CUSTOMER SATISFACTION WITH SUPERMARKET RETAIL SHOPPING Binta Abubakar Swinburne University of Technology Felix Mavondo Clayton Campus

Val Clulow Swinburne University of Technology

Abstract We investigated the customer ratings of importance of several attributes associated with supermarket shopping. We then reviewed the satisfaction ratings of the attributes. The aim was to rank the factors and to relate the importance rankings to customer satisfaction. The findings have implications in that a retailer is able to assess how well they meet their customers needs on important attributes. The results suggested that since retail formats have become very standardised, corporate reputation is rated high and may be a source of sustainable competitive advantage. Accessibility was considered important, as was quality of service especially the friendliness and efficiency of checkout personnel. The results suggested the retail chain has largely been able to align its efforts to the areas considered important by customers. However, the satisfaction scores are rather low suggesting the retailer might be susceptible to an attack by a competitor prepared to deliver superior value to the customers.

Introduction Supermarket shopping is often categorised as a self-service retail environment. For supermarket retailers wanting to build relationships with their customers, being able to track their levels of satisfaction with the key elements of the supermarket environment is extremely important. From the retailers perspective the aim is to minimise the reasons for complaints and dissatisfaction and the cost of a service recovery plan (McCollough, Berry and Yadav, 2000) whilst establishing a track of direct feedback from customers about their reactions to those key elements. Satisfaction is a consumers post-purchase evaluation of the overall service experience. It is an affective reaction (Menon and Dub, 2000) in which the consumers needs, desires and expectations during the course of the service experience have been met or exceeded (Lovelock, 2001). Satisfaction in this sense, could mean that a supermarket has just barely met the customers expectations, not exceeded nor disappointed those expectations. The benefits of taking the customers response beyond satisfaction at this level by exceeding expectations, is a competitive strategy many retailers aspire to achieve. Customer satisfaction now represents a central strategic focus for customer-oriented firms across diverse industries ( zymanski and Henard, 2001). In recent years, researchers have S focused their attention on measuring levels of customer satisfaction (Tse and Wilton, 1988; Myers, 1991; Peterson and Wilson, 1992; Tom and Lacey, 1995; Hackl, Scharitzer and Zuba, 2000) and on the cues that signal services quality to customers (Carman, 1990; Parasuraman

et al. 1988, 1991, 1994). There has also been an attempt to better understand the dynamics of the relationship that exists between satisfaction and service quality and the impact on customer purchase intentions (Bolton and Drew, 1991; Cronin and Taylor, 1992; and Taylor and Baker, 1994). Australian supermarkets and grocery stores contributed AUD$38.3 billion and 26% of total retail sales to June 1999 (IBIS, 1999) The supermarket sector of the retail industry is highly competitive and stores operate in a mature market with slow growth opportunities and vie fiercely for market share. Any factor which might influence profit in such conditions is critical (Anderson and Mittal, 2000). Customer satisfaction has become a primary point of differentiation in a market where consumers typically make a weekly trip to their preferred supermarket and spend more on this trip than at other times (Kahn and McAlister, 1997). Against this background of fierce competition in a mature Australian marketplace, a study was designed to investigate customers satisfaction levels with a range of key elements, which contribute to the retail offer presented by ane Australian supermarket chain. Factors of particular interest in a retail supermarket environment are ambience, friendliness of staff, specialised foods on offer, merchandise variety, prices, check out procedure and accessibility.

Background Literature In an early conceptual article, Kotler, (1973) develops a systematic exposition of atmosphere as a buying influence. Kotler explores the notion that one of the most significant features of the total product is the place where it is bought or consumed. The atmosphere of the place is more influential than the product itself in the purchase decision" Kotler, (1973, p. 48). The term atmospherics is defined in Kotler, (1973) as the effort to design buying environments to produce specific emotional effects in the buyer that enhance his/her purchase probability. Atmosphere is experienced through the senses, primarily sight, sound, scent, and touch. Bitner used the term servicescapes to describe the idea of atmospherics in a service setting. Servicescapes also adds the notion of the service personnel to physical setting (Bitner, 1992). Bitner elaborates on the neglect of the servicescape as follows: The effect of the atmospherics, or physical design and dcor elements, on customers and workers is recognised by managers and mentioned in virtually all marketing, retailing, and organisational behaviour texts. Yet, particularly in marketing, there is a surprising lack of empirical research or theoretically based frameworks addressing the role of physical surroundings in consumption settings. The servicescape is describe as covering such elements as physical layout of the service facility, ambience, background music and that the servicescape can also affect customers impressions of and satisfaction with service (Lovelock, Patterson and Walker, 2001). Service quality or desired expectations are defined as a blend of what the customer believes can be and should be (Zeithaml and Bitner 1996). Service quality can be measured by the level of discrepancy between consumer expectations or desire and their perceptions of what they received as described by the SERQUAL scale (Bebko 2000). Customer satisfaction occurs when the value and customer service provided through a retailing experience meet or exceed consumer expectations. If the expectations of value and customer service are not met, the consumer will be dissatisfied. Unfortunately for retailers, most consumers do not complain when dissatisfied, they just shop elsewhere (Jackson, 1999). Retailers should always keep in mind that customer expectations move continuously upward and that only satisfied customers are likely to remain loyal in the long run.

