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Study on Customer Satisfaction Level at Hypermarkets in Indian Retail

Industry

Article in SSRN Electronic Journal · July 2011

DOI: 10.2139/ssrn.3240421

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 Study on Customer satisfaction level at Hypermarkets in
Indian Retail Industry

Dr. S. Jeevananda
Assistant Professor – I & Campus Co-ordinator.
Christ University Institute of Management.

Abstract:

Satisfying customers is one of the main objectives of every business. Businesses recognize
that keeping current customers is more profitable than having to win new ones to replace
those lost. Management and marketing theorists underscore the importance of customer
satisfaction for a business’s success. Customer satisfaction is the key factor in knowing the
success of any retail store or business, therefore it is very important to measure it and to find
the factors which affect the customer satisfaction. Customers are most likely to appreciate the
goods and services that they buy if they are made to feel special. This occurs when they feel
that the goods and services that they buy have been specially produced for them or for people
like them. It should be always keep measuring in order to get feedback for the product and
service in order to develop it further with wide customization.

Customer satisfaction refers to the extent to which customers are happy with the products and
services provided by a business. Customer satisfaction levels can be measured using survey
techniques and questionnaires. Gaining high levels of customer satisfaction is very important
to a business because satisfied customers are most likely to be loyal and to make repeat
orders and to use a wide range of services offered by a business. Customer satisfaction is an
asset that should be monitored and managed just like any physical asset. This is true for both
service-oriented and product-oriented organizations.

Key Words: Customer Satisfaction, Service Quality, Hypermarket Retail Stores, Decision
Making, Loyalty.

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Indian retail industry:

Indian retail industry is a derivative of the growing economy, changing demographics and
preferences of the Indian consumers. Retailing format like supermarkets, department stores,
mega stores, shopping malls and retail chains had come up on the country with varying
intensity during the 1980’s and 1990’s, have now started proliferating. Organized retail is
booming and creating huge opportunity for enterprises. Ever increasing number of
hypermarkets, departmental stores and shopping malls need continuous attention from
customers.

Retail is India’s largest industry, accounting for over 10% of the country’s GDP and around
8% of the employment. Indian retail industry size was estimated at INR 754.21 billion in
2005-06, out of which the organized retail contributed about INR 366.21 billion.
(www.indiainbusiness.nic.in)

Introduction to Hypermarket retailing formats

A hypermarket is a superstore which combines a supermarket and a department store. The

result is a very large retail facility which carries an enormous range of products under one
roof, including full lines of groceries and general merchandise. In theory, hypermarkets allow
customers to satisfy all their routine shopping needs in one trip.

Describing a typical hypermarket is difficult, since they differ from country to country. But
most hypermarkets have a large parking area and a building with 50,000 sq.ft. of sales space,
more or less. Hypermarkets operating in India typically have a heterogeneous mixture of
large and small individual retailers. Most of these Hypermarkets sell branded products of
both, domestic and international manufacturers. Hypermarkets of India offer products with
different price bands for each and every sections of urban society.

Indian hypermarkets constitute 1.99% of the total organized retail and the segment was
estimated at INR 7.28 billion during 2005-06, growing by 37% over 2004-05.

Review of Literature:

Customer satisfaction in simple terms stated as the level of shopping experience in a retail
outlet where the customer’s expected service level is met with by the actual service provided
to him by the retailer. In a business term, it is a measure of how products and services
supplied by a company meet or surpass customer expectation. Customer service is a series of
activities designed to enhance the level of customer satisfaction – that is, the feeling that a
product or service has met the customer expectation.

Measuring service quality is difficult due to its unique characteristics: Intangibility,

heterogeneity, inseparability and perish ability (Bateson, 1995). Service quality is linked to
the concepts of perceptions and expectations. Customers’ perceptions of service quality result
from a comparison of their before-service expectations with their actual service experience.
The service will be considered excellent, if perceptions exceed expectations; it will be
regarded as good or adequate, if it only equals the expectations; the service will be classed as
bad, poor or deficient, if it does not meet them.

