is notable. ACSI has been a reliable predictor of consumer spending, and the Index forecasts slower spending growth at 2.5 percent in the fourth quarter.
FOOD MANUFACTURING: Customer satisfaction with food companies falls for the first time since 2005, down 2.4 percent to 81. Because of the relative size of the sector (compared to other industries measured in Q3), the drop made a big impact in the overall ACSI score, even though it was the only industry to decline. Higher prices are mostly to blame. Heinz moves up 3 percent to 90, the highest score of any company in any industry in all ACSI. The big gainer is Campbell Soup, up 4 percent to 83. They capitalized on “wellness” food and the strategy is working for them.
ATHLETIC SHOES: Industry score improves 4 percent to 79. Nike rebounds from a drop last year, and they are up 4 percent to 75. Adidas (which includes Reebok) slips a tad, down 1 percent to 77. The “all others” category, which includes Skechers, Puma, and New Balance, leads the industry at 83, up 3 percent.
APPAREL: Hits an all-time high, climbing 3 percent to 82. VF Corporation leads with 84, while Liz Clairborne falls 3 percent to 79.
SOFT DRINKS: It appears the Pepsi challenge is a draw. Pepsi drops 2 percent and Coke jumps 2 percent; both companies land at 84. Who would have guessed that Cadbury Schweppes would lead this race at 86?
BREWERIES: The industry hits an all-time high of 83. Not much of a gap between highest scoring company (Miller, 83) and lowest (Anheuser-Busch, 82). The coming merger of Molson Coors with Miller isn’t expected to change much, other than helping the bottom line in lower production costs and combined advertising.
PERSONAL CARE & CLEANING PRODUCTS: Another record high for yet another industry (up 1 percent to 85). Dial is the big gainer, up 4 percent to 82, its highest score in 12 years. Clorox is tops (+1 percent to 87). Unilever, Proctor & Gamble up 1 percent to 86 and 85, respectively. Colgate-Palmolive is the only decliner, down 3.6 percent to 81.
The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States. It is updated each quarter with new measures for different sectors of the economy replacing data from the prior year. The overall ACSI score for a given quarter factors in scores from about 200 companies in 43 industries and from government agencies over the previous four quarters.
The index is produced by the U-M?s Ross School of Business in partnership with the American Society for Quality and CFI Group, and is supported in part by ForeSee Results, corporate sponsor for the e-commerce and e-business measurements.
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