Methodology The research was conduct for an Australian supermarket chain. A survey method was utilised to determine key variables that create customer satisfaction. The effective sample was 800. This was a response rate of 75 %. All questions were on a 10-point Likert-type scale ranging from 1=totally dissatisfied to 10=totally satisfied. The questionnaire was 3 pages long. Exploratory Factor Analysis was used to reduce the number of questions into a manageable set. The resulting factors were checked for meaning and reliabilities were calculated. All the scales had reliabilities above .75, which exceeds the recommended level of .7 ( unnally N 1978). The respondents were asked to rate the importance of each item and then to rate how satisfied they were with that particular item as provided by the retailer. Data was collected from four postcodes in which the retailer was the dominant retail player.

Results and Discussion The figures in brackets are the rankings of the importance attached by consumers to various items. The most important factors are store reputation for ethical business practices, food handling and environment. This was followed closely by accessibility (parking) and then customer service and product range and depth. A comparison of the postcodes indicated there were differences in what was considered important but the pattern of rankings was maintained.

Figure 1: Importance of Measures of Satisfaction by postcodes A B C D N=175 N=250 N=125 N=250 Store reputation (food handling, 8.76 8.73 9.36 safety hygiene) (2) 9.39 Store reputation (animal welfare, 8.41 8.43 8.31 free range eggs etc) (3) 8.62 Store reputation (ethical business 8.82 8.77 8.98 practices) (1) 8.97 Quality of fruits and vegetables 6.23 6.43 6.27 6.22 Quality of meat products (11) 6.38 6.50 6.39 6.24 Range of products (7) 6.49 6.73 6.30 6.32 Service quality (6) 6.59 6.44 6.42 6.25 6.77 6.45 6.82 6.73 6.60 6.74 6.52 6.88 6.56 6.81 6.83 6.24 6.70 6.27 6.73 6.67 6.63 6.57 6.31 6.51 6.14 6.58 6.37 6.54

F-ratio 15.185*** 2.308* 1.030 1.172 1.543 3.744** 1.072 2.339 2.011 3.778** 1.681 1.208 1.894

Different sets

B & D>A&C B, A &C>D

B>D

Product availability (9) Reputation (10) Pricing (13) Parking facilities (5) Enjoyment of shopping experience (8) Overall cleanliness and hygiene of store (4) *p<.05, **p<.01; ***p<.001

B>D

The results for satisfaction indicate that customers are most satisfied with reputation quality of service and accessibility. However, since these figure are based on a 10-point scale, there is a lot of room for improvement since these figures suggest barely satisfying customers. An important observation, however, is that the retailer seems to meet the needs of the customers in those areas the customers consider important. There are differences across the postal districts but these are not many. Postal Code area B seems to have the most satisfied customers.

Figure 2: Mean Satisfaction Measures for Different Postcodes A B C D N=175 N=250 N=125 N=250 Store reputation (food handling, 8.09 7.88 7.94 safety & hygiene) (2) 8.23 Store reputation (animal welfare, free 8.25 8.06 7.68 range eggs etc) (1) 8.05 Store reputation (ethical business 7.68 7.32 7.58 practices (3) 7.91 Quality of fruits and vegetables Quality of meat products Range of products Service quality Product availability (13) 6.23 (11) 6.38 (7) 6.49 (6) 6.59 (9) 6.44 6.42 6.25 6.77 6.45 6.82 6.43 6.50 6.73 6.73 6.60 6.74 6.52 6.88 6.56 6.81 6.27 6.39 6.30 6.83 6.24 6.70 6.27 6.73 6.67 6.63 6.22 6.24 6.32 6.57 6.31 6.51 6.14 6.58 6.37 6.54

F 3.416* 6.315*** 7.567*** 1.172 1.543 3.744** 1.072 2.339 2.011 3.778** 1.681 1.208 1.894

Different sets B>D A, B&C>D

B>C & D

B>D

Reputation (10) Pricing (12) Parking facilities (5) Enjoyment of shopping experience (8) Overall cleanliness and hygiene of store (4) *p<.05, **p<.01; ***p<.001

B>D

Conclusion These findings point to several implications for managers. Reputation is important whether it is for quality, for cleanliness or for freshness of produce. People care about reputation as a differentiator since most retailing is otherwise very similar. Access to the retail is important. This might refer to availability of parking and the associated costs. Some factors indicated as not important are possibly taken for granted. Businesses need to go beyond satisfaction to attract and retain customers. Customers have become very demanding; hence the low scores on most satisfaction measures. Large self-service retail chains cannot ignore the importance placed by customers on the attribute of service quality. Customers value friendliness and caring treatment and to succeed there is need to provide these especially in competitive market. The results suggest customer service, might be an important antecedent to customer loyalty and future patronage. In addition to gaining feedback on attributes of customer satisfaction further work needs to be undertaken in the retail industry to better understand the relationship between the store preference, perceived satisfaction and service quality. The retail outlets chosen were representative of the retail landscape of Australia, the sample sizes were large, and the measurements exhibited high reliability, and hence the results could be generalisable.

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