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The functional quality of a service is often assessed by measures of customers’ attitudes as in
customer satisfaction questionnaires. As discussed by Hayes (1997), the process of
identifying customers’ attitude begins with determining customers’ requirements or quality
dimensions.

The European perspective consists of three dimensions: functional (the process of service
delivery to customers), technical (the outcomes generated by service to the customers) and
image (how the customers view the company). Considering on those dimensions the quality
of service depends on two variables, the perceived service and expected service.(Gronroos
1984).

Parasuraman et al (1985) identified in his first study, 10 quality dimensions based on series of
focus group sessions. However he emphasized on two main dimensions such as Quality
dimension development approach and critical incident approach. The first one uses different
sources of information such as opinions of providers and leaders and the second one is a
process to obtain information from customers.

Statement of the Problem:

Retailers need to constantly update themselves with the need and wants of customers who are
very much dynamic in terms of preference of any product or services. They have high
disposable income to cash on frequent shopping habits and thus their need of customer
satisfaction levels in the store would help them device strategies that could enhance customer
experience and generate loyalty.

Highly competitive market scenarios in every retail format has led the retailers to concentrate
on clearly understanding the attributes that are important to enhance customer satisfaction
levels and in turn generate more sales. At this juncture it become more significant to
understand the various customer service attributes that are of vital importance in creating
customer satisfaction in hypermarket retail formats. Hence the research study was carried out
on the topic titled “Study on Customer satisfaction level at Hypermarkets in Indian Retail
Industry”.

Research Methodology and Design:

In this research, descriptive research methodology has been adopted to analyse the various
demographic variables. This study involves the field survey conducted across different retail
stores in Bangalore. The respondents were approached inside the hypermarket retail stores. It
also focused on the decision about choice of stores for specific purchase incident, since each
purchase occasion might actually be a different decision.

Objective of the study:

 To identify the important customer service attribute that helps in making buying
decision.
 To analyse the correlation between customer satisfaction level and loyalty of
customers.
 To study the different strategies used by retail players to increase level of customer
satisfaction.

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Statement of Hypothesis:
1. Ho: Customer Service is not a key attribute in buying decision process
Ha: Customer Service is a key attribute in buying decision process.
2. Ho: There exists no significant difference between expected and actual service levels.
Ha: There exists significant difference between expected and actual service levels.
3. Ho: Loyalty of customers is independent of their satisfaction level.
Ha: Loyalty of customers is dependent on their satisfaction level.
4. Ho: Overall customer satisfaction level rating at the stores is poor.
Ha: Overall customer satisfaction level rating at the stores is good.

Data Collection:
 Primary data is collected by administering the questionnaires to the customers at
hypermarket stores.
 Secondary data for the study was collected from various existing sources of
information such as internet, newspaper, magazines, journals are used for reference.
 List of hypermarket players in Bangalore : Spar; Max; Total; Reliance Mart; Big
Bazar

Sampling Procedure:
 Sampling Method: Simple random sampling.
 Sampling Size: 100 customers.
 Sampling Characteristics: Customers shopping at hypermarket retail stores.

Limitations of the study:

 The study was conducted only at hypermarket retail outlets.
 The study was confined only to Bangalore district.

Analysis:

Figure No 1: Shopping Preference.

Shopping Preference
Hypermarket Convenience Store Nearby Kirana Store

41
62

45

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Inference :
Among the sample size, 62 respondents say that they shop at Hypermarkets regularly,
followed by 45 and 41 respondents who shop at Convenience stores and Kirana Stores
respectively. This tells us that among the various retail formats, hypermarkets have been
preferred for shopping by most of the respondents.

