With the U.S. in a recessionary mode – a sagging housing market, rising unemployment, lack of credit availability, high energy prices, and rising food prices – consumers find themselves faced with a fairly narrow range of options. They can make fewer trips to the store. They can defer optional purchases, until things get better. They can switch from name brands to generics – both with products and stores.

Thus, it would seem logical that in the current economic environment, lower-end retailers would be gaining share at the expense of higher-end merchants. But that’s not what’s happening.

BIGresearch, a major consumer research organization based in Worthington, Ohio, recently analyzed shopping habits of America’s consumers. A synopsis of their findings was published in the National Retail Federation magazine last month.

Service Trumps Price

BIGresearch says consumers aren’t shopping down. That might have happened a few decades ago, but today, the customer experience is the most important part of the retail equation. Here are BIGresearch’s findings:

• Between January 2007 and January 2008, significant numbers of shoppers switched away from Wal-Mart to Kohl’s. In addition, shoppers switched from J.C. Penney to Macy’s, according to BIGresearch findings.

• What was behind this shift? Of the more than 20 percent of the current Kohl’s customers who switched from Wal-Mart, many cited poor quality, long checkout lines and unavailability of stock in the right size at Wal-Mart as their reasons for making the move to Kohl’s. They said that price was important, but the shopping experience is even more important.

• In an environment of intense competition and a relatively constrained ability to distinguish between merchants based on price and selection, the key differentiator between retailers is customer service.

• Even in tough times, consumers want good treatment, and they will reward retailers who provide it.

• The lesson for retailers: don’t let up on customer service. This is not the time or place to scrimp. Make sure your front line soldiers – your sales people – understand the importance of good customer service. 

 By giving great customer service now, merchants will reap huge benefits with economic times improve, according to BIGresearch.