Negative in-store experiences costing retailers $262 billion in sales

American retailers are struggling to maintain customer satisfaction, with negative in-store experiences costing the retail sector up to 262 billion dollars in lost revenue, according to a recent study from customer experience (CX) expert Forsta.

After analyzing 50,000 online reviews from US and UK physical retailers, Forsta found that 48 percent of negative feedback stems from issues like "mismanaged checkouts" and "unhelpful service," resulting in an estimated annual revenue loss of 262 billion dollars. With holiday spending expected to reach an all-time high of 902 US dollars per person this season, according to the National Retail Federation, and 46 percent of surveyed consumers intending to shop in-store, retailers should do all they can to capitalize on this opportunity. 

Why inadequate in-store experiences are costing retailers billions

In-store sales for US retailers saw little growth for Black Friday 2024, with foot traffic declining by 3.2 percent and sales increasing by just 0.7 percent year-over-year, in stark contrast to the 14.6 percent growth in online sales. 

According to Forsta's review data, a key factor driving these lost sales and diminishing customer loyalty is the widening gap between customer expectations and the in-store experience retailers are providing. A recent survey of US consumers found that 74 percent of adults will leave a store without making a purchase if they have a negative in-store experience. 

The data also highlights that long checkout times and insufficient staff interactions are the leading causes of dissatisfaction, accounting for 40 percent and 59 percent of negative reviews, respectively. While many retailers may be relying on cost-cutting measures such as reduced staffing and increased reliance on self-checkouts, these, in turn, are causing customer frustrations and negatively impacting the overall customer experience.

"Long queues and unhelpful customer service are not just inconveniences—they're eroding customer trust and loyalty," said Kyle Ferguson, CEO of Forsta, pointing out the potential financial implications of neglecting the in-store experience. "When customers are frustrated in-store, they're more likely to abandon their purchases and take their business elsewhere." 

How retailers can bridge the gap between customer expectations & the in-store experience

"While we're seeing many retailers focus on improving their online experience, the reality is that conversion ratios are fundamentally higher in-store, so retailers must reconsider how they manage their in-store environments, especially during the busiest time in the retail calendar. Some retailers are already making this shift, take a look at Walmart which has implemented in-store AI to aid employees in giving better overall in-store experience."

However, Forsta warns that investing in technology to support staff may not fully resolve the issue. Data indicates that 59 percent of complaints are linked to negative staff interactions, pointing to deeper issues beyond staffing levels. To effectively address these challenges, retailers should focus not only on customer experience but also on employee experience by empowering and training their staff to represent the brand more effectively.

"With consumer spending expected to reach a new high this winter holiday season, retailers need to take urgent action to enhance face-to-face customer service and store management to make the most of this seasonal retail peak," continued Ferguson. "Retailers must gain a more granular understanding of how customer experience, employee experience, and brand performance impact one another to create an informed roadmap to removing pain points in their operations." 

"With the right data-driven approach, retailers can quickly focus on improving what's within their control, such as optimizing staffing and reducing wait times. These seemingly simple changes can lead to higher customer satisfaction, stronger loyalty, and ultimately, more sales."