Figure No 2: To identify the most important customer service attribute through giving
weightage points to them :

Warranties 311

Repair services 302

Personal assistance in selecting the merchandize 344

Parking 335

Dressing rooms 301

Home delivery 299

Child care facilities 250

Assembly of merchandize 330

Acceptance of credit cards 323

0 50 100 150 200 250 300 350 400

Inference:
From the above chart we can say that Personal assistance to customers in selecting the
merchandize is the most important customer service attribute. This is followed by Parking
areas, Assembly of merchandize, Acceptance of credit cards, etc. respectively.
Customers give the least importance to child care facilities as a customer service. Thus
retailers have to make a note to emphasize more on employee training on product knowledge,
behavior and friendliness nature of the salespeople who directly interact with customers.

Table No 1: There is a match between expected and actual service levels of the
customers.

Cumulative
Frequency Percent Valid Percent Percent
Valid Can't Say 35 35.0 35.0 35.0
Yes 18 18.0 18.0 53.0
No 47 47.0 47.0 100.0

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 Cumulative
Frequency Percent Valid Percent Percent
Valid Can't Say 35 35.0 35.0 35.0
Yes 18 18.0 18.0 53.0
No 47 47.0 47.0 100.0
Total 100 100.0 100.0

Figure No 3: Match between actual and expected service levels

Inference :
47% of the respondents say that their expected service levels at the stores are not
being delivered in actual service. While 35% are neutral, 18% say that their expected service
levels match with the actual service provided to them. It can thus be concluded to say that
there exists service gaps between customers’ expectation of service level and what they
actually get.

Table No 2: Loyalty to the store if service level is good.

Cumulative
Frequency Percent Valid Percent Percent
Valid Can't Say 21 21.0 21.0 21.0
No 1 1.0 1.0 22.0
Yes 78 78.0 78.0 100.0
Total 100 100.0 100.0

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Figure No 4: Loyalty to the store if service level is good

Inference :
It can be inferred from the chart above that if good customer service is provided to
the customers, 78% of the respondents said that they would remain loyal to the store. And
only 1% still says that they would remain unloyal to the store. Thus good service is very
important to satisfy customers and generate repeat business by attaining customer loyalty to
the store.

Figure No 5: Various promotional tools used in the store

Various promotional tools used in the store

Series1

61
51

37

22

Print Ads and TV Posters/Banners Salesperson Assistance Regular

Commercials Announcements in the
store

Inference :
Posters and Banners were mostly used in the stores as 61 respondents agree to this
promotional tool used in the store they have visited. Print ads/ TV commercials are being
witnessed by 51 respondents in the store while only 22 respondents have been assisted by
salesperson in these stores.

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Table No 3: Extent of promotional tools useful in making buying decisions

Cumulative
Frequency Percent Valid Percent Percent
Valid Can't Say 13 13.0 13.0 13.0
Extremely useful 10 10.0 10.0 23.0
Not useful at all 1 1.0 1.0 24.0
Somewhat not 10 10.0 10.0 34.0
useful
Somewhat useful 66 66.0 66.0 100.0
Total 100 100.0 100.0

Figure No 6: Degree of usefulness of the promotional tools.

Inference:
From the above list of promotional tools used in the store, 66 of the respondents agree
to say that the tools have been somewhat useful to them for making buying decisions. While
10 respondents say that they had been extremely useful, only 1 respondent said that they have
never been of any use to him for making buying decisions.

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Table No 4: Frequency chart on Overall customer satisfaction level.

Cumulative
Frequency Percent Valid Percent Percent
Valid 1 17 17.0 17.0 17.0
2 38 38.0 38.0 55.0
3 32 32.0 32.0 87.0
4 9 9.0 9.0 96.0
5 4 4.0 4.0 100.0
Total 100 100.0 100.0

Figure No 7: Overall satisfaction

Inference:
It can be said from the above frequency chart that 17 respondents agree to say that
their overall satisfaction of service at the store is highly dissatisfied. 38 respondents consider
it somewhat dissatisfied while only 4 respondent feel that they are highly satisfied with the
customer service levels at the store.

