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To find out the factors affecting Customer Satisfaction in Retail Sector in NCR
Region, with special reference to Pantaloon & Spencer
To find out the factors affecting the choice & the preferences of Retail Player
For this research paper, a sample from Delhi, NCR region and Western UP has been
chosen to explore all the factors regarding preferences of Retail Player in general The
primary data has been analyzed using statistical tools like Factor Analysis, Hypothesis
Testing using Chi-Square, Scatter Plotting. American Customer Satisfaction Index
(ACSI) Model has been adopted as Research Model, based on which inferences have
been drawn.
The Indian retail market, which is the fifth largest retail destination globally, was
ranked second after Vietnam as the most attractive emerging market for investment in the
retail sector by AT Kearney's seventh annual Global Retail Development Index (GRDI),
in 2008. The share of retail trade in the country's gross domestic product (GDP) was
between 8–10 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22
per cent by 2010.
Commercial real estate services company, CB Richard Ellis' findings state that India's
retail market is currently valued at US$ 511 billion, and is poised to grow to US$ 833
billion by 2013. The report further stated that organised retail that currently accounts for
less than 5 per cent of the total retail market is expected to register a compound annual
growth rate (CAGR) of 40 per cent and swell to US$ 107 billion by 2013.
A report by global consultancy firm, AT Kearney said "The consumer spending in India
has increased by an impressive 75 per cent in the last four years and will quadruple in the
next 20 years." Moreover, India recently topped the Nielsen Global Consumer
Confidence study, conducted by Nielsen, a market research company. The biannual
report revealed that Indians are "the most optimistic lot globally who think that their
country will be out of the economic recession in the next twelve months."
According to the recent report by McKinsey & Company titled 'The Great Indian Bazaar,
Organized Retail Comes of Age in India', India's overall retail sector is likely to grow to
US$ 450 billion by 2015. Another McKinsey report 'The rise of Indian Consumer
Market', estimates that the Indian consumer market is likely to grow four times by 2025.
In a joint study recently conducted by ASSOCHAM and KPMG, the following findings
were revealed:
The total retail market size in India in 2008 was estimated at US$ 353 billion.
The annual growth of the retail market in India is expected to be around 8 per
cent.
In the light of above stated facts, the relevance & significance of current research paper is
enhanced as its findings will help a retail sector player to know the factors, which have
direct impact on customer satisfaction. To get the above-expected result, it is necessary
that we will have to win the confidence of customers. In this regard, it becomes necessary
to find out those factors, which affect the customer satisfaction. In our present research,
we have tried to find those certain dimension of some variables, which are directly
related to customer satisfaction.
Pantaloon
Pantaloon is the harbinger of the growth in the Indian organized retail sector. It is one
of the largest among the latest format stores in India.
The largest retailer in the Indian organized retail sector, Pantaloons Retail (India) Limited
is a chain of retail outlets all over the country. Pantaloons follow several formats of retail.
Pantaloons engage in retail operations with 450 stores in 40 different locations in India. It
is increasing its operations in India by opening more stores and employees around 18,000
people.
The retail formats followed by Pantaloons are Food Bazaar, Big Bazaar, Pantaloons,
and Central. Pantaloons retail concentrates solely on apparels and accessories. Food
Bazaar is an array of food products including fruits and vegetables, food grains, FMCGs,
3
and packaged ready-to-cook products. Big Bazaar is a hyper mart which provides a
variety of consumer goods at one place which include both apparel and non-apparel
segments, while Central is a chain of stores that stock music, books, global fashion
brands, lifestyle and leisure accessories, restaurants and lounges.
Pantaloon is a fashion leader in India which follows international standards. It goes by its
latest ideology of "Fresh feeling, Fresh attitude, Fresh fashion", according to which it
provides fresh stock to its customers every week! This is a unique method of attraction.
Previously modeled as a family store, Pantaloons went through a number changes. Now it
stands as a fashion depot, catering mainly to the younger generation. (Source-
http://www.pantaloon.com/companyinfo.asp)
Spencer
Spencer‟s Retail is one of India‟s fastest growing retail stores with multiple formats and
retailing food, apparel, fashion, electronics, lifestyle products, music and books.
Established in 1996, Spencer‟s has become a popular destination for shoppers in India
with supermarkets, hypermarkets and dailies spread all over India.
The history of RPG Enterprises goes back to the 19th century. In 1979 Mr. RP Goenka
took the initiative to set up RPG Enterprises. Presently it has a turnover of US$ 1.65
billion (Rs. 7472 crore) and assets worth US$ 1.8 billion. Among the fastest growing
groups in India, it is operating successfully through more than 20 companies in 7
business sectors, namely Retail, IT & Communications, Power, Transmission,
Entertainment, Life sciences and Tyres. The organization believes in responding to a
business opportunity, making optimum utilization of resources, and inspiring people to
foster teamwork. Quality is another important parameter for the enterprise to improve
continuously and satisfy customers in the best possible manner.
