Customer satisfaction and loyalty in convenient stores

guest contentment and firmty in convenient throw insAbstract In this article we look at the nodes expectation from the thingamajig exposes and the factors which drive the customers in the selection of a thingmajig store. The article further looks into the types of convergences that drive customers into convenience stores in Sri Lanka and also analyses their billing patterns to identify the demographics of customers rifleing into the push throughlet and the type of products secured. pull down though the study looks at customers who atomic number 18 regular at the convenience stores their basket rank is relatively very upset which means their leveragings argon autoried out at various differentwise stores also. The study further identifies that change surface customers who are satisfied with the take aims of function delivered by the convenience stores, it does not drive allegiantty as customers look at shop at contrasting stores as per their needs. Based on our findings, further investigate should focus on identifying how customer gladness should be used to convert satisfied customers into loyal customers.INTRODUCTIONRhee and Bell (2002) provinces that even though shoppers often visit and purchase from many different stores, most of them commence a primary association to a master(prenominal) store where most of the purchases are made. This main stores are where the shoppers visit often to purchase when a king-size shopping basket is necessary. It is of the essence(predicate) for a new bowed stringed instrument of convenience stores to be the preferred main store as when shoppers are converted into loyal shoppers they tend to spend double the amount in their first choice store as per Knox and Denison (2000). This is because most shoppers perceive the primary store as a safe bet correspond to Roselius(1971) as the primary store is a trusted place with the lowest level of perceived risk of disappointment when shopping. except T aher et al. (1996) argues that being at ease with a store is not sufficient to ensure repeat patronage. They go on to state further that with more discipline being uncommitted to consumers nigh value/cost alternatives Taher et al. (1996) believes that the number of customers who are willinging to take the perceived risks are growing. This is good news for a gloomy chain of convenience stores, which is relatively new as it means that by providing more information it is possible to attract new customers but the challenge is increase in converting these customers into loyal customers.It is therefore important match to Taher et al. (1996) and Sirohi et al. (1998) that sellers continuously collect information of the consumers who frequent the stores in a structured manner in social club to encounter areas for development of augmented services to develop loyalty to the stores. The strength of loyalty of customers to a store is one of the most important indicators of the stores s trength according to Rhee and Bell (2002). Reichheld and Sasser (1990) reassure that profitability cigaret be increased by increasing the levels of loyalty. Knox and Denison (2000) in their study of the retail celestial sphere in UK goes on to state that it is important for a corporate retail strategy to maximize consumer loyalty and minimize consumers from opting for switching.harmonize to Solgaard and Hansen (2003) assortment of products at the outlet is one of the most important factors that drive the choice between the different stores customers patronize in.MODERN RETAIL LANDSCAPE AND CONVENIENCE STORESRetail comprises of all activities which directly relate to the sale of goods and services to the consumer for personal, non business use. (Retail glossary, 2009) The retail sector in Sri Lanka can be categorized into two as forward-looking trade retailers and traditional trade retailers (grocery shops). The modern retail trade in Sri Lanka is expect to grow rapidly with the p ost war economic development and increase in house involve income. The penetration levels are pass judgment to increase from 15% soon to 30% over the next 5 years.Modern retail format can be categorized into five formats as BIRO (2001) defines they are convenience store, mini market, super market, departmental store and hypermarket. Convenience store is small in nature, offer few products. Its sign upd in convenience goods with extra brands. Mini market is bigger than convenience store in size, but still limited in product brands. Same with convenience store, mini market product offers focus on convenience goods. Department store is bigger in nature than minimarket, with varied products. Departmental store is a large retail store offering a variety of merchandise and services and organized in separate departments. Consumer can find shopping goods on with convenience goods in a department store. Supermarket is a large self-service food store selling groceries, meats, menage goo ds, and so on, usually on cash-and-carry basis. Hypermarket is a variation of a supermarket that offers a variety of non food items, such as appliances, clothing, and services, along with food items, in a vast space much larger than a regular supermarket, some ages in excess of 200,000 square feet also called superstore. The grocery items are often worthd below market to draw calling into the store however, the grocery selection is also more limited than in a regular supermarket.The Sri Lankan modern retail market is dominated by the Cargills chain of supermarkets which has over 50% of the market share. There is only one hyper market in Sri Lanka to fit into BIROs classification of hypermarkets, but it has relatively low floor size. The modern retail market consists of five large players who are subsidiary business units of large conglomerates in the country. With high focus on large volumes and low margins, the customers in the modern retail segment are benefited by having a wid er range of products, including groceries and general merchandise under one roof at relatively