Impact of Shopping Experience in Retaining Customer Loyalty
- A Case Study of Shoppers Stop


By

Mahesh Gowda S
Lecturer
Department of MBA
SJB Institute of Technology
Kengeri, Bangalore-560060
 


Abstract:

Indian Retail Industry is standing at its point of inflexion, waiting for the boom to take place. The inception of the retail industry dates back to times where retail stores were found in the village fairs, Melas or in the weekly markets. Those stores were highly unorganized. The maturity of the retail sector took place with the establishment of retail stores in the locality for convenience. With the government intervention the retail industry in India took a new shape. Outlets for Public Distribution System, Cooperative stores and Khadi stores were set up. These retail Stores demanded low investments for its establishment.

The study is about influence of shopping experience on retaining customer loyalty.  Study speaks about shopping experience in retail stores and consumer purchase behavior. It helps to understand frequency of shopping visit; the usual time of day for shopping; travel time; time spent; and number of companions. We can also understand various loyalty building programmes that are being initiated by the retail stores.

This study intends to know how shopping experience helps the retailers in building store loyalty. Statistical tools are employed to examine the relationship between variables. The study concludes that shopping experience has a direct influence on customer loyalty.

Keywords: loyalty, retention, variety, products, shopping, satisfaction, offers.

Introduction

Indian Retail Industry is standing at its point of inflexion, waiting for the boom to take place. The inception of the retail industry dates back to times where retail stores were found in the village fairs, Melas or in the weekly markets. Those stores were highly unorganized. The maturity of the retail sector took place with the establishment of retail stores in the locality for convenience. With the government intervention the retail industry in India took a new shape. Outlets for Public Distribution System, Cooperative stores and Khadi stores were set up. These retail Stores demanded low investments for its establishment.

The retail industry in India gathered a new dimension with the setting up of the different International Brand Outlets, Hyper or Super markets, shopping malls and departmental stores.

The untapped scope of retailing has attracted superstores like Wal-Mart into India, leaving behind the kiranas that served us for years. Such companies are basically IT based. The other important participants in the Indian Retail sector are Shopers Stop, Bata, Big Bazaar, Pantaloons, Archies, Cafe Coffee Day, landmark, Khadims, Crossword, to name a few.

It is believed that 21 million people are employed in retail sector in India, which is 7% of the total national force*(*Source- The benefits of modern trade to the Indian economy, CII, PWC paper). It is estimated that an additional 8 million jobs will be generated through direct and indirect employment related to retail sector.

Retail, India's largest industry and the country's largest source of employment after agriculture, has the deepest penetration into rural India, and generates more than 11% of India's GDP. The government allows 100% Foreign Direct Investment (FDI) in cash and carry through the automatic route and 51% FDI in single brand retail through Foreign Investment Promotion Board(FIPB).The economic Survey 2007-08, has suggested a share for foreign equity in all retail trade is 100% in respect to luxury brands and other specialized retail chains. The back-end costs without distribution centre costs, or what is called retail administration costs in retail jargon, is around 2.5% to 3% of sales.

India continues to be among the most attractive countries for global retailers. At US$ 511 billion in 2008, its retail market is larger than ever and drawing both global and local retailers. Foreign Direct Investment (FDI) inflows as on January 2009, in single-brand retail trading, stood at approx. US$ 25.18 million, according to the Department of Industrial Policy and Promotion (DIPP).

India's overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1.3 trillion by 2018, at a compound annual growth rate (CAGR) of 10%. As a democratic country with high growth rates, consumer spending has risen sharply as the youth population (more than 33% of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75% in the past four years alone. Also, modern retail, which accounts for almost 5% of the market, is expected to grow at a CAGR of 40% from US$ 20 billion in 2007 to US$ 107 billion by 2013.

This report will be useful to entrepreneurs interested in getting insights of retail industry for doing direct and indirect business in the sector, management consultants, banks evaluating retail sector proposals, investors who are interested in this sunrise sector, retail professionals for getting larger picture of the sector. This report can also be useful for educational institutions imparting courses in retail management.

Shoppers Stop:

Shoppers Stop is an Indian department store chain promoted by the K Raheja Corp Group (Chandru L Raheja Group), started in the year 1991 with its first store in Andheri, Mumbai.  Shoppers Stop Ltd has been awarded "the Hall of Fame" and won "the Emerging Market Retailer of the Year Award", by World Retail Congress at Barcelona, on April 10, 2008. Shoppers Stop is listed on the BSE. With the launch of the Navi Mumbai departmental store, Shoppers Stop has 34 stores in 15 cities in India.

Shoppers Stop is one of the leading retail stores in India. With the launch of the Navi Mumbai departmental store, Shoppers Stop has 34 stores in 15 cities in India.

With an unparalleled assortment of the leading international and national brands in clothing for men, women, and kids; accessories, fragrances, cosmetics, footwear; home furnishing and decor products, our stores aim to provide shoppers a truly international shopping destination.

