INFLUENCE OF CUSTOMER EXPECTATION AND RETAIL FORMATS ON CUSTOMER SATISFACTION: A STUDY IN NATIONAL CAPITAL REGION OF INDIA

Abstract

The retail industry is one of the most upbest sector of the economy. India’s retail market is estimated to nearly double to US$ 1 trillion by 2020 from US$ 600 billion in 2015, determined by income growth, urbanisation and attitudinal changes. The overall retail market is anticipated to grow at 12 percent per annum. However, the modern trade is expected to grow twice as fast at 20 percent per annum and traditional trade at 10 percent (IBEF, 2017). Consumer spending in India is expected to touch US $3.6 trillion (about Rs. 240 trillion) by 2020, increasing India’s share in global consumption to 5.8 per cent, more than twice its existing levels (Livemint, 2016). Retailing is a main instrument of economic growth and employment. One of the pillars of the Indian economy, retail accounts for about 10 percent of its Gross Domestic Product (GDP) and around 8% of the employment. Retail activity is frequently used as an indicator for the health of the economy. Retail is also extremely diverse, ranging from the mom and pop corner store to the large companies operating in big and multiple formats. Woven deeply into the fabric of our local communities and entire economy, retail has the power to create massive benefit to society. Retail is an indispensable foundation for our market economies, serving as the important link between business and customers. Companies in all sectors are working on adapting to the existing challenges like, shifting demographics, ever changing customer preferences, higher customer expectations etc. India, the second most populous country in the world accounts for more than a sixth of the world’s population. India is expected to be the world’s most populous country by 2025 exceeding China. In a multicultural country like India customers satisfaction is difficult to define, their behavior is hard to predict, expectations hard to meet and customer satisfaction hard to achieve. Customer satisfaction is deliberated to influence customer retention and consequently, profitability and competitiveness. This study explore the variables that pretend as the marketing challenges for satisfying customers varying expectation and preferences in the competitive retail market. The study, developed on the basis of a comprehensive study in the Indian context, is aimed to understand and explore the

v relationship between customer demographics, customer typology and shopping motives; retail and store attributes; quality; price of the product and cost of purchase and customer satisfaction. A thorough review of the literature ascertains the issues related to customer satisfaction. Quantitative and qualitative techniques are used as part of the research methodology. Quantitative approach with help of various statistical techniques helped assessing the collected data, using a deductive approach like hypothesis testing etc. Both primary and secondary data sources have been utilised to answer research questions. Primary data was attained through directing questionnaires to the customer while secondary sources was utilised to gather information from databases so as to have a better understanding. For the study, a theoretical model was developed describing the factors which may affect customer satisfaction. The model was empirically tested. Hypothesis was established to assess the interrelationship between affecting factors and satisfaction level. Empirical data was collected by way of questionnaire in National Capital Region (NCR) of Gurugram, Noida and Delhi in India. The data was subjected to statistical analysis including descriptive stats, Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM) using SPSS and AMOS. Discriminant analysis was conducted to examine the data to draw perceptual maps for selected retail formats in grocery and apparel sector. Hierarchical clustering was done for better understanding of the Indian customers. Further, interplay of customer expectation with respect to different retail formats and demographic profile was done using independent sample t-test and ANOVA test. The result hints a slow drift of the Indian consumer from traditional retail formats towards modern formats. Moreover, hypermarket and supermarket do not differ significantly in the mind of the consumers. This study provides a basic understanding of the elements desired by the Indian shoppers from the different retail formats. Customers have their own description and opinion of attributes they wish from a particular format and this is also shaped by customers’ demographic and psychographic frame. Inability of the retailers to understand and diagnose these facts

vi leads to customer displeasure. The result clearly indicates that customer satisfaction is the key to success. Therefore, it is well advised to keep a tab of the drivers of customer satisfaction. It is important to have a serious look at the attribute-format makeup, from customers’ perspective. Indian consumers are lured by the glamour of modern formats offering plethora of modern amenities with organized product displays, brand variety, groomed staff etc. In recent times, strategic maneuvering by the kirana store and local apparel stores to become more competitive is obligatory for their survival. They need to have an analytical and a pragmatic examination of their capabilities and weaknesses to re-vamp and reposition themselves. The conclusion and findings of the study are presented chapter-wise along with the recommendations, scope for further research and limitations