4
operates through various retail formats such as supermarkets, hypermarkets, music stores
and health and beauty products outlet.
Its largest chain of Spencers offers a complete array of products and durables. It is
operating through 80 stores spread in 20 cities, and is still growing rapidly. Every month
nearly 2.6 million people walk in its stores. The stores are located in Bangalore, Mumbai,
Delhi, Chennai, Trivandrum, Hyderabad, Faridabad, Vizag, Aurangabad, Pune,
Ghaziabad, Cochin, and many more.The music store of RPG Enterprises - MusicWorld
delivers its products through 170 outlets spread in 21 cities. The enterprise has also set up
a training institute for Front Line Staff and Staff Managers known as RPG Institute of
Retail Management (RIRM). (Source- http://www.rpggroup.com/about.html)
The American Customer Satisfaction Index uses customer interviews as input to a multi-
equation econometric model developed at the University of Michigan's Ross School of
Business. The ACSI model is a cause-and-effect model with indices for drivers of
satisfaction on the left side (customer expectations, perceived quality, and perceived
value), satisfaction (ACSI) in the center, and outcomes of satisfaction on the right side
(customer complaints and customer loyalty, including customer retention and price
tolerance).
The indices (shown in Fig.1) are multivariable components measured by several
questions that are weighted within the model. The questions assess customer evaluations
of the determinants of each index. Indices are reported on a 0 to 100 scale. The survey
and modeling methodology quantifies the strength of the effect of the index on the left to
the one to which the arrow points on the right. These arrows represent "impacts." The
ACSI model is self-weighting to maximize the explanation of customer satisfaction
(ACSI) on customer loyalty. Looking at the indices and impacts, users can determine
which drivers of satisfaction, if improved, would have the most effect on customer
loyalty. (Source-Morgeson, Forrest; Trends In Customer Satisfaction with the U.S.
Federal Government – Findings of the ACSI, National Quality Research Center Ross
5
School of Business, University of Michigan Washington, D.C., December 15, 2005)
Refer to Fig. 1.
Fig-1: ACSI Model
(Source-Morgeson, Forrest; Trends In Customer Satisfaction with the U.S. Federal Government
– Findings of the ACSI, National Quality Research Center Ross School of Business, University of
Michigan Washington, D.C., December 15, 2005)
Research Methodology
6
The research methodology was divided into two stages, which involve two sources for
collecting the data in order to achieve the objective of project.
1. Collecting data regarding the potential customer from the existing outlets of
Pantaloon and Spencer in NCR region.
2. Collecting the primary data directly with the customer with the help of the
questionnaire (Refer Annexure-1)
The research methodology was divided into two stages, which involves two sources for
collecting the data in order to achieve the objective of project.
We have taken into consideration a hypothetical model based on ACSI model (Refer Fig
1).
We have used Purposive Sampling, then select the individual through simple random
method (SRS).
Sample design
1. Sampling Unit : Pantaloon and Spencer
2. Sampling Size : 455
3. Sampling Technique: Purposive Sampling
4. Sampling area: Delhi and NCR regions
5. Contact Method : Personal Contacts.
7
Bachelor 40.75%
Degree
Education Master Degree 23.57%
Levels Professional 16.25%
Degree
Ph. D. 8.81%
From above table-1, it is clear that in our sample, there is 52.33% of male
respondents and 37.67% of female respondents.
From above table-1, it is clear that a high percentage (33.26%) of respondents
belong to age group 26-35 and only small fraction (5.95%) belong to age group
56 and above.
From above table-1, it is clear that 40.75% respondents are those who are
graduates only and then after 23.57% respondents are those who have done post
graduation.
Analysis
As per our research we have concluded that for acquiring the customer satisfaction, we
have to work on certain parameters, which are broadly divided into three categories
according to our research model (Ref. Fig-1) name as “Processes”, “Information”, and
“Customer Services”. Once we are able to acquire customer satisfaction on above
mention three characteristics, then we will definitely get the customer satisfaction. In this
regard, our research is basically concern to find out those variables, which makes
“Processes”, “Information”, and “Customer Service” better.
8
with varimax rotation to reduce potential multicollinearity among the items and to
improve reliability on the data (Refer Table 2: Condensed Factor analysis table for
“Processes”). Varimax rotation (with Kaiser Normalization was converged in eight
itereations.)
First we applied the factor analysis on first 15 variable those define the „processes‟.
Fifteen variables reduced to four orthogonal factor dimensions, which explained 41.33%
of overall variance indicating that the variance of original values was well captured by
these four factors.
9
Refer Table 2: Condensed Factor analysis table for “Processes”
10
From the Refer Table 2: Condensed Factor analysis table for “Processes”, it is clear
that 15 variables have been condensed into 4 factors and these 4 factor explain 41.33% of
the “processes”, in which „Merchandise quality‟ and „Customer Dealing‟ plays an
important role in explaining the “processes” as 12.47 %, and 12.08% respectively and
cumulatively these two explain 24.55% of process.
Variables‟ Name
11
my friends only and not through
advertisements (V26)
The demonstration of the usage and
benefits of the products provided by .536 .547
the store is helpful (V23)
Prices are not reasonable in
.513 .449
comparison to other stores (V21)
2.225 1.690 1.290
Eigen Value
Variance (%) 20.229 15.366 11.73
Cumulative Variance (%) 20.229 35.595 47.325
From the table Refer Table 3: Condensed Factor analysis table for “Information” it
is clear that 10 variables have been condensed into 3 factors and these 3 factors explain
the 47.325% of “Information” in which „Advertisement‟ and „Special Offer‟ explain
20.229% and 35.595% of the “Information” respectively while „Demonstration & Prices‟
explain 11.73% of the “Information”.
12
or already sold out
(V57)
The employees at the
store do not assist
.607 .447
those less likely to
buy(V55)
There are a lot of
shoppers in the store
.531 .544
and it is inconvenient
to move aroundV27
The employees at this
store pressurize
.521 .547
customer into a
purchase (V58)
It is easier to move
from one place to other
as the store is very .753 .601
spacious and has a
good design (V30)
The store feels very
spacious and gives me
an open airy feeling
.715 .584
since the ceiling are
high and light is bright
(V28)
The layout makes it
easy to find what is .639 .537
needed (V31)
I am satisfied with my
shopping experience at
.567 .564
the store because of
store ambience (V29)
Materials associated
with the store‟s service
.697 .562
are visually attractive
and easy to use (V51)
It is rather prestigious
.665 .539
place (V36)
The employees at his
store are able to
.554 .483
answer my
question(V45)
The employees at this
store have my best .677 .591
interests at heart (V46)
I feel safe conducting
business with the
.593 .468
employees at this
store(V43)
The employees are
never too busy to
.711 .638
respond to my requests
(V41)
The behavior of the
employees instills
.625 .470
confidence in me
(V42)
I can meet friends here
.592 .600
with pleasure (V34)
I feel comfortable in
.569 .603
this zone as if I am at
13
home (V33)
Also „Merchandise Quality‟, „Customer Dealing‟, „Fast and efficient Service‟, and
„Convenient Store with competent employees‟ explain the „Customer Service‟ as 12.47%,
12.08%, 8.40% and 8.38% respectively.
Findings
Processes, Information and Customer service are the three factors, which ensure
the customer Satisfaction.
For attaining the “Processes”, we have to focus on, following factors name as
„Merchandise Quality‟, „Customer Dealing‟, „Fast and Efficient Service‟, and
„Convenient Store with competent employees‟.
12.47 % of “Processes” define by the „Merchandise Quality‟
12.08 % of “Processes” define by the „Customer Dealing‟
8.40 % of “Processes” define by the „Fast and Efficient Service‟.
8.38 % of “Processes” define by the „Convenient Store with competent
employees‟
Hence, „Merchandise Quality‟ and „Customer Dealing‟ are the important
factor for improving the “Processes” and finally get the customer
satisfaction.
For attaining the “Information”, we have to emphasis on the following factors
name as. „Advertisement‟, „Special Offer‟, and „Demonstration and Prices‟.
20.29 % of “Information” define by the „Advertisement‟
15.36 % of “Information” define by the „Special Offer‟
11.72 % of “Information” define by the „Demonstration and Prices‟
Hence, „Advertisement‟ is the most important factor for improving the
“Information” and finally gets the customer satisfaction.
14
For attaining the “Customer Service”, we have to mainly consider on the
following variables name as. „Business Ethics‟, „Environmental Effect‟,
„Goodwill‟, „Employees‟ behavior‟, and „Friendly Atmosphere‟.
20.102 % of “Customer Service” define by the „Business Ethics‟
10.325 % of “Customer Service” define by the „Environmental Effect‟
8.102 % of “Customer Service” define by the „Goodwill‟
7.902 % of “Customer Service” define by the „Employees‟ behavior‟
6.987 % of “Customer Service” define by the „Friendly Atmosphere‟
Hence, Retail store must maintain „Business Ethics‟ for improving the
„Customer Service‟, and finally get the customer satisfaction.
