LOVELY PROFESSIONAL UNIVERSITY PHAGWARA

(2009)

LOVELY PROFESSIONAL UNIVERSITY DEPARTMENT OF MANAGEMENT

A Comparative Study of Service Quality of Retail Stores in Jalandhar.

A dissertation submitted to Department of Management in partial fulfillment of the requirement for the award of degree of MASTER OF BUSINESS ADMINISTRATION

Submitted by: Karandeep Thakur 7020070038 Vikram Singh 3020070109 Ankur Sharma 7020070055
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Supervisor: Ajay Chandel Lecturer

Sahil Sharma 3020070226

Table of content Sr. no Page no

1. Introduction 2. Review of existing literature 3. Need and scope of the study 5 13 3

Chapter

Research objective Research methodology Tentative Chapterization 4. References & Bibliography

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Introduction
The Indian retail industry iis the fifth largest in the world. Comprising of organized and unorganized sectors, India retail industry is one of the fastest growing industries in India, especially over the last few years. Though initially, the retail industry in India was mostly unorganized, however with the change of tastes and preferences of the consumers, the industry is getting more popular these days and getting organized as well. With growing market demand, the industry is expected to grow at a pace of 25-30% annually. The retail industryii in India is currently growing at a great pace and is expected to go up to US$ 833 billion by the year 2013. It is further expected to reach US$ 1.3 trillion by the year 2018 at a CAGR of 10%. As the country has got a high growth rates, the consumer spending has also gone up and is also expected to go up further in the future. In the last four year, the consumer spending in India climbed up to 75%. As a result, the India retail industry is expected to grow further in the future days. By the year 2013, the organized sector is also expected to grow at a CAGR of 40%. The Retail Business in India is currently at the point of inflection. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to India Brand Equity Foundation (IBEF), it is valued at about US$ 395.96 billion. Organized retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian economy has registered a growth of 8% for 2007. The predictions iiifor 2008 is 7.9%. The enormous growth of the retail industry has created a huge demand for real
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estate. Property developers ivare creating retail real estate at an aggressive pace and by 2011, 300 malls are estimated to be operational in the country. With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011, India will need additional retail space of 700,000,000 sq ft (65,000,000 m2) as compared to today. Current
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projections on construction point to a supply of just 200,000,000 sq ft (19,000,000 m2), leaving

a gap of 500,000,000 sq ft (46,000,000 m2) that needs to be filled, at a cost of US$1518 billion. According to the Icrier reportvi, the retail business in India is estimated to grow at 13% from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganized retail sector is expected to grow at about 10% per annum with sales expected to rise from $ 309 billion in 2006-07 to $ 496 billion in 2011-12. A store needs to be flexible - able to figure out ways to accomplish things that others think they are not. However, there should always be consistency as to the policies, which can only be changed after careful thought and consideration. Each staff in the retail store contributes to the overall perception of the business service quality. A security guard that says hello and bids have a nice day to clients can make a huge difference. Thus, each employee should be selected well using customised criteria. To promote cheerful personalities among workers, it is important to recognise the need of leisure and break, as well as the value of training and briefing. Deserving workers need to be compensated based on a definite system for raises and promotions because this will make the good people stay. Hire a designer who can make the store as pleasing as possible for customers and the office as honorable for workers. It is true that most of the retail companies fully understand the importance of customer service, especially those established during the era when customers were always right. Nevertheless, service levels in the retailing industry have a lot to improve, as do other economic sectors. Boardroom meetings continue to get spiced up with topics on how to offer better service. Customer service remains a vital factor for retailing success. By improving its service, a retailer can build up sales and regain or increase market share.

