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Retail Reputation Study Reveals Opinion Gap Between Industry Executives and Analysts

Bedminster, N.J. (29 April 2002) - Retail industry analysts viewed Kohls, BJ's and Costco 30 percentage points more favorably than industry executives on key dimensions of corporate reputation and, conversely, were equally more critical of Dillard's, Kmart, Saks and Sears, according to research and corporate reputation ratings published today by Rating Research LLC (RRC), a joint venture between The Ratrix Group and Opinion Research Corporation.

"The findings suggest there are opportunities for some of the surveyed companies to better leverage their reputation, or conversely, spend time addressing some negative perceptions," said Dory Gasorek, RRC Principal and Chair of RRC's Rating Committee. "Perceptions of these two key audiences need to be aligned in order for a company to establish a solid foundation for reputation leadership."

The RRC Reputation Ratings (Table 1) are based on both qualitative and quantitative input secured through in-depth interviews with senior business executives within the retail industry and financial analysts who specialize in the industry.

Specifically, analysts participating in the Department Store and Discount Retailing Industries Reputation Survey, scored Kohl's, BJ's and Costco higher on key reputation dimensions such as Excellent Company and Willing to Invest In. (Table 2). Although somewhat dismissed by industry executives, Kohl's was seen by one analyst as having "the potential for strong growth as the darling of the strip malls". Ninety-four percent of analysts versus 54% of executives felt Costco "can survive downturns in the economy" and, similarly, 75% of them compared to 38% of executives felt BJ's "quickly adapted to market conditions".

Analysts' more negative comments on Saks focused on the incompatibility of its two divisions as well as concerns related to the future of the department store format. Harsh viewpoints of Dillard's focused on workforce-related issues, summarized by one analyst's comment: "Family management is killing the company". The weakness of Sears' softlines was noted by analysts.

Wal-Mart Remains the Clear Winner, Target Also Favored

Not surprisingly, Wal-Mart, the retail giant, was the clear industry winner with favorable scores from both analysts and executives, reflecting its strong performance and growth. However, one surprising anomaly in Wal-Mart's otherwise stellar ratings is its comparatively low score in Ethics, also shared by Target, another favored industry player.

"This ranking is likely the negative response of some industry executives, competitors of Wal-Mart, to the cost advantage the company achieves through its considerable leverage over vendors, " noted Ms. Gasorek.

Coming in lowest on the reputation rating was Ames, not surprising given its bankruptcy filing in August 2001. It was preceded by Kmart which executives viewed modestly better than Ames with clear strengths in Strategic Investment and Workforce Diversity.

RRC is a publisher of research and opinion focused on the intangible dimensions of corporate reputation. RRC assigns corporate reputation ratings to the leading companies in each industry surveyed and publishes these ratings for use by interested third parties.

Table 1

Table 2

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For more information on the Department Store and Discount Retailing Industries Reputation Survey call (908-470-1260) or visit www.ratingresearch.com.