Key factors of retail service quality affecting shoppers perception of retail store service suppermakets versus convenience shops in vietnam

There are main five factors positively affect to overall evaluation of retail service quality including physical aspects, reliability, personal interaction, problem solving and policy..

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

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Dang Van Tuan

KEY FACTORS OF RETAIL SERVICE QUALITY AFFECTING SHOPPERS’ PERCEPTION OF RETAIL STORE SERVICE: SUPPERMARKETS VERSUS

CONVENIENCE SHOPS IN VIET NAM

ID: 22110076

MASTER OF BUSINESS

SUPERVISOR: Dr DINH THAI HOANG

Ho Chi Minh City – Year 2014

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Abstract

The purpose of this paper was to determine shoppers’ perceptions of service quality offered

in Ho Chi Minh City, Viet Nam supermarkets and small convenience shops A cross sectional design of explorative nature was adopted for this study to evaluate the shoppers’ perception of the convenience shops and supermarkets This research was used an existing scale to measure retail service quality and also explores the comparison between the convenience shops and supermarkets

The objectives of this study have been achieved through study 355 completed questionnaires obtained from Ho Chi Minh City customers were used in the analysis for the main study There are main five factors positively affect to overall evaluation of retail service quality including physical aspects, reliability, personal interaction, problem solving and policy Principal component analysis was used for scale reduction and multiple regression analysis was used to find associations

The result of this study recommend that the competitive strategies for convenience shops are to concentrate on willingness to assist or in helping the customer, skills to solve customers’ problems and providing variety and deep assortment and improvement in cleanliness It coincides with customers’ suggestions for improvement such as improving on the physical facilities, displays, shop presentation and arrangement as well as in-store and environment The competitive strategies for supermarkets are to concentrate policy and personal interaction From these findings, managerial implications and limitation of this research have been also discussed

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CHAPTER 1: INTRODUCTION 5

1.1 Problem statement 6

1.2 Research methodology and research scope 7

1.3 Research contribution 7

CHAPTER 2: REVIEW OF LITERATURE 9

2.1 Service quality and customers’ perception 9

2.2 Review of Service Quality Models 10

2.3 Model and hypothesis 14

2.4 Moderating effect 17

CHAPTER 3: METHODOLOGY 20

3.1 Research process 20

3.2 Sampling design 20

3.2.1 Sample Size 20

3.2.2 Pilot survey 21

3.2.3 Main survey 21

3.3 Measurement scale 21

3.4 Methodology of data analysis 22

3.4.1 Descriptive statistics 22

3.4.2 Reliability analysis 22

3.4.3 Exploration factor analysis 22

3.4.4 Multiple regression analysis 23

3.4.5 Data analysis 23

CHAPTER 4: RESEARCH RESULTS 24

4.1 Data statistical analysis 24

4.2 Cronbach’s Alpha coefficient of reliability test 26

4.3 Exploratory factor analysis (EFA) 28

4.4 Multiple regression analysis for common model 31

4.5 Hypothesis testing for Common model 33

4.6 Multiple regression analysis of supermarkets 35

4.7 Multiple regression analysis of Convenience Shops 37

4.8 Hypothesis testing of moderating effect 40

CHAPTER 5: CONCLUSION, IMPLICATIONS, AND LIMITATIONS 43

5.1 Conclusion 43

5.2 Managerial implications 43

5.2.1 Competitive Strategies for Convenience Shops 44

5.2.2 Competitive Strategies for Supermarkets 45

5.3 Limitation and for further research 46

APPENDIES 52

Appendix 1: The RSQS Items used in the Instrument 52

Appendix 2: Questionnaire (English Version) 54

Appendix 3: Questionnaire (Vietnamese Version) 58

Appendix 4: Test result of independence of residuals – Common Model 61

Appendix 5: Test result of linear relationship - Common Model 61

Appendix 6: Test result of homoscedasticity of residuals – Common Model 62

Appendix 7: Correlation indexes – Common Model 62

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Appendix 8: Coefficients indexes – Common Model 63

Appendix 9: Test result of Normality of residuals – Common Model 63

Appendix 10: Test result of independence of residuals – Convenience shops 64

Appendix 11: Test result of linear relationship - Convenience shops 64

Appendix 12: Test result of homoscedasticity of residuals – Convenience shops 66

Appendix 13: Correlation indexes – Convenience shops 66

Appendix 14: Coefficients indexes – Convenience shops 67

Appendix 15: Test result of Normality of residuals – Convenience shops 68

Appendix 16: Test result of independence of residuals - supermarkets 68

Appendix 17: Test result of linear relationship – supermarkets 68

Appendix 18: Test result of homoscedasticity of residuals – supermarkets 69

Appendix 19: Correlation indexes - supermarkets 70

Appendix 20: Coefficient indexes - supermarkets 71

Appendix 21: Test result of Normality of residuals – supermarkets 71

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CHAPTER 1: INTRODUCTION

Retail service quality has drawn attention of researchers and managers in recent decades (Zeithaml, 2000) It has become very much important in the competitive environment and widely used by the retailers as one of the important strategy because of its impact on customer satisfaction The retailing industry plays a crucial role in the overall economy of Viet Nam By satisfying customers through high quality service, business firms not only retain their current customers, but also increase their market share (Finn and Lamb, 1991) By the way, retailers have positioned themselves for all kind of customer needs and income levels especially the growing young working population Many retailers have been upgrading themselves by re-locating to up-coming modern malls and shopping centers, providing superior shopping atmosphere and experience especially in the urban and semi urban centers To date, many studies on service quality relied on service quality construct and scale by Parasuraman et

al (1988) However, this application to the retail industry may not be appropriate for service quality in retailing industry, as well as not clear enough whether these retailers have fully embraced the retail concept which emphasis on proper communication, total retail experience, customer service, relationship retailing and consistent strategy Additionally, the retailers are more forced to concentrate towards customer’s perception in the competitive environment One of typical characteristic in retail setting, especially retail stores where there is a mix of product and service, retailers are likely to have impact on service quality more than on product quality (Dabholkar et al., 1996) As retailers can create such effects, service quality plays a significant strategic role in creating quality perceptions In this, the marketing decisions revolving around the target market, product assortment, services and store atmosphere, store activities and experience, procurement, price decisions, communications and location decisions which are very critical to a retailer’s success should be emphasized (Kotler & Keller, 2006)

Recently, the growth in importance of service quality in the world has been influenced greatly by the changing nature of the world economies and the customers changing needs, tastes

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and preferences The move has also been fueled by the growth in consumerism, world travel and the competitive business environments The service quality has become a key concept in a competitive corporate strategy (Gronroos, 2001) However, there have been very few studies on retail service quality in Vietnam, especially the comparison between supermarkets and convenience shops Therefore, the research on perception of service quality within convenience shops and supermarkets in Viet Nam is necessary to show out an overall picture of retail service quality in Viet Nam Hence, the question is how to evaluate customer’s perception of service performance within the retail stores that needs to clarify timely and pertinent because perceived performance could influence the retail stores image, customer satisfaction and bottom-line growth

In the world, there are some researchers have researched about this such as Ed Watkins (1976) researched on factors influencing choice of supermarkets and convenience stores to develop a marketing strategy for each, while Ryu and Han (2010) investigated the influence of quality food, service and physical environment on customer satisfaction and behavioral intention in

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quick-casual restaurants in Midwestern state This study is aimed to explore the components of retail service quality in term of supermarkets and convenience shops in Viet Nam, as well as the relationships between each of retