CiteSeerX — AN IN-DEPTH STUDY OF SERVICE QUALITY IN RETAIL INDUSTRY

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AN IN-DEPTH STUDY OF SERVICE QUALITY IN RETAIL INDUSTRY

Madhavi Garikaparthi^1*

This research paper examines service quality in retail apparel industry. The methodology includes a literature survey followed by a primary data collection based on the SERVQUAL questionnaire from 300 customers. Data is collected and analyzed from three apparel chains—Shoppers Stop, Pantaloons and Westside. Requisite statistical tools like factor analysis were used to analyze and club the various relevant factors. Based on the findings of the study the author propose relevant recommendations to be adopted by the service providers and the scope for future research.

Keywords: Retail industry, Service quality, SERVQUAL questionnaire.

*Corresponding Author: Madhavi Garikaparthi [email protected]

INTRODUCTION

Shopping in India has witnessed a transformation with the change in consumer buying behavior and the complete format of shopping is undergoing a huge change. The Retail industry in India, is one of the largest and accounts for around 8% of the total employment and contributes around 10% of the country’s GDP. The industry is currently driven by increasing affluence of customers, changing lifestyles and also the change in demographics.

Presently, organized retailing Industry in India is in a tremendous growth phase. At present there are many established players in organized retailing in India, which include Pantaloons, Trent, Shoppers Stop, RPG Group, Life Style, etc., to name a few who have already established retail networks in the county in a big way. International

1 IBS Mumbai, Hiranandani Knowledge Park, Hiranandani, Powai.

ISSN 2319-345X www.ijmrbs.com Vol. 3, No. 3, July 2014

players have also made their mark in the retailing business in India.

The format of retail too is undergoing a great change where the small dull shops are being replaced by huge malls with multiple facets of experiences for customers. Shopping today is a new and enriched experience for customers.

With the changing format of retailing, it has increasingly become important to maintain the quality of service delivered to the customers and with almost all the service providers offering similar products and vying for the same pocket of expenses aggressively, services provided have become the differentiating factor.

One of the most used model to understand the study of services is the gaps model of service Quality developed by the famous trio –

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Int. J. Mgmt Res. & Bus. Strat. 2014 Madhavi Garikaparthi, 2014

Parusaraman, Zeithaml and Berry. The model shows four major provider gaps and the Customer gap and tries to explain with the help of these gaps the difference between what needs to be done and what has been done (Figure 1).

Customer Gap – is considered the most important and if this gap exists then one or more of provider gaps also exist. The gap between the expectations of customers and the actual service received by them is known as Customer Gap.

Provider Gaps are the gaps that arise out of service failure to the customers. Provider Gap one – also known as Knowledge Gap is the difference between ‘what customers expect from a company’ and what the ‘service provider considers as customer expectations’. Provider Gap two – Standard Gap – is the difference between what a ‘service provider considers as customer expectations’ and the ‘standards of service set based customer expectations’.

Provider Gap three – Delivery Gap – is the difference between ‘Customer driven service stanadards’ and ‘Service Delivery’. Provider Gap four – delivery gap- is the difference between

‘Service Delivery’ and ‘external service communication’ A complete study of service quality will show us the difference – if any – between customer expectations and the actual service received by them. It should also show to what extent the difference is.

LITERATURE REVIEW

In order to evaluate the service quality aspect of retail outlets three outlets in Mumbai were identified. These three outlets were Pantaloons, Shoppers Stop and Westside. The aid of SERVQUAL instrument was taken to evaluate the service quality aspect of retail outlets. Out of many tools that have been developed to study the quality of service, SERVQUAL continues to

Figure 1: Gaps Model of Service Quality

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be the most used tool. Much of the attention focused on the service quality construct is attributable to the SERVQUAL instrument developed by Parasuraman, Zeithaml and Berry (1988) for measuring service quality. Service quality has been developed taking into consideration the incompatibility between expected service level and perceived service performance. Service quality would be high when service performance is perceived to be higher than expectations of service (Parasuraman et al., 1990). The term reliability implies the potential of the organization to dependably and accurately complete the service promised. The term responsiveness implies the willingness on the part of the organization to give prompt service to the customers. The term assurance implies the potential of the organization to convey trust and confidence in their customers through courtesy and knowledge of its employees. The term empathy implies the caring and individualized attention of the employees given to the customers. The term tangible implies the look, the physical facilities, the equipments, the personnel, and the communication materials of the employees. Reviewing literature it has been observed that service quality influences trust, customer satisfaction, and profitability in customer relationship. (Persuraman et al., 1988;

Tees, 1994; and Rust and Oliver, 1994).

Several studies subsequently employed the SERVQUAL to measure service quality and to assess the validity and reliability of the scale across a wide range of industries and cultural contexts (Carman, 1990; Finn and Lamb, 1991;

Gagliano and Hathcote, 1994; Blanchard and Galloway, 1995; Mittal and Lassar, 1996; Wong and Sohal, 2003). SERVQUAL study includes study of tangible and intangible components of

service. The five parameters of the RATER Scale used in SERVQUAL are—Reliability, Assurance, Tangibles, Empathy and Responsiveness. The questionnaire of SERVQUAL includes 21 items which fall under these five parameters.

Internationally many studies have been done in retail industry and the quality of service is measured using different scales like SERVQUAL, SERVPERF and RSQS among others.

Surprisingly not many studies have been done on service quality in this dynamically growing industry in India.

Given this scenario understanding the importance of quality of service and providing the same is one of the key factors of success.

Internationally many studies had been conducted in retail industry and the quality of service is measured using different scales like SERVQUAL, SERVPERF and RSQS among others.

Surprisingly studies in literature have not focused on the service quality aspect in the context of dynamically growing retailing industry in India.

Hence, in this research paper the focus of the study is to identify the underlying factors of expectations influencing retail industry in India.

OBJECTIVE OF THE STUDY

The primary objective of the study is to understand the service quality in retail industry. The study also attempts to identify factors influencing service quality based on the relevance and importance of the 21 parameters discussed in SERVQUAL scale and the retail environment India. The authors believe that not all parameters may be relevant to the retail industry. The study also attempts to identify the most important parameters significant to the specified industry. From the brief literature review, it is observed that though there have been

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studies relating to issues of consumer attitudes regarding apparel retailing; the studies have paid little attention into the need for service quality in the retail industry in India.

DESCRIPTION OF THE STUDY

An exhaustive literature review was done of the SERVQUAL scale and the retail industry. Based on the same the 21 parameters were reduced to 16 parameters which were considered most relevant to the industry. They are –

1. Service Quality at different times;

2. Meeting expectations;

3. Overall Service offered;

4. Consistent Service;

5. Special Attention provided;

6. Understanding need of customer;

7. Ambience;

8. Parking Facilities;

9. Sanitary Facilities;

10. Staff readiness to help;

11. Prompt service of Staff;

12. Knowledge of employees;

13. Quality of service;

14. Customer Loyalty Program;

15. Information about different offers; and 16. Information provided about special offers on

special days.

An initial list of expectations was made based on the external communications used by the organizations. These included their Print and broadcast media, outdoor media and other

advertisements or promotions used to build the awareness and expectations of the customers.

It is important to note that they form the promises made by the organizations and hence will form or enhance the level of expectations of customers. The factors derived in the study included the parameters considered relevant based on literature review and the external communications used by the organizations.

METHODOLOGY

The methodology includes a literature survey followed by a primary data collection based on the SERVQUAL questionnaire. The survey using structured questionnaire was administered to 300 respondents in three retail outlets in Mumbai, i.e., Pantaloons, Shoppers Stop and Westside. Out of the 300 respondents, 275 usable questionnaires were obtained. Data was collected on a five point Likert scale on how far the consumers feel that the items are important when they chose a particular apparel retail store. In the first phase of the analysis, exploratory factor analysis of the responses collected on the 20 items on the Likert scale. The questionnaire had statements in which the respondents were required to provide their response with help of using the Likert scale (5 point) in which higher the number, greater is the desire of the customer towards the retail outlet.

The entire analysis was done using SPSS 13.

Data was collected and analyzed from three apparel chains – Shoppers Stop, Pantaloons and Westside. Requisite statistical tools like factor analysis were used to analyze and club the various relevant factors. Based on the findings of the study the authors propose relevant recommendations to be adopted by the service providers and the scope for future research.

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BACKGROUND

In this study, customers visiting three different outlets were taken into consideration. The three outlets were Pantaloon Retail (India) Limited, Westside and Shoppers Stop.

Pantaloon Retail (India) Limited is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. The company operates over 10 million square feet of retail space, has over 1000 stores across 61 cities in India and employs over 30,000 people. Pantaloon Retail was awarded the “International Retailer of the Year 2007, by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space.

The foundation of Shopper’s Stop was laid by K Raheja Corp. group of companies. From its inception, Shopper’s Stop has progressed from being a single brand shop to becoming a Fashion

& Lifestyle store for the family. Today, Shopper’s Stop is a household name, known for its superior quality products, services and above all, for providing a complete shopping experience.

Shopper’s Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). Shopper’s Stop won “The most admired Fashion Shopping Destination of the Year” Award at the Images Fashion Forum in January 06.

Shopper’s Stop won “Retailer of the Year” Award at the Images India Retail Forum in September 06.

Westside was established in 1998 as part of the Tata Group, Trent Ltd. operates Westside, one of India’s largest and fastest growing chains of retail stores. The Westside stores have numerous departments to meet the varied shopping needs of customers. These include Menswear, Women’s wear, Kid’s wear, Footwear, Cosmetics, Perfumes and Handbags, Household Accessories, lingerie, and Gifts. The company has already established 31 Westside departmental stores (measuring 15,000 - 30,000 square feet each) in Mumbai, Bangalore, Hyderabad, Jaipur, Chennai, Pune, Delhi, Noida, Gurgaon, Ghaziabad, Kolkata, Nagpur, Indore, Ahmedabad, Lucknow, Ludhiana, Surat, Mysore and Rajkot. The company hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing.

SAMPLE CHARACTERISTICS

The sample comprised of 58% females and 42%

males. The respondents belonged to the age groups 20-60 years category. Thirty seven percent of the respondents belonged to the annual income bracket of Rs. 3,00,000 to 500000, followed by 30% of respondents in the income group of Rs.

1,00,000 to 3,00,000 and thirty three percent of the respondents having annual income above Rs.

5,00,000. The sample comprised 34%

respondents who had visited pantaloons store, 30% respondents who had visited Shoppers Stop store and 36% of the respondents who had visited Westside store.

MAJOR FINDINGS

In this study the different attributes influencing the service quality were taken into consideration. The SERVQUAL instrument was used in this study with changes suiting the service quality aspects

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of Indian retail industry. Factor analysis was conducted on the data collected for 16 variables.

The “principal component analysis” and varimax rotation had been used for extraction and rotation

of factors. The results of the factor analysis show that the variables could be grouped into six factors.

Five factors were named in accordance with the SERVQUAL model. The sixth factor derived was an addition to the SERVQUAL model, i.e., Advanced Services. This factor included attributes like information about different offers communicated to the customers, special offers on special days and customer loyalty program.

Table 1 gives the factor solution along with the factor loadings. The KMO value of 0.65 was in the acceptable region and Bartlett’s test was found to be significant.

Table 1: KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure .650

of Sampling Adequacy.

Bartlett’s Test of Sphericity 320.406

Approx. Chi-Square

df 120

Sig. .000

Table 2: Rotated Component Matrix (a)

Component

1 2 3 4 5 6

Special offers on special days 0.654

Loyalty 0.614

sevice quality at diff times 0.724

meet expectations 0.589

Ambience 0.645

understanding need of customer 0.584

given special attention 0.808

Quality 0.754

Parking 0.586

Sanitary 0.546

Consistent service 0.656

Ready to help 0.741

prompt service in case of problems 0.816

employee knowledge 0.768

overall service 0.579

Information about different offers 0.756 Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a Rotation converged in 11 iterations.

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Reasonable levels of communality were obtained for each variable and the six-factor solution explained 58.67% of the total variance.

(Refer to Table 2 for detailed Factor Analysis Results). The six factors are Reliability, Empathy, Tangibles, Responsiveness, Assurance and Advanced Communication (Refer to Table 3 for the Items in the respective factors).

IMPLICATIONS

The implications of the study are many folds. The study had shown that there are six factors which influence the service quality of a retail outlet. Five out of the six factors are in accordance with the five factors of SERVQUAL model. The sixth factor that has been identified in the study is Advanced

Services. This factor has been taken into consideration the Indian Retail Environment. The study although had identified the different factors influencing service quality of a retail store but it had not tested for reliability and construct validity.

FUTURE STUDIES

Since the study identified various factors that influence service quality in Indian Retail Environment, future studies can focus on testing the reliability and construct validity of the factors.

Future studies can and should look into development of a scale to measure service quality of retail outlets in India incorporating both the SERVQUAL instrument and the Indian retail environment. The other limitation of the study is

Table 3: Factor Analysis Solution

S. No. Item Factor Name

1. Service quality at diff times Reliability

2. Meet expectations

3. Overall Service

4. Consistent Service

5. Given special attention Empathy

6. Understanding need of customer

7. Parking Tangibles

8. Sanitary

9. Ambience

10. Ready to help Responsiveness

11. Prompt service in case of problems

12. Employee knowledge Assurance

13. Quality

14. Information about different offers Advanced Communication

15. Special offers on special days

16. Customer Loyalty Programme

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that the study did not look into the Nomological Validity. Hence, future research can look into the nomological validity where the scale dimensions could be linked with appropriate antecedents and consequences. The study had looked into only three retail outlets in Mumbai. Therefore future studies can look into other outlets in other cities in India. Nevertheless, this study would be beneficial to both industry and academia. Relevance for academia is as a trigger for further research, and for industry as a tool to understand the factors influencing service quality in a retail store.

REFERENCES

1. Blanchard R F and Galloway R L (1994),

“Quality in Retail Banking”, International Journal of Service Industry Management, Vol. 5, No. 4, pp. 5-23

2. Carman James M (1990), “Consumer Perceptions of Service Quality: An Assessment of the SERVQUAL Dimensions,” Journal of Retailing, Vol. 66 (Spring), pp. 33-55

3. Finn David W and Charles Lamb Jr. (1991),

“An Evaluation of the SERVQUAL Scales in a Retailing Setting,” Advances in Consumer Research, Vol. 18, No. 1, pp. 483-490 4. Gagliano K B and Jan Hathcote (1994),

“Customer Expectations and Perceptions of Service Quality in Retail Apparel Specialty Stores,” Journal of Services Marketing, Vol.

8, No. 1, pp. 60-69.

5. Mittal Banwari and Lassar Walfried M (1996),

“The Role of Personalization in Service

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7. Parasuraman A, Valarie, Zeithamal and Berry Leonard L (1988), “SERVQUAL: A Multiple Item Scale for Measuring Consumer Perceptions of Service Quality”, Journal of Retailing, Vol. 64, No. 1, pp. 12-40.

8. Rust R T and Oliver R L (1994), “Service Quality: Insights and Managerial Implications from the Frontier”, in Rust R T and Oliver R L (Eds.), Service Quality: New Directions in Theory and Practice, Thousand Oaks, CA:

Sage Publishing, pp. 241-68.

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11. Wong Amy and Amrik Sohal (2003), “Service quality and customer loyalty perspectives on twolevels of retail relationships,” Journal of Services Marketing, Vol. 17, No. 5, pp.

495-513.

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