RETAIL MANAGEMENT
Service Orientation in Retailing
Service orientation in retailing has come to the fore with the emergence of organized retailing, and has spread its roots to traditional formats as well. The changing expectations of consumers have necessitated that services are effectively planned and executed. Today, successful retailers know that the demand for their merchandise is not just price elastic, as economists would like to believe, but also service elastic. Accordingly, service orientation should be integrated into all aspects of retailing. The goal should not only be customer satisfaction, but also customer delight.
Retailing, being one of the fastest growing sectors in India, has started recognizing the importance of service initiatives. Today, more than their products, the retail stores are known for their service standards and people like to shop with a retail store which delivers goods along with better services. Service standards are directly linked to the store or channel selection, loyalty and fulfillment. The changing expectations of consumers require services to be effectively planned and executed. A classic example is that of the e-retaileramazon.com, that has made itself successful through quick delivery and enhanced range of merchandise offered.
These days, retail shopping experience is more than negotiating one's way through the store, website or catalog, selecting the merchandise and paying for it. In fact, it is essentially about services. If proper attention is not given to this aspect, the customer becomes a transient customer or a temporary customer, and loyalty suffers. Customer service cannot happen all by itself, but must be integrated into all aspects of retailing. Thus, successful retailers know that the demand for their merchandise is not just price elastic, as economists would believe, but also service elastic.
Service Orientation
Service orientation has developed with the emergence of organized or modern formats of retailing and has spread to the traditional formats also. The new services offered by traditional formats include visual merchandising, electronic billing, quick checkouts and distributing printed lists of monthly household purchases of food, groceries and FMCGs. This is in addition to offering credit and free home delivery, which have been their main strengths. Organized retail on the other hand is trying to establish newer standards on the services front, to retain its edge over traditional retailers.
McDonald's and other fast food chains have given due importance to hygiene, and people today are not afraid of eating out as hygienic food is served through better restaurant management systems. Baskin Robbins ice-creams are untouched by hand in the entire production process. Without exception, high quality has become a fact of life for all retailers.
High quality service is defined as delivering services that meet or exceed customer expectations. It is to be noted that there is no absolute measure or defined level of service quality. Rather, it is defined in relation to expectations of customers and in comparison with competitors. For example, a restaurant which has good ambience and serves good food with cleanliness and friendliness in 20 minutes is more likely to be preferred over another which also delivers the food in 20 minutes, but without some of these attributes.
As such, customer expectations are to be seen in a holistic manner, and further, it is recommended that high-performance retailers develop relationships with customers by offering additional benefits, such as financial benefits in the form of discounts, credit points, etc., as also various social benefits by way of personalized greetings on special occasions like birthdays, anniversaries, and so on.
The services triangle, comprising management, employees and customers (Exhibit 1) is a good concept for evaluating the service quality based on the organization's ability to set, enable and deliver on the promise of quality in retailing services.
Categorization of Services in a Retail Store
The services expected in a retail store may be categorized as:
Merchandise Management
These days, customers prefer to browse through a wide variety of merchandise of all shapes, sizes and colors before making their choice; and if a store can stock a large variety of merchandise, the customer would love to shop there again and again. For example, people prefer going to Shopper's Stop because of the wide range of branded readymade garments available under one roof.
Location and Layout Management
Selecting a location to suit the target market is the best way to increase footfalls. The layout should be customer friendly and convenient. Proper attention needs to be given to the parking space, lighting and fixtures, ambience and arrangement of merchandise, placement of rest chairs, location of billing counters and complaints and returns desk.
At several outlets, McDonald's provides special facilities like `Play Place' (Exhibit 2) where children can play various games, which makes it a fun place to eat out. At some places, it has provided Wi-Fi facilities to attract students to the outlet, like the one at Vile Parle in Mumbai.
Promotion Management
Providing timely information to customers regarding various sales promotion schemes, new arrivals, off-season sales and specific local advertising is another important area, which is emphasized from the retailing perspective.
Big Bazaar periodically hosts an exchange scheme to encourage people to get rid of their old stuff, which would otherwise have very little value, and purchase new products of their choice in return. People can get any of their old products, ranging from plastic bags to old vessels, and get them valued at the separate counter set up for the purpose (Exhibit 3). This is a one of its kind sales promotion offer which buoys up the sales of Big Bazaar and also develops a relationship with its customers.
Price Management
Price should be clearly marked and must be visible and unambiguous. The pricing should be fair, honest and straight forward. Aggressive pricing strategies to attract various target groups are adopted from time to time by value retailers like Big Bazaar (with its Sabse Saste Char Din) which increases the footfalls and also helps to build a bond between the customers and the retailer.
Credit Management
The management of credit, both in-house and bank credit, should also be integrated into the customer service program. However, most of the organized retail stores in India are yet to think on this aspect of service orientation. On the other hand, the practice of extending monthly or weekly credit facilities for groceries and other day-to-day items are prevalent in many of the traditionalkirana stores, and this has been a major source of customer loyalty and retention.
Components of Customer Service
Customer service consists of all those activities performed by the retailer that influence:
These three are the pre-transaction, transaction and post-transaction components of customer service. Retailers should design their programs around these elements to achieve competitive advantage. After all, in the event of mass distribution, most retailers have access to the same merchandise and therefore differentiation in services is the key element that attracts customers. Some retailers differentiate themselves on the basis of store location or design, while some try to provide additional services such as free home delivery, gift wrapping, fitting rooms, etc. A brief description follows:
A. Pre-Transaction Services
Pre-transaction services, such as convenient hours and information aid are critical, as they form the foundation for providing retail services by making a prospective customer comfortable and aware of the offerings.