low prices.Convenience stores are a relatively new concept to the Sri Lankan market, and many consumers are still associating the convenient shops with mini supermarkets. The understanding of the convenience concept with limited range of products is still not clear in the local market. In Sri Lanka one of the growing convenience stores is Go Getter which was launched two years ago and currently it has 25 outlets. For this dossier the customers who visit Go Getter are studied to remove an understanding of what drives these customers to the Go Getter outlet and which of these factors can be used to drive loyalty amongst the customers.In most of the Asian region the convenience stores are plenty and available in about all locations. The growth of the convenience stores is mainly attributed to increased car ownership, increase number of households with refrigerators and freezers, and the gro wth in the number of working wives. (Jeannet and Hennessey, 1988) In other words the increase in mobility, growing purchasing power and the era constrains bring customers from shopping at supermarkets to convenience stores as customers are on the run and need to purchase products on the go. The wider choice of products and more competition was expected to bring higher pure tone and safety as well as to counter balance to rising price levels (Lipman 2003).According to Calvin B. Lee (2002) higher customer service levels lead to greater revenue and net income. The above stated research finding elaborates the extent to which customer service can lead to the high society development. In every business, the customer service is very important. Without the help of customer convenience stores will find it difficult to attract customers and retention for repeat purchase. books RIVEWAccording to Magi, 1995 and Corstens and Corstens, 1995 most of the consumers shop at more than one outlet. M ost consumers patronage two or more outlets regularly because they arrange their shopping trips from different geographical locations (Solgaard and Hansen 2003) (e.g.,on way home from work, or other non-domestic activities). Similarly different stores may be selected as the purchasing requirement may vary by the amount of goods required (e.g., monthly purchases, topping up when necessary) or it can vary by the range of goods required (e.g., vegetables, meat, frozen foods, discount, etc.). Some consumers may even be looking for the products they prefer most or different individuals of the household may have preferences for different outlets.Therefore, to create loyal consumers one needs to understand what driver the customers to the store, however Mitchell et al. (1998) in their number of studies on store sign had not place a link between store attributes and loyalty. Garton (1995) and Bloemer et al. (1998) states that the consumers experience of the stores quality and service had relatively low level of influence in converting the consumer into a loyal repeat customer.Available belles-lettres has recognized several factors which influence pleasure of outlet whilst shoppingStore attributes such as location of store (Woodside and Trappey, 1992)Range and quality of assortment stocked (Claxton and Brent-Ritchie, 1979 Sirohi et al., 1998)The pricing strategy used (Williams et al., 1978)Promotions carried in-store (Urbany et al., 2000 Kumar and Leone, 1988) tending provided by floor staff (Macintosh and Lockshin, 1997 Mgi, 2003)Atmospherics of store ( Crawley, 1993Yalch and Spangenberg, 199 Babin and Darden, 1996)Volume of purchase (Mgi 2003)Garton (1995) goes on to suggests that to gain store loyalty it is important that the consumers image of the store be in line with the consumers self image. Sivadas and Baker-Prewitt (2000) concluded that the attitudes of consumers which drive the similarity between self image and store image are joined to store cheer. Sti ll there is no evidence to suggest that this satisfaction necessarily has a direct effect on store loyalty.According to (Solgaard and Hansen 2003) a consumers preferred store is based on the perceived utility that they derives from the store. Consumers perceive the utility according to what they get for what they give. What consumers get is the output from the store which include service, products, price and other attributes in the consumer experience (Bucklin, 1966 Bucklin et al., 1996). To receive this output from the store the consumer also has to spend his visions in terms of time and money (Blackwell et al., 2001). As resources are scarce, resource maximization will be the key concern of the consumer and he will opt for the store where he perceives he will get the best store output for the resources he spend according to his knowledge of the services he receive. The available writings has pointed down a few significant drivers which effect consumers perception of store outpu t these include the range of products and its assortment, quality of products available, overall service levels, store assistance personnel, store lay-out, convenience, cleanliness and atmosphere (Blackwell et al., 2001 Levy and Weitz, 2001 Bucklin et al., 1996, Finn and Louviere, 1996). Whilst the cost to the customer goes beyond the monitory value partnerd with the product prices themselves, and include the resource values of the time and money spend on transportation to and from the outlet.Individual determinants such as shopping intension, attitude towards retail outlets and shopping habits plays an important role on consumer shopping decision. Attitude towards retail outlet and shopping habits tend to influence shopping intension. This implies that retailers should concentrate on strategies in building consumers positive attitude towards their retail so that consumers visit their retail in guild to make their visits regular (Siringoringo 2009)DESIGNING OF THE enquiryThe fact ors that drive customer satisfaction identified by literature review were used amongst convenience store customers to understand if these factors hold true in the Sri Lankan context. And if they hold