Review of Literature
Parasuraman, Zeithaml and Berry (1988) defined Service Quality as A global judgment or attitude, relating to the overall superiority of the service. The characteristics of services like Intangibility, Perishable, Inseparability and Heterogeneity make measuring service quality indefinable and abstract. Due to this ambiguity measuring the service quality has become the biggest challenge for the service marketers. With this background Gronroos (1984) defined perceived service quality as: The outcome of an evaluation process, [whereby] the consumer compares his expectations with the service he perceives he has received, i.e. he puts the perceived service against the expected service. The result of this process will be the perceived quality of service. Keiningham, T.L. & Vavra, T.G. (2001) conducted a research on The customer delight principle: Exceeding customers expectations for bottom-line success and concluded that good customer satisfaction has an effect on the profitability of nearly every business. For example,when customers perceive good service, each will typically tell nine to ten people. It is estimated that nearly one half of American business is built upon this informal, word-of-mouth communication. Improvement in customer retention through better services by even a few percentage points can increase profits by 25 percent or more The University of Michigan found that for every percentage increase in customer satisfaction, there is an average increase of 2.37% of return on investment. Hence better service is the key to success. Gitomer, J. (1998) conducted a research on Customer satisfaction is worthless, customer loyalty is priceless: How to make customers love you, keep them coming back, and tell everyone they know and concluded that however, a lack of customer satisfaction has an even larger effect on the bottom line. Customers who receive poor service will typically relate their dissatisfaction to between fifteen and twenty others. The average
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American company typically loses between 15 and 20 percent of its customers each year (Griffin, 1995). The cost of gaining a new customer is ten times greater than the cost of keeping a satisfied customer. In addition, if the service is particularly poor, 91% of retail customers will not return to the store. In fact, if the service incident is so negative, the negative effects can last years through repeated recollection and recounting of the negative experience. Anderson, K. & Zemke, R. (1998) conducted a research on Delivering knock your socks off service and concluded that it is obvious - satisfied customers improve business and dissatisfied customers impair business .Customer satisfaction is an asset that should be monitored and managed just like any physical asset. Therefore, businesses that hope to prosper will realize the importance of this concept, putting together a functional and appropriate operational definition. This is true for both service-oriented and productoriented organizations. Sureshchander, G.S., Rajendran, C., & Kamalanabhan, T.J. (2001) conducted a research on Customer perceptions of service quality: A critique. And concluded that the primary issue with developing an operational definition with the specific components of customer satisfaction is to clearly identify the nature of the organizations business. This further extends into the effective collection, analysis, and application of customer satisfaction information. Services and products are the two major orientations of business. Products also referred to as goods, are the physical output of a business. These are tangible objects that exist in time and space. These are first created, then inventoried and sold. It is after purchase that these are actually consumed. Products might include computers, automobiles, or food at a restaurant. Martineau, P. (1958) conducted a research on The personality of the retail store and for the first time used the concept of store image. He defined it as a store defined in customers mind partly based on functional attributes and partly based on psychological attributes. He claimed that store image includes its characteristic attributes and it makes customers feel the store different from others. Functional attributes are assortment of commodities, layout, location, price value relation, and service that consumers can objectively compare with other stores. Psychological attributes are
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attractiveness and luxuriousness that represent special attributes of that store. Since that effort of Martineau, a lot of researcher carried the research in this area and focused on specific set of attributes and even related store image with store loyalty and store choice.

