Boston, MA – November 17, 2010 – The inaugural L.E.K. Consulting Retailer Preference Index (RPI) ranks the top stores across 20 retail segments and provides new insights into how consumers’ perceive the strengths and shortcomings of leading national retailers. Brands including Brooks Brothers, H&M, L.L.Bean, Neiman Marcus and Target each lead their respective categories.

L.E.K. developed the RPI by surveying 3,000 U.S. consumers and weighing key factors that shape their shopping decisions – such as shoppability, value and loyalty incentives. The 100-point index serves to quantify how consumers rank retailers in specific categories, which can provide senior executives with new insights into strategic positioning opportunities versus their rivals.

Just as select stores stand out for consumers, some categories also have a pronounced pack of leaders while other sectors are barely distinguishable. Interestingly, the top-two retailers in nearly half of the L.E.K. RPI categories are only separated by small margins, which illustrates that consumers in many retail sectors see little reason for loyalty, even with market leaders.

“The L.E.K. Retailer Preference Index provides an important tool that executives can use to understand where they are succeeding and how to further address unmet market needs based on consumer preferences,” said Andrew Rees, Vice President and Head of L.E.K. Consulting’s Retail and Consumer Products Practices. “Brands that are lagging in a category can develop specific programs to change market perceptions, while companies in retail segments with little perceived differentiation have a chance to take corrective actions and distinguish themselves.”

Examining Retail Purchasing Drivers 
Digging deeper underneath the index scores, L.E.K. also examined the factors that drive preference for one retailer versus another. These influencers included a variety of attributes such as perceived value for money, variety, quality of service, convenient location, fashion leadership and shoppability. L.E.K. found that the importance of the factors varies significantly by retailer category and the degree to which retailers differentiate on the key bases of competition itself varies.

To illustrate these findings, L.E.K. has featured five of the 20 retail segments examined in the L.E.K. Retailer Preference Index below: women’s specialty, men’s specialty, teen retailers, department stores and mass merchants. Please see click here for the full report.

Top-Five Women’s Specialty Retailers

Retailer and Rank Index Score
1. H&M 68.7
2. Victoria's Secret 68.4
3. Old Navy 64.8
4. Ann Taylor LOFT 64.8
5. Limited 63.4

Value and product variety are the most powerful drivers for consumer spending in this category. Top retailer H&M scored lower on value than competitors like Old Navy and Ann Taylor LOFT, but its above average scores across product variety and product quality (another top driver), likely propelled it to the top spot. Consumers did not rank retailers’ ability to stock the most exciting styles as a top purchasing factor in this category, nor did they feel that loyalty programs influenced their willingness to spend money in women’s apparel stores.

Top-Five Men’s Specialty Retailers

Retailer and Rank Index Score
1. Brooks Brothers 73.2
2. Express Men 72.1
3. H&M 72.1
4. Casual Male 71.0
5. Banana Republic 70.9

Although shoppers ranked value as their strongest purchasing driver in the men’s segment, premium retailer Brooks Brothers came out on top. It outscored the more value-based Express Men and H&M on other key influencers including apparel fit and style. Banana Republic ranked the highest in terms of stocking exciting styles, which shoppers in the men’s category ranked nearly as important as value in terms of purchase influence – a sharp contrast with top drivers in the women’s category.

Top-Five Teen Retailers

Retailer and Rank Index Score
1. Charlotte Russe 70.7
2. Forever 21 67.8
3. Hollister 63.9
4. American Eagle 63.4
5. Aeropostale 62.4

Shoppers felt that stocking the most exciting styles was nearly as important as value in terms of their purchasing preferences at teen retailers. Charlotte Russe scored above average on key purchasing drivers in the category including shopping experience, product variety and quality, and stocking the latest fashions. Third-ranked Hollister had lower scores on value and shopping experience. Former market darling Abercrombie & Fitch was at the bottom of the index ranking, with consumers scoring it low across nearly all dimensions.

Top-Five Department Stores

Retailer and Rank Index Score
1. Kohl’s  67.7
2. J.C. Penney  65.5
3. Macy’s  65.2
4. Dillard’s  62.3
5. Sears  61.7

Kohl’s performed well across the board and was the hands-down leader on providing value for money. Shoppers also expected to spend more in department stores that could offer a pleasant shopping experience and desirable brands, and gave high scores to Macy’s and Dillard’s for those drivers.

Top-Three Mass Merchandisers

Retailer and Rank Index Score
1. Target 68.1
2. Walmart 65.9
3. Kmart 61.1

Target was the clear winner for mass merchandisers, rating above average on key drivers such as product quality, store navigation and brand variety, but shoppers recognized Walmart for having better bargains. Reflecting its lower ranking, Kmart scored poorly across most key purchasing criteria in this category when compared to the competition.

“L.E.K.’s findings confirm that value reigns as the strongest driver of purchases across most retail segments,” said Dan McKone, Vice President of L.E.K. Consulting. “But there are subtle purchasing driver variations within each segment that play a significant role in how consumers arrive at their top choices. Retailers must understand these fine differences to gain leverage against their competitors, and win over consumers’ loyalty.”

About the Survey
The L.E.K. Retailer Preference Index was developed in October 2010 based on a nationally representative sample of 3,000 adults in the United States with a 1.8% margin of error at the 95% confidence level. The L.E.K. RPI is part of L.E.K.’s Consumer Sentiment Survey (CSS), which has tracked consumers’ changing attitudes and spending behaviors semiannually since fall 2008.

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and analytical rigor to help clients solve their most critical business problems. Founded in 1983, L.E.K. employs more than 900 professionals in 20 offices across Europe, the Americas and Asia-Pacific. Global clients include Fortune 500, FTSE 100, Eurotop 300 and many of the largest firms in Asia-Pacific. With a reputation for solving the most complex issues, L.E.K. collaborates with business leaders to accelerate the pace and precision of strategic decision-making.

As a leading global advisor to the Retail & Consumer Products industry, L.E.K. works with senior executives looking to enhance profit performance through the development and execution of long-term growth strategies, services enhancement, merchandise management, new product development and execution, and operational effectiveness.

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Value is Major Driver of Retail Store Preference, According to L.E.K. Consulting Research