true to what extend are the levels of satisfaction they get from the existing convenience stores and their level of loyalty with the existing convenience stores. Further regular customers of 15 convenience stores were identified and their purchase habits were recorded using specially designed software at the point of sale to understand the alliance between customer demographics and purchase patterns. The objective of the second phase was to identify the types of products purchased and the basket value as literature break aways that consumers spend more at the primary stores than at any other outlet.4.1.1 Objectives Of The Potential Consumer SurveyThe first phase of the study is carried out amongst the potential/current customers of convenience stores to understand their if the satisfa ction drivers of the consumers hold true as per literature review and to understand further if they are loyal to one outlet or if the customers regularly switch between outlets.4.1.2 Convenience Store Customer testThe convenience store users sample size depends on resources available as well as on methodological considerations. Based on these, the study objectives will initially entail a review of approximately 390 convenience store potential customers. For the selection of the sample, a number of options for selecting the sample will be considered, with designation of purposive sampling as the most distract approach of those considered. Purposive sampling will allow for information-rich cases to be selected, which will generate insights into key issues and into strong point of interventions, rather than generalization to a population (Patton 2002). Sampling would entail surveying convenience store consumers and well as potential consumers who will be futurity sullyers of Go G etter.Of the follow population of convenience store potential consumers are undefined therefore a sample size of 390 is identified in the pursual areas Main City limits and suburban area where convenience stores are popular and consumers are more adaptable to the concept of convenience stores. These constitute 5 of the 10 main cities where the convenience stores are currently functioning will be selected as the survey centers. Data capturing will be based on a structured questionnaire.A purposive sampling procedure will be used and the respondents will be selected based on income, profession, family size, gender and place of dwelling. The questions overcompensate information areas such as current purchasing power, goods and services requirement and assessment of assortments and opinion on the services provided by the convenience stores. The SPSS package with an fit code-book was used to process and analyses the data. Mainly descriptive statistics mean, mode and percentages wil l be used.The reason is to select sample is number of population is bigger than the 1 million. According to the Anderson sample chart fewer than 5 % error rate 390 is the best sample size if population is bigger. Hence, they will be selected from the people who work for FMCG sector (suppliers of Go Getter, potential customers, who would like to purchase goods from convenience stores and who live in apartments, who are receiving a salary above 1000US$, who are earning less(prenominal) than one hundred fifty US$, which compel them not to stock up their basic needs as well as young executives in the age range of 20 to 40 years who are living mostly in rented apartments or boarding houses.4.1.3 study Captured In Phase 1The questions will be formulated to reveal the information listed below to understand the level of satisfaction customers are currently getting from the outlets they currently shop at.Table 1 understanding the convenient store landscapeObjectivesDescriptions1. Knowledge of convenience storesSince the concept of convenience stores is new for the Sri Lankan consumers, identifying the consumers knowledge levels is important if they are to comment on the satisfaction they get from the convenience stores.2. harvest categoriesIn the CVS/retail industry products are categories into different groups such as groceries, personal care, tobacco, perishable, impulse purchase etc. Different retail formats such as supermarkets, CVS, meat shops carry only selected categories of products. The products are categories tested are as followsSnack and confectionary BakeryColas Mobile CreditTobacco GroceriesBaby care products dairy productsOthers3. Convenience offered/ pass judgment/neededIdentifying factors that customers associate as factors that drive convenience at the outlets they currently shop at and the levels of satisfaction they are getting from these outlets.4. Customer retention/loyaltyHow loyal are the customers to the outlets that they shop at the moment. Are they switching amongst the outlets or are they shopping only at one selected outlet.5. Expected retail formatWhat other factors do they look from the convenience stores. These include factors other than convenience such as price/quality/atmosphere/relationship as literature review suggest these factors also drive the customer satisfaction levelsThere is a dearth of literature on the use of an appropriate scale to specifically measure the level of store satisfaction and store loyalty. Knox and Walker (2001) in their study of measuring and managing (brand) loyalty, stated that there is limitations in very much measuring of customer satisfaction as well as customer loyalty. Since there is no assured measuring instrument, the Likert five-point itemized rating scale is used in this instance to measure the level of attributions which drive store attributes.4.2.1 Objectives Of The Online SurveyThe main objective of the online survey is to identify if the products which are purchase b y the customers who have been identified as regular customers to the convenience stores are similar to the products stated by the respondents in phase one. This will help understand gaps if any amongst the actual customers at the store and the respondents to the first phase of the survey. The second set of