Drug store mergers heat up as retailers defend against the Amazon threat

Among retailers, health and personal care stores were one of the bright spots in our latest Retail Report 2017.

Just like supermarkets, health and personal care stores climbed one point to an ACSI score of 79. While that doesn’t match the 82 of internet retailers, it’s a high score, and the improvement points to the results of both M&A and preparations for Amazon to enter the space.

But that vote of confidence from customers is just the prelude to a shake up that the industry’s many mergers are creating.

The leaders shed points, but still lead

Kmart pharmacies and Kroger were tied at a score of 80 at the top of the health and personal care industry. However, both saw their ACSI score fall in 2017, with Kmart pharmacies shedding 4 points and Kroger down 1 point. Kmart pharmacies did show significant improvement in service quality, and both brands improved in meeting customer expectations.

CVS customer satisfaction powered by and preparing for mergers

CVS was right behind the leaders at a company-best 78. It was the most improved in the category, gaining 2 points, and one of only two large chains to improve over 2016.

Acquiring Target pharmacies may have boosted CVS’s customer satisfaction scores. When dividing CVS’s score into CVS and Target pharmacies, Target stands at a score of 80, while CVS sits at 77.

The health care retailer’s possible merger with Aetna is suspected to be a preemptive move to counter the threat of Amazon, which may begin selling prescription medicine. Whether this merger will boost customer satisfaction – or even go through – remains to be seen.

Rite Aid split among Albertsons and Walgreens

Rite Aid, which fell 1 point in 2017 to a score of 77, is in the middle of being purchased.

Walgreens is snatching up 1,932 Rite Aids (it tried to buy all of them before antitrust scrutiny led to a scaled-back deal). And now Albertsons plans to buy the remaining 2,500 Rite Aids, further expanding its footprint after merging with Safeway in 2015.

It seems many of the health and personal care stores toward the bottom of the ACSI rankings are banding together in hopes of better serving customers and getting ahead of Amazon’s potential entrance in the market.

Walgreens gained a point in 2017 to tie Rite Aid at 77. Safeway pharmacies was just a point higher at 78 after plummeting five points from last year, a drop of 6 percent. Declines in customer loyalty and perceived value contributed to the fall.

Perhaps the many mergers and acquisitions will give these stores more resources to improve customer satisfaction.

The elephant in the room

In the end, M&A in the health and personal care space, as well as the improvements in service quality and meeting customer expectations, are all about Amazon. The potential for the dominant internet retailer to enter the space and push out any and all competitors has many companies making big moves to shore up their ranks.

If Amazon steps into the space, a focus on customer satisfaction will be critical to winning customer loyalty and dollars.

3 ways financial advisors can hold onto customers despite market volatility

The stock market’s rocky start to February has investors, observers, and advisors watching the peaks and valleys and wondering what’s next.

At least for financial advisors, there are a few steps forward in the latest ACSI data around customer satisfaction.

The ACSI Financial Advisors Report 2017 collected data in the fourth quarter of 2017 and reflects customer perceptions when the stock market was still soaring. As you might expect, the scores were high. The average of 81 (out of 100) places it in the top 10 industries measured by the ACSI.

But it also contains opportunities for advisors to differentiate themselves and rise above their competitors, something especially crucial if market volatility remains a trend.

Currently, the major financial advisors have ACSI scores within a few points of each other. LPL Financial and Charles Schwab lead the pack with a score of 82, while Fidelity, Merrill Lynch, and UBS all have the lowest score of 79.

The narrow range shows how competitive the industry is right now and how small, incremental changes can help advisors stand out. Here are three ways to improve customer satisfaction, according to the data:

1. Focus on improving customer service.

Despite the relatively high scores for financial advisors overall, they also have the fourth highest complaint rate of any industry measured by the ACSI – a red flag of negative feedback from customers experiencing problems.

This is probably the biggest opportunity for financial advisors to set themselves apart. A concerted effort to improve service – whether through more face-to-face contact or instantaneous chat capabilities on a website — could increase customer satisfaction and loyalty.

2. Develop or upgrade mobile options.

Mobile options for account management had one of the lowest scores among all the benchmarks, coming in at 78.

While the industry has to contend with compliance constraints, a push behind better mobile capabilities could set advisors apart and give them a technological lead over their competitors.

3. Establish routine contact with investors.

Scores for routine contact with investors (81) and personal contact (79) were two others with lower scores among financial advisors.

Investors will likely have questions about the recent volatility in the markets, making this a prime opportunity for improvement. By taking a more proactive approach to client communication, advisors can not only help clients navigate a suddenly shaky market, but develop relationships with customers that could weather further market volatility.

How customers feel about their financial advisors

While these steps are a start, we’ll have to wait and see how the markets fare in the coming weeks and months.

We’ll closely monitor the perceptions of customers and see whether the high ACSI scores for financial advisors hold up even if the big upticks we saw in 2017 don’t materialize in 2018.

Take a deeper dive into all the customer satisfaction data for financial advisors for more insights on this segment of the market.