From this we can infer that there is lot of scope for improvement of overall satisfaction of
customers and strong and relevant steps should be adopted by the retailers to improve the
same.

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Hypothesis testing:

1. To test hypothesis whether overall customer satisfaction rating at the stores are good
or poor.

H1: Overall customer satisfaction level rating at the stores is poor.

One sample t-test is used with α=.05 and confidence level at 95%, df = 99, t-3.

One-Sample Statistics
Std. Error
N Mean Std. Deviation Mean
Overall 100 2.45 1.009 .101
satisfaction

One-Sample Test
Test Value = 3
95% Confidence
Interval of the
Sig. (2- Mean Difference
t df tailed) Difference Lower Upper
Overall -5.452 99 .000 -.550 -.75 -.35
satisfaction

Inference:
With critical t=3(indicating customer satisfaction level rating is neutral), the observed
mean is 2.45 which is less than 3. Also significant value of the sample population is less than
.05, ie.0.000. Hence, null hypothesis is accepted and alternate hypothesis is rejected which
conclude to say that overall customer satisfaction rating is very poor.

2. To test hypothesis whether customer service is a key attribute in consumer’s buying

decision making or not.

H2: Customer service is not a key attribute in consumers’ buying decision

making.

One sample t-test is used with α=.05 and confidence level at 95%, df = 99, t-3.

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 One-Sample Statistics
Std. Std. Error
N Mean Deviation Mean
Buying decision 100 4.05 .903 .090
making based on
customer
service(personal
assistance)

One-Sample Test
Test Value = 3
95% Confidence Interval
Sig. (2- Mean of the Difference
T df tailed) Difference Lower Upper
Buying decision making 11.626 99 .000 1.050 .87 1.23
based on customer
service(personal
assistance)

Inference:

From the above results, the mean value 4.05 is greater than test value=3. The significance
value of the output, 0.00 is lesser than the tested significance level at 0.05.

Hence, null hypothesis is rejected and alternative hypothesis is accepted.

Chi-Squared Test:

3. H3: There exist no significant differences between expected service level of

customer and actual service delivered.

Descriptive Statistics
Std.
N Mean Deviation Minimum Maximum
rating 99 1.76 .757 1 3

Chi-Square Test Frequencies Rating

Observed N Expected N Residual
1 43 33.0 10.0
2 37 33.0 4.0
3 19 33.0 -14.0
Total 99

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 Test Statistics
rating
Chi-Square 9.455a
Df 2
Asymp. Sig. .009
.
Inference:
The observed mean value of the test is 1.76 and the significance value of 0.009 is lesser than
tested value of 0.05. Hence, null hypothesis is rejected and alternative hypothesis is accepted.

4. H4: Loyalty of customers is independent of their satisfaction level.

Descriptive Statistics
Std.
N Mean Deviation Minimum Maximum
Loyalty if 100 1.23 .446 1 3
service level is
good

Chi-Square Test Frequencies

Loyalty if service is good
Observed N Expected N Residual
1 78 33.3 44.7
2 21 33.3 -12.3
3 1 33.3 -32.3
Total 100

Test Statistics
loyaltyifservic
e
Chi-Square 95.780a
df 2
Asymp. Sig. .000

Inference:
The observed mean value is 1.23 and also the observed significance value of 0.000 is lesser
than tested significance value at α=0.05. Hence, null hypothesis is rejected and alternative
hypothesis is accepted.

It can be concluded by saying that retailers should take steps to increase customer satisfaction
level in order to attain their loyalty which have higher chances of leading to increased sales
and profit.