Convenient Hours
Customers want convenient shopping hours, as these days they are deprived of time and they want to shop at their convenience. Many retail stores are operating for longer hours and several brick and mortar retailers are changing into click and mortar retailers to offer the shoppers the time flexibility which they have always wanted.
Information Aid
In western countries, retailers nowadays provide their customers with special booklets on various topics such as the selection and care of floor coverings, kitchen planning basics, how to select furniture, how to select hand and power tools, fabric care manual and so on. There are websites where consumers can experience firsthand a virtual walk through the store. Retailers' websites also provide other information to make the shopping experience a comfortable one. Retailers such as GAP and Lands' End offer the facility to move images of the latest fashion around on the screen to give the feel of how the outfits will mix and match.
B. Transaction Services
These are the services specifically related to transaction convenience such as credit facilities, gift wrapping and packaging, merchandise availability, personal selling, convenient sales transaction and an overall wonderful shopping experience.
Credit Facilities
Extending credit facilities to customers wherever possible, would be an advantage, as regular customers would be able to buy even if they have not come with the required amount of cash. In addition, this allows the customer to buy now and pay later. Credit also leads to impulsive buying which is further beneficial for the retailers, provided they have enough expertise to manage their receivables.
Gift Wrapping and Packaging
Customers are happy if their purchase is taken care of through proper packaging. Gift wrapping is one service which delights the customers further because it saves them the hassle of finding the gift wrapping material and then trying to wrap it neatly. Retailers like National Handloom Corporation in Rajasthan give due importance to this service always and are thus appreciated by customers.
Merchandise Availability
Availability of merchandise is an important dimension. If goods are often out of stock, it leads to frustration among customers, prompting them to go elsewhere.
Personal Selling
Well trained sales staff is an asset to any organization. This becomes even more important in the case of retailing because a sales person can gently explain the attributes and benefits of a product to the customer and thus contribute to suggestive selling. Customers like to be helped around by cooperative and helpful sales staff.
C. Post Transaction Services
The most common post transaction services include complaint handling, merchandise return and exchange, product repair, servicing and delivery.
Complaint Handling
Customer dissatisfaction is the most common source of complaints. Complaints originate when the retailer's product or service fails to meet customer expectations. Proper care should be given to resolve customer complaints.
Merchandise Returns and Exchange
The policy regarding merchandise returns is quite important, sometimes making the difference between profit and loss. The returns policy can range from `no returns, no exchange' to `the customer is always right'. It depends on the retailer to decide on either of the two policies or to position oneself somewhere between the two extremes.
Servicing and Repairs
After sales service is gaining importance day by day. Retailers who offer merchandise servicing and repair to their customers, tend to generate higher sales. It is really difficult for many customers to make repeat visits to service providers because of the shortage of time, with both husband and wife working. As a corollary, the service provider too will have only a limited window of two to three hours per day when he can meet the customers at their home, thereby demanding high resources. Thus, after-sales service along with delivery is perhaps one of the most difficult activities to manage.
Home Delivery
Delivery by retailers is another service which is catching up with the customers. This is one service which has given a new meaning to the customer's shopping experience. Domino's, Pizza Hut and other fast food chains are surviving primarily on the basis of efficient delivery. Traditional grocery retailers have been providing free home delivery to their regular customers since decades, and the modern retail chains are trying to emulate the same.
Evaluation of Service Quality - The Gap Model
Evaluation of one's service quality has to be undertaken on a continual basis, so as to provide the best services. The gap between customers' expectations and perceptions matters a lot, and this can be reduced with the help of Gap analysis.
Customer Expectations
Customer expectations are based on their knowledge and experiences. Technology is dramatically changing the way the customers and firms interact. Expectations also vary depending on the type of store. The customer expects a hypermarket to provide convenient parking, to be open from early morning till late evening, to have a wide variety of merchandise and to offer fast check-outs. On the other hand, customer expectations might be different in the case of a specialty store.
Perceived Service
Customers evaluate retailer services based on their perceptions as compared with their expectations. Their evaluation of service quality is often linked to the manner in which store employees provide the service.
Store service is characterised by certain variables such as:
The Gap Model
The gap model or service quality delivery model (Exhibit 4) indicates what retailers need to do to provide high quality service. When customer expectations are greater than their perceptions of the delivered service, they are dissatisfied and feel that the retailer's service is of poor quality.
These four gaps add up to Gap 5, i.e., the Service Gap. The retailer's objective is to reduce the service gap by minimizing each of the other four gaps. Thus, the key to improving service quality is to:
Once the retailer has carried out the gap analysis, he becomes more knowledgeable about customer expectations, can set standards for service delivery accordingly and work towards achieving the same.
Conclusion
A well executed service orientation is a sine qua non for successful retail management. The goal should be not only to satisfy the customers, but more importantly to delight them on every possible occasion. This would be possible with a consciously undertaken gap analysis, effective customer service and commitment towards continual improvement. While the management of the retail store has the primary responsibility for this, employees and even customers too are expected to facilitate the right kind of service orientation in a retail store. In the long run, this will be the real differentiator and value creator.
-- Nitu Saxena
Assistant Professor
(Marketing & Retail Management),
Banasthali Vidyapeeth, Jaipur.
The author can be reached at
saxenanitu@rediffmail.com
Assistant Professor
(Marketing & Retail Management),
Banasthali Vidyapeeth, Jaipur.
The author can be reached at
saxenanitu@rediffmail.com
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