information concerns on the basket value to understand if these regular customers are actually loyal customers as the basket value of loyal customers should be higher than or in par with the basket value in phase one.4.2.2 Online SampleThis data sight is planned to be done from customers who visited the convenience stores using a Convenience card which was given to the shoppers who visited the outlet regularly. This study is planned to be done at 15 outlets of the Go Getter convenience stores. Computerised data is collected from January 2008. The sample comprise of 15 outlets in order of the highest number of customer visited from 1st January 2008. There are 200-300 convenience c ard holder who visit each outlet on a daily basis. Hence, an average of 250 customers per outlet for 15 outlets will result, 3750 customers per day for a month and the same could be taken as respondents. Therefore it can be considered as an adequate representation. Data will be collected monthly.A special modification was done to the point of sales software application where the specially trained cashiers enter profile data of customers prior to the billing process.4.2.3 Information Captured In Phase 2Data which will be collected at the time of checkout is age group, gender, and product availability (were the products that they wanted available or were they out of stock). This data will be automatically correlated with items that they have purchased which will result in the identification and analysis of patterns and trends.5.0 DISCUSSION OF info ANALYSIS5.1.1 Understanding The Product Range And Pricing ConcernFrom the respondents selected for the data collection 77% of the respond ents were in executive or managerial grades. Almost 63% of the respondents earn $ 150 are in the executive grades whist 70.97 % of those who earn As expected more than half the population (57.63%) stated that they buy other products, followed by 35.59% stating CSD/colas whilst milk products were stated by 32.2%. This clearly reflects that customers visiting convenience stores look beyond the major product groups identified.Regarding the value for money received at competitors, 61.2% of those who earn $ 150 agreed that that value for money is received whilst 48.4% of those Given what was discussed above regarding the range, it is important to assess whether consumers have any concerns about the range on offer. However, a more than two third of the sample $150 and 5.1.2 Level of Satisfaction driversService is a key dimension that needs to evaluate in the retail industry is customer service, as the entire concept revolves around service delivery. Nearly half the sample 82.8% stated th at the check out is spry whilst a majority (90.7%) stated that the sales staff can be identified most of the time. Furthermore, 92.6% of the overall sample stated that the outlets kept up(p) cleanliness with 58.2% stated that outlets maintained cleanliness most of the time. Nearly equal number of persons surveyed commented on the price congruity with 164 persons stating that price consistency is maintained sometime while 181 persons out of 390 interviewees stating that price consistency is seen most of the time. The staff assistance was commented positively with near universally 93.1% stating that the staff provides assistance most of the time or sometimes.On receiving goods promptly, 55.9% of those earning above The respondents earning above $ 150 category felt that the service was good sometimes. Almost universally the respondents were satisfied with the overall level of service (92.6%).Furthermore, a cross analysis between those who shop at the outlets, the facilities they loo k for and the times of the day and the product range highlights the following findingsGiven this levels of satisfaction, it is important to look deeper in to data and see what aspects are set by the customers at convenience store outlets. In order, a cross analysis was carried out between those who shop at these outlets and what they value most.As the literature suggested almost half the population in both income levels stated that it is location followed by range and service at an overall level.These findings when analyzed by the respective(prenominal) income brackets come in the order of priority where 48.4% state location, 32.3% stating offering a range and fast service being stated by 25.8% of those below $ 150. The order of importance changes when looking at the data of those above $ 1000. To them it is the location that matters most, followed by fast service and the product range.5.1.3 Tendency To Shop At Multiple Outlets (Low Loyalty)From the total base of 390 respondents, a little less than half the population (40.51%) visit competitor outlets at least once a week and the next absolute frequency was irregular (21.79%) with a similar amount (21.54%) claiming to visit competitor outlets less than once a week. None of the respondents do their shopping at one selected outlet. 40% shift from outlet to outlet more often than not on a regular basis even though there is high level of satisfaction, whilst the balance on a irregular basis shops from different stores. This clearly shows that even though most of the customers are satisfied with the offerings of the convenience stores they still are not loyal to one outlet.Discussion On Data Collected At Selected OutletsThe information which was captured through the POS data collection system was analysed to find similarities in the profile of customers visiting the outlets and the type of products mainly purchased. The literature review highlighted that it is important to identify the main products that are look ed for by the consumers need to be merchandised properly to strain customer satisfaction.When analyzing the Go Getter customer profile it is evident that customers of all ages have patronized the outlets. The regular repeat customers were divided into 4 main segments teenagers, youth, the set develop and the elderly. Table 1 illustrates the summary of the analysis of data collected from the survey of Go