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Major findings:
1. Among 100 customers surveyed more than 60% of them prefer shopping at a
hypermarket compared to a convenience store or a kirana store.
2. Among the various customer service attributes such as product availability, display,
service at billing counter, payment options, etc., personal assistance to the customer is
the most important attribute.
3. Close to 47% of the respondents say that their expected service levels do not match
with the actual service provided to them by the retailer.
4. If good customer service is given, more than 78% of the respondents agree to say that
they would be loyal to the store.
5. More than 66% of the respondents say that the promotional tools such as Print Ads,
posters, banners, etc were somewhat useful in making purchase decisions.
6. More than 60% of the respondents say that the overall satisfaction level of the store is
very poor. This is again tested and proved on hypothesis test.
7. From the hypothesis test, it is found that customer service like personal assistance is
the key attribute to customers while making his purchase decisions.
8. From the chi-squared test, it is found that there exists a significant difference between
expected and actual service levels in the stores.
9. Chi-squared test that loyalty of customers is highly dependent on customer
satisfaction level in the store.

Suggestions:
1. Personal assistance to customers in the store is a very important customer service
attribute and hence retailers should take relevant measures to ensure of its best
assistance.
2. Majority of the customers found a mismatch between the expected service levels and
the actual (perceived) service level provided by the retailers. Hence measures should
be taken to minimize this gap by implementing standard operating procedures of
services that enhances satisfaction levels.
3. Retailers should try to improve on customer services in order to generate customer
loyalty.
4. Promotional tools such as Print Ads, Banners, Posters, Danglers and TV Ads should
be adequately used to help the customers in their purchase decision making process.
5. By taking above measures the retailer can help in increasing customer satisfaction
level.
6. The retailer strategized to provide many other services such as easy payment options,
returns and claims, free shipping and delivery, easy ordering and tracking points, rest
rooms, salesperson assistance, store ambience, parking, etc. to increase satisfaction
levels.

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 Conclusion:
1. It can be concluded from the study that personal assistance is the most important
service attribute that helps in customers’ buying decision making process.
2. It can be concluded from chi squared test that loyalty of customers is highly
dependent on customers’ satisfaction level in the store and henceforth retailer should
take every step possible to increase satisfaction level in order to generate customer
loyalty.
3. The retailer believes that retail mix variables such as store layout, atmosphere,
assortment of products and promotion tools, pricing are highly important in order to
increase customer satisfaction level while shopping in the store.

References:
 David J. Burns, Lewis Neisner, (2006) "Customer satisfaction in a retail setting: The
contribution of emotion", International Journal of Retail & Distribution Management,
Vol. 34 Iss: 1, pp.49 – 66.
 Gomez, Miguel I., Edward W. McLaughlin, and Dick R. Wittink (2004), "Customer
Satisfaction and. Retail Sales Performance: An Empirical Investigation," Journal of
Retailing, 80 (4), 265-78.
 Westbrook, Robert A (1981), “Sources of Consumer Satisfaction with Retail
Outlets”, Journal of Retailing, Vol. 57 Issue 3, p68-85.
 Wong, Amy Sohal & Amrik (2003), “Service Quality and Customer Loyalty
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 Timothy L. Keiningham, Bruce Cooil, Lerzan Aksoy, Tor W. Andreassen, Jay
Weiner, (2007) "The value of different customer satisfaction and loyalty metrics in
predicting customer retention, recommendation, and share-of-wallet", Managing
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 Prakash Gupta, http://www.evancarmichael.com/Small-Business-
Consulting/3444/retail-customer-satisfaction-model-rcsm.html.
 Shirshendu Ganguli and B Vinoth kumar (Dec 2008), “Drivers of Customer
Satisfaction and Loyalty in Indian Retail Supermarkets: An Exploratory Study”, IUP
Journal of Management Research.
 http://www.indiainbusiness.nic.in/industry-infrastructure/service-sectors/retailing.htm
 http://www.iupindia.in/1208/IJMR_Indian_Retail_Supermarkets_60.html
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 Parasuraman et al., 1985, 1988; Lewis and Mitchell, 1990.

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