Shoppers Stop retail products of domestic and international brands such as Louis Philippe, Pepe, Arrow, BIBA, Gini & Jony, Carbon, Corelle, Magppie, Nike, Reebok, LEGO, Mattel among others, through our stores. We retail merchandise under our own labels, such as STOP, Kashish, LIFE and Vettorio Fratini, Elliza Donatein, Haute Curry, I Jeanswear, Insense, Mario Zegnoti, Acropolis and Indi-Visual. Our designer section show cases some of India's prominent fashion designers (Ritu Kumar, Satya Paul and LABEL), retailing affordable designer wear. We are also licensees for Austin Reed (London), an international brand; the men's and women's outerwears are retailed in India exclusively through our chain.

Customer loyalty

The key to a successful business is a steady customer base. After all, successful businesses typically see 80 percent of their business come from 20 percent of their customers. Too many businesses neglect this loyal customer base in pursuit of new customers. However, since the cost to attract new customers is significantly more than to maintain your relationship with existing ones, your efforts toward building customer loyalty will certainly payoff.

Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer loyalty programs is happy customers who will return to purchase again and persuade others to use that company's products or services. This equates to profitability, as well as happy stakeholders.

Measuring customer loyalty and developing a retention strategy are critical to an organization's success. The organization that understands and manages customer loyalty has a leg up on its competition.

A customer loyalty scheme is "a mechanism for identifying and rewarding loyal customers" (Rayers, 1996). At the basic version, customers collect points according to the scale of purchases. Then customers can earn a future discount exchanging these points in their next visit. The main objective of a loyalty program is to retain regular customers, to increase commitment from occasional customers and to acquire new ones.

Shopping in India

India is a shopper's paradise. You'll find everything from clothes to ceramics, and metal work to musical instruments. The only problem is how to get all your purchases back home! Read on to discover what to buy and where to shop 'til you drop.

Changing attitudes of the Masses:

Droves of middle-class Indians have broken off their love of traditional stand-alone Indian stores that have no air conditioning; organized parking and other public amenities. Experts say mall throughout the country are getting bigger as they are now being positioned as a one-stop-shop for shopping, entertainment, leisure and eating-out needs rather than a place only for shopping for fashion goods.

By 2007, north zone will account for 39 per cent of total mall space, followed by west zone (33 per cent), south zone (18 per cent) and east zone (10 per cent), and said the Images study. The study said a lot more activity on the mall development front was expected from the smaller cities in the years ahead. These cities will have about 12.8 million sq ft of mall space by 2007, with Ludhiana accounting for about 2.5 million sq ft and Ahmadabad about 3.4 million sq ft.

The study said the fast growing middleclass population, the rise in women workforce and consumerism over the decade was the major forces in driving demand in the retail sector. "To the present generation, shopping means much more than a mere necessity and malls are now fast becoming image benchmarks for communities".

Research methodology:

Statement of problem

The success of any organization will depend on a constant effort made by it to satisfy the needs of the customers. This is where market research, especially consumer behavior research provides information which is not only useful in taking various marketing decisions but also help to reduce the risk in decision making. It will also help in understanding better what factors influence the decision making process of the consumers. Thus all firms are becoming not only customer focused but are also trying to build long term relationship with them. This is done by continuously updating information, knowledge and understanding about the customer needs and expectations.

The study aims at understanding the customer's needs, expectations, shopping experience and customer loyalty towards the Shoppers Stop.

Objectives of the study

  • To understand the Influences of retail stores on shopping behavior
  • To understand the varied consumer behavior and identity.
  • To understand the Future consumer needs and market opportunities
  • To understand the expectations and experience of customers at retail stores
  • To understand the stores efforts towards building customer loyalty
  • To understand the influence of shopping experience on building customer loyalty.
  • To understand the measure and evaluate the customer's response towards various loyalty building programmes.

Scope of the study

  • The study will help to understand the shopping experience of the consumers at retail stores.
  • The study will help to understand the loyalty building programmes
  • The study is helpful to understand the departmental performances, staff ability to maintain long term relationship with customers
  • The study is helpful to understand the consumer behavior at retail outlets

Methodology

Methodology has a prime importance in any study. The study was conducted with the help of structured questionnaire. The data was collected by the personal interviews and questionnaire administration with the sample customers. In certain cases informal discussion were made with the respondents to get an in depth knowledge of their buying behavior. Each respondent was given time to think in order to avoid the chances of partial response. A most care was taken to avoid any kind of error creeping in the study.

Sample Design:

Sample size

  • Among all the customers, a sample size of 100 was selected.
  • In these 100 customers for better understanding of customer loyalty, it is divided into 4 type of age group
  • The age groups were 15 to 25yrs, 26 to 35yrs, 36 to 45 yrs and 45yrs above.

Sample Area:

  • Sample area was confined to Customers visiting Shoppers stop, Bangalore.

Sampling technique

  • Simple random sampling technique: This is a process in which every individual of the population has an equal probability of being chosen.
  • Descriptive Research: This type of research is also known as statistical research, describes data and characteristics of the population or phenomenon being studied.

Research Tools Used:

  • The research tool used is simple average method

Data collection

Primary data:

  • Questionnaire
  • Personal interview

Secondary data:

  • Company website
  • Internet
     

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Source: E-mail March 28, 2011

          

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