Jinfeng, W. and Zhilong, T. (2009) conducted a research on The impact of selected store image dimensions and service quality on retailer equity: Evidence from 10 Chinese hypermarkets and indicated the positive effect of store image dimensions such as convenience, perceived price, physical facilities, employee service, and institutional factors on retailer equity dimensions as antecedents of retailer equity. Store image affects purchase intentions indirectly, by reducing perceived risk and increasing Store brand quality perceptions. Yoo-Kyoung Seock (2009) in his research Influence of retail store environmental cues on consumer patronage behavior across different retail store formats: An empirical analysis of US Hispanic consumers examined the influence of Hispanic consumers perceived importance of apparel retail store environmental cues and demographic characteristics (i.e., age and the number of years lived in the US) on their apparel store patronage behavior across various retail store formats. Of the three dimensions, Customer Service appeared as a significant determinant in Hispanic consumers decision to shop at department stores, specialty stores, and mass merchant stores. Convenience was significantly, but negatively, related to the use of specialty stores. Physical Atmosphere appeared as significant determinants of Hispanic consumers use of Internet websites Ulrich R. Orth, Mark T. Green (2009) in their research Consumer loyalty to family versus non-family business: The roles of store image, trust and satisfaction showed differential effects in how image elements influence customer loyalty directly as well as indirectly through trust and satisfaction. A cross-cultural examination of the effects of social perception styles on consumers' store image formations was conducted by Haiyan Hu, Cynthia R. Jasper (2007) to find out that Chinese students were more significantly affected by the social cues that are embedded within the store environment than
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American students. Retailer reputation is an important factor that influences consumer's store patronage. Barnett et al. (2006) conducted a research on Corporate reputation: the definitional landscape and concluded that corporate identity-image-reputation suggests that stores with favorable store image create customer satisfaction which in turn leads to store loyalty. Store image can be defined as the way that consumers view the store, i.e. their impression or perception of the store (for a review of various definitions of store image see Hartman and Spiro, 2005). The corporate image of the store is defined as a combination of the store as a brand, and the selection of store brands and manufacturer brands offered by the store (Grewal et al., 2004). Prior research has found that store brands contribute to greater store differentiation rather than to greater price sensitivity in the market (Sudhir and Talukdar, 2004). Other researchers conclude that it is important for retailers to retain a balance between store brands and national brands to attract and retain the most profitable customers (Ailawadi and Harlam, 2004). Retailers have used manufacturer brands to generate consumer interest, patronage, and store loyalty. Wong, Amy and Amrik Sohal (2003) conducted a study on Service quality and customer loyalty perspectives on two evels of retail relationships and investigated how store image factors and various categories of perceived risk associated with product attributes affect consumer evaluations of store-branded product. Doreen Chze Lin Thang, Benjamin Lin and Boon Tan (2003) found key store image attributes as significantly influencing consumer preference were merchandising, accessibility, reputation, in-store service and atmosphere of the stores. Store image in the sense of the store as a brand is usually measured as consumers perceptions of store performance. This choice is based on the notion of a value-percept diversity, i.e. customers are likely to be more satisfied with the offering as the ability of the offering to provide consumers what they need, want, or desire increases relative to the costs incurred (Johnson, 1998; Szymanski and Henard, 2001). A general assumption in the branding literature is that a favorable brand image will have a positive impact on consumers behavior towards the brand, such as the opportunity to command premium
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prices, buyers who are more loyal, and more positive word-of-mouth. Translated to a retailing context, it is likely that a favorable store image increases satisfaction with the store which in turn increases store loyalty (Osman, 1993; Bloemer and de Ruyter, 1998). Several studies (Kunkel and Berry-1968, Reynolds, Darden and Martin, Korgaonkar, Lund and Price-1985) have report direct linkages between Store Image and intensity of Store Loyalty. Thus, we can conclude that more positive the Store Image the greater is the degree of loyalty. Dabholkar, Thorpe and Rentz (1996) conducted a study on A Measure of Service Quality for Retail Stores: Scale Development and Validation and developed the retail service quality scale (RSQS ) to measure service quality in retail settings .They proposed six dimensions in retail service quality namely, physical aspects, reliability, personal interaction, problem solving and policy. Boshoff and Terblanche (1997) have tested the validity and reliability of the RSQS in South African retail environment and found the instrument suitable for studying the retail service quality of South African retail industry which comprises of department stores, speciality stores and hypermarket that offers a mix of goods and services. Mehta, Lalwani and Han (2000) conducted a study on Service quality in retailing: relative efficiency of alternative measurement scales for different product-service environments and concluded that the usefulness of RSQS as a tool for measuring the service quality of retail outlets of different categories in Singapore. A strong intercorrelation is found between the various dimensions of the RSQS in case of supermarket and electronic goods. Subashini Kaul (2005) conducted a study on Measuring Retail Service Quality: Examining Applicability of International Research Perspectives in India and examined the applicability of RSQS in the context of Indian speciality apparel stores. On applying confirmatory factor analysis using AMOS 4.0, it is found that RSQS dimensions of Dhabolkar et al are not valid in India. Kim and Jim (2002) have studied the five dimensions of RSQS and point out that problem solving and policy are the only two new dimensions proposed by Dabholkar et al (1996) and the rest are similar to SERVQUAL.
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G.Sureshchander et.al (2002) conducted a study on Customer perceptions of Service Quality A Critique and indentified the critical determinants of service quality that have been overlooked in the literature and proposed a comprehensive model and an instrument framework for measuring customer perceived service quality specifically to the banking sector in India. They included the factors like service content, service delivery and social image which were not addressed by SERVEQUAL. The results of the study may not be applicable to all sectors and there is a possibility of cultural bias when applied to countries other than India. He questioned the generic applicability of SERVEQUAL in the Indian Retailing context; this may be a lead to extend the research to different sectors in different countries. Riadh Ladhari (2009) reviewed 20 years (1988-2008) of research on the SERVQUAL scale for measuring service quality. Studies that have applied the SERVQUAL scale in this 20-year period were examined in a non-exhaustive review of the literature. Despite these criticisms, the paper concluded that SERVQUAL remains a useful instrument for service-quality research. The paper summarizes a selection of 30 applications of SERVQUAL and provides a useful source of information on SERVQUAL and its applications. Mattila (1999) conducted a study on The Role of Culture in the Service Evaluation Process and also examined the impact of culture but on customer evaluations of complex services. She evaluated the trade-offs that Western and Asian customers were willing to make between personalized service and pleasant physical environment in the context of luxury hotels. She found that customers with a Western cultural background might be more likely to rely on tangible cues than their Asian counterparts and that the hedonic dimension of the consumption experience might be more important for Western consumers than for Asians. Noel Y.M. Siu, Jeff Tak-Hing Cheung (2001) conducted a study on "A measure of retail service quality" and concluded that Current measures of service quality for retail stores are scarce. A validated Retail Service Quality Scale is used to study the service quality delivery of a department store chain and its impact on consumption behaviour. It results in six dimensions; they are namely: personal interaction; policy; physical appearance;
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promises; problem solving; and convenience. The findings show that the impact of physical appearance and the policy are salient on the overall perceived service quality and the future shopping behaviour respectively. Among the six service dimensions, the physical appearance and policy have the greatest impact on the overall service quality and on future consumption respectively. The implications for practitioners and researchers are discussed. Julie Baker, Dhruv Grewal and A. Parasuraman conducted a research that reported how combinations of specific elements in the retail store environment influence consumers inferences about merchandise and service quality and discusses the extent to which these inferences mediate the influence of the store environment on store image. Results show that ambient and social elements in the store environment provide cues that consumers use for their quality inferences. In addition, store environment, merchandise quality, and service quality were posited to be antecedents of store imagewith the latter two serving as mediatorsrather than components of store image (as they are typically treated in the store image literature). Theoretical and managerial implications of the findings are discussed, and future research directions are proposed.