Getter customers for a period of two months.Table 4 Profile of customers at Go Getter outletsProfile informationResponseAverage age segmentDependent upon each outlet. However, a notably high number of customers belong to the middle age seem to frequent.GenderMore skewed towards the males, conforming the basic fact that top up is less frequent as a household level in Sri Lanka.Purchase tendencyExcept for a few variations that were dependent upon the outlet location, most demand was generated to beverages, snacks/confectionary and frozen food.Basket ValuePurchases are very small in quantity, bought either on the go or for topping out at homes. Most people (25% 33%) of the customers spend less than Rs 50.Source AuthorOne of the most striking findings is the fact that seemingly lesser number of teens and youth has visited the outlets, especially teens. This is mainly owing to the fact that in Sri Lanka children are dependent on their parents till their secondary education is completed. Culturally, children leaving home takes place only after marriage and till such time parents and grown up children live under the same roof which is quite opposite to the Western countries. Within this backdrop, teens and youth often do not have an income for themselves and depend on their parents to give them cash for their education and other needs.A higher number of the visitors to the outlet were middle aged and elderly, dominated by the males. This coined with the main products purchased beverages/snacks and confectionary shows that most of the purchases were low value produ cts bought on impulse rather than for household topping up.The outlets in residential areas were doing better than the outlets in commercial areas, still the product range commonly sold shows that beverages/snacks are bought more than household products, which shows that consumers still dont buy products for household topping up from Go Getter.What is very discouraging about the information gathered from the online research is the average basket value of the regular customers. From the data analysis is the basket value spent by the consumers per visit with almost a third of the customers spending less than Rs 50 (less than USD 0.5) on an average visit.This is in line with the first phase of the study that most customers prefer to buy from different outlets. Therefore the basket value of even the regular customers who visit the selected convenience stores remain low as they come into purchase products of low value as and when necessary.5.3 Limitations of ResultsThis study was done as a part of the doctorate thesis on understanding the consumers and the challenges in the retail trade for the entrance of a new chain of convenience stores in a market where the concept of convenience stores is limited. Therefore the data was collected on understanding the customer satisfaction drivers and to understand what need to be done to increase the revenue of the Go Getter outlets and not to understand how to grow loyalty as the business is currently at the beginning phase. Therefore further research needs to be done on the regular customers of the outlets to understand their levels of loyalty as the factors used in the research to identify the relationship between satisfaction and loyalty are limited.6.0 CONCLUSIONPrevious studies carried out by Woodside and Trappeys (1992) states when specific attributes such as low overall prices or most convenient are suggested customers respond with a top of the mind association for each of the values. These associations are the strong drivers of satisfaction are what customers associate with the main store where they make most of their purchases.Bloemer et al. (1998) states the store satisfaction is the mediator of the perception of the store and store loyalty. Still even in reason studies though this connection is seen a solid link between store satisfaction and loyalty has not been established. In a recent study, it was identified that customers are loyal to outlets with an image which match their own self image. Through the levels of satisfaction customers get from the convenience stores, they look for a parallel with the self image and the store image, which according to Sivadas and Baker-Prewitt (2000) does not necessarily translate into store loyalty as there is no clear connection. This lack of clear connection between store satisfaction and loyalty, the relationship between these two attributes remain speculative according to Mitchell et al. (1998).When analyzing the information collected from the Sri Lan kan chain of convenience stores and their potential stores it shows high level of customer satisfaction amongst customers who use convenience stores. The study further goes on to show that even though most customers are highly satisfied with the stores they patronize they still are not loyal to any of the outlets they shop at. The customers have a limited loyalty to outlets and prefer to shop at outlets as and when necessary to purchase products as and when necessary.The purchasing habits suggest that even the customers who visit the convenience stores regularly purchase products only for a small basket value suggesting that the main outlet of purchase is different to this outlet even though they regularly visit these selected outlets. This suggests that the customers who visit these outlets regularly are looking for top up products whenever the need occurs and the outlets need to work on cross selling to these customers and increase impulse purchases to increase basket value.The re lationship between loyalty and satisfaction is still not clear but as customers are satisfied with selected attributes they continue to patronize the outlets. Therefore in creating loyalty satisfaction is a basic need. It is not clear how satisfaction can be converted into loyalty or if that transformation can be achieved. Therefore further studies need to be carried out to understand the drivers of loyalty in the local retail sphere to understand better on the development of loyalty amongst customers.