Conclusions & Significance of the Study
Despite few limitations, the significance of the current paper lies in the fact that it is
expected to:
Help the marketers in Retail Sector to focus attention to the variables & factors
like- Processes, Information and Customer service to enhance the Customer
Satisfaction
Provide insight in formulation of the further marketing strategies by the marketers
enabling them to focus on right issues including-„Merchandise Quality‟,
„Customer Dealing‟, „Fast and Efficient Service‟, „Competent Employees‟etc.
One thing is but sure that advent of Retail Sector is having a dramatic impact on the
consumption patterns of the consumers, irrespective of their affiliation to certain
geographical locations – rural or urban & their gender. Indeed, as per the current
research, it is now widely recognized that the role of Information provided to customers
in stores, customer service & processes is very important to attain customer satisfaction.
This view can be the driving force behind efforts by the marketers in Retail Sector to
develop rules regarding their marketing mix strategies.
References
Biong, H. 1993. Satisfaction and loyalty to suppliers within the grocery trade.
European Journal ofMarketing 27 (7), 21-38.
15
Bloemer, J. M. M., Kasper, H. D. P. 1995. The complex relationship between
customer satisfaction and brand loyalty. Journal of Economic Psychology, 16,
311-29.
Collins, A.M. and Loftus, E.F. (1975), “A spreading activation theory of semantic
processing”, Psychological Review, Vol. 82 No. 6, pp. 407-28.
Cronin, J.J. and Taylor, S.A. (1992), “Measuring service quality: a reexamination
and extension”, Journal of
Marketing, Vol. 56 No. 3, pp. 55-68.
Anderson, E.W., & Fornell, C. “A Customer Satisfaction Research Prospectus.”
In R.T. Rust & R.L. Oliver (eds.), Service Quality: New Directions in Theory and
Practice, 241-268..
Websites
http://www.ibef.org/industry/retail.aspx
http://retailsectorinindia.blogspot.com/
http://www.indianground.com/retail/retail-sector-in-india.aspx
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Annexure - I
QUESTIONNAIRE
Opinion survey on Retail Sector to Know factor affecting customer satisfaction
To indicate your response, please tick ( ) the appropriate box that most closely represents your
opinion. Please give your opinions based on your own view of the current situation. There is, of
course, no right or wrong answers. For each question „undecided‟ response is available if you
cannot decide about a statement or if it does not apply to you.
1.MERCHANDISE QUALITY
S.No. SA A N DA SDA
1. The store has excellent products
2. The store has an excellent variety of products
3. The products at this store are among the best
4. The store offers private labels of good quality
2. RETAIL OPERATION QUALITY
S.No. SA A N DA SDA
5. The store provides plenty of convenient parking
space
6. The store doesn‟t have convenient operating
hours (opening and closing hours)
7. The store accepts major credit cards
8. The store doesn‟t have enough employees to
meet customer needs
9. The store provides adequate training to its
employees
10. The store has a manager to be able to resolve
questions and problems
11. The store has a customer-friendly return-
exchange policy
12. The store doesn‟t have modern-looking
equipment and fixtures
13. The store/mall has good security even at night
like well lit parking areas
14. The checkout service is fast and saves time
15. I find plenty of stores here competing for similar
kind of products
16. The store has an efficient queuing system
B. Information
1.IN-STORE PROMOTIONS
S.No. SA A N DA SDA
17. Free Samples are not provided by the store
18. I always find special offers/schemes in the store
17
19. I can find the products advertised in the
newspaper/magazine by the store
2.PRICING
S.No. SA A N DA SDA
20. I can get good bargains in this zone
21. I always find discount prices here
18
40. The behavior of the employees instills
confidence in me
41. I feel safe conducting business with the
employees at this store
42. The employees are not courteous
43. The employees at this store are able to answer
my questions
44. The employees at the store have my best interest
at heart
45. The employees at the store don‟t understand my
specific needs
46. The Free Home Delivery service is important for
me
47. The Layby service is important for me
48. The online shopping is not important for me
3.RETAIL FACILITY QUALITY
S.No. SA A N DA SDA
49. Materials associated with the store‟s service
(such as shopping bags, shopping carts, catalogs
or statements) are visually attractive and easy to
use
50. The store has clean, attractive and convenient
public areas (restrooms, fitting rooms and toilets)
51. The store doesn‟t have handicap-friendly
facilities
4.BUSINESS ETHICS QUALITY
S.No. SA A N DA SDA
52. The store gives preferential treatment to certain
customers
53. The employees at the store do not assist those
less likely to buy
54. The store takes the products back when returned,
even though the products have been used by me
55. This store makes excuses about the products
when they are either not in the store or already
sold out
56. The employees at this store pressurize customer
into a purchase
57. The store sells a more expensive product when a
less expensive one would be best for customers
58. The store withholds information of an upcoming
sale that will include the item the customer is
buying
59. The store does not display the free samples
19