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Need of the study

It is true that most of the retail companies fully understand the importance of customer service, especially those established during the era when customers were always right. Nevertheless, service levels in the retailing industry have a lot to improve, as do other economic sectors. Boardroom meetings continue to get spiced up with topics on how to offer better service. Customer service remains a vital factor for retailing success. By improving its service, a retailer can build up sales and regain or increase market share. Let us try to understand the importance of the topic by some examples like when a customer visits a local retailer to buy furniture. They are able to benefit in some cases from the additional service of having the furniture installed for them. At the same time hopefully they will get a good 'service' from the retailer, who will be happy to help them with advice about the properties of different types of furniture, repayment terms, delivery etc. If an oil company assumed that the function of its retail network was simply to sell petrol and lubricants it would quickly lose business to competitors. Its real function is to supply a 'customer service' in its case the service of enjoyable, trouble-free motoring. Customer service is one of the most important ingredients of the marketing mix for products and services. High quality customer service helps to create customer loyalty. Customers today are not only interested in the product they are being offered but all the additional elements of service that they receive from the greeting they receive when they enter a retail outlet, to the refund and help that they receive when they have a complaint about a faulty product that they have paid for. Retail sector in India is growing day by day. In spite of the failure various retail stores have seen in Indian markets, the mushroom growth in Indian retail sector doesnt seem to stop. The new players, both domestic as well as foreign are making their ways into Indian market. But the failure of Subhiksha, vishal mega mart and many others somehow make us think of the probable reasons for the failure. Less focus, unplanned growth and poor service quality are some of the reasons that could be taken into account for these failures.

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The topic here tends to study and compare the service quality of retail stores like Vishal Mega Mart, Big Bazaar, Easy Day and V-mart. The research would try to differentiate these stores from each other in terms of the service quality they provide to their customers. The study would be of help to generalize that which factors are actually more important when one talks about the service quality of any retail store.

Scope of the study

The study will be conducted in Jalandhar in retail stores like Vishal Mega Mart, Big Bazaar, Easy Day and V-mart to achieve the objectives of the study.

Research Objectives
There are some objectives behind any study which one tries to fulfill through the research. This research study was also conducted to fulfill some objectives. The main objectives of this study are: 1. To identify the critical factors as determinants of organized retail stores service quality in Jalandhar. 2. To compare the service Quality of the organized retail stores in Jalandhar.

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Research methodology
Sampling technique:
The convenience sampling will be used to conduct the survey.

Sampling frame:
The sampling frame consists of the populations from which the sample has been drawn. The sampling frame for this research will be the customer of different retail stores chosen.

Sample size:
Total of 200 respondents will be chosen to conduct the research in the organized retail stores in Jalandhar.

Survey tool (instrument for survey):

Scale developed by Dhabolkar, Thorpe and Rentz (1996) for measuring the service quality of retail stores which is the extension of the SERVQUAL measure of Parasuraman, Zeithmal and Berry (1988) will be used for the study. The scale will consist of 5 dimensions like physical aspects, reliability, problem solving, personal interaction and policy.

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Tentative Chapterization
1 1.1) Introduction 1.2) Research Objectives 1.3) Need for the study 1.4) Scope of the research 1.5) Methodology 2. 3. 4. 5. Introduction to Indian retail industry Review of literature Discussion on objectives and findings. Summary of results 5.1) Conclusion 5.2) Limitations 5.3) Recommendations 6. References and Bibliography

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References
1. Parasuraman,

A,

Valarie

Zeithaml

and

Leonard

Berry.

(1988).

SERVQUAL: A Multiple-Item Scale for Measuring Consumer Perceptions of Service Quality, Journal of Retailing, 64 (Spring), 12-40.
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Exceeding customers expectations for bottom-line success. Chicago: McGraw-Hill. Viewed at- www.eurojournals.com/ejss_16_2_08.pdf 3. Gitomer, J. (1998). Customer satisfaction is worthless, customer loyalty is priceless: How to make customers love you, keep them coming back, and tell everyone they know. Austin, TX: Bard Press. Viewed www.goodreads.com/.../129680.Customer_Satisfaction_Is_Worthless. 4. Anderson, K. & Zemke, R. (1998). Delivering knock your socks off service. New York: AMACOM. Viewd at- net.educause.edu/SuggestedReadings/3046 5. Sureshchander, G.S., Rajendran, C., & Kamalanabhan, T.J. (2001). Customer perceptions of service quality: A critique. Total Quality Management, 12 (1), 111-125 Viewed at- www.emeraldinsight.com/journals.htm?articleid=855088&show
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at-

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7. Jinfeng, W. and Zhilong, T. (2009) The impact of selected store image

dimensions p.486-494.

on

retailer

equity:

Evidence

from

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Chinese

hypermarkets, Journal of Retailing and Consumer Services, 16 (6),

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Viewed at- www.sciencedirect.com/science/article/pii/S0969698909000599

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on consumer patronage behavior across different retail store formats: An empirical analysis of US Hispanic consumers, Journal of Retailing and Consumer Services, Volume 16, Issue 5, Pages 329-339. Viewed at-www.mendeley.com/.../the-influence-of-multiple-store-e... - United States
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non-family business: The roles of store image, trust and satisfaction, Journal of Retailing and Consumer Services, 16 (4), p.248-259. Viewed at- top25.sciencedirect.com/subject/business-management.../23
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reputation: the definitional landscape, Corporate Reputation Review, Vol. 9 No. 1, pp. 26-38. Viewed at- reputationinstitute.com/crr/V09/BarnettV9N1.pdf
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Measure of Service Quality for Retail Stores: Scale Development and Validation, Journal of the Academy of Marketing Science, 24 (Winter), 3-16. Viewed at- www.springerlink.com/index/230784q16g50121x.pdf
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quality in retailing: relative efficiency of alternative measurement

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scales for different product-service environments, International Journal of Retail & Distribution Management, 28 (2), 62-72. Viewed at- www.emeraldinsight.com/journals.htm?articleid=857278&show. 14. Subhashini kaul. (2005). Measuring Retail Service Quality: Examining Applicability of International Research Perspectives in India, Indian Institute of Management, Ahmedabad, Working Paper No. 200510-2, pp 1-19 Viewed at- www.iimahd.ernet.in/publications/data/2005-10-02skaul.pdf
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Customer perceptions of Service Quality A Critique, Total Quality Management, 12(1), pp-111-124 Viewed at- www.iimahd.ernet.in/publications/data/2005-10-02skaul.pdf
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research , International Journal of Quality and Service Sciences, Vol.1 No.2, pp.172-198. Viewed at- www.emeraldinsight.com/journals.htm?articleid=1796093&show
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Journal of Service Research, 1(3), 250- 261. Viewed at- jsr.sagepub.com/content/1/3/250.refs

18. Noel Y.M. Siu, Jeff Tak-Hing Cheung, (2001) "A measure of retail service

quality", Marketing Intelligence & Planning, Vol. 19 Iss: 2, pp.88 96, viewed at-http://www.emeraldinsight.com/journals.htm? articleid=854529&show=html

Footnotes

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http://business.mapsofindia.com/india-retail-industry/ viewed on 26th September 2011 http://business.mapsofindia.com/india-retail-industry/ viewed on 26th September 2011 iii http://www.economist.com/markets-data viewed on 24th September 2011 iv http://indiafmcg.blogspot.com/2007/08/indian-retail-story-from-myths-to-mall.html viewed on 24th September 2011 v http://www.inrnews.com/indianrealestate/2006/11/indias_retail_revolution_begin.html viewed on 24th September 2011 vi http://articles.economictimes.indiatimes.com/2008-07-02/news/27713145_1_icrier-smallretailers-large-retail-chains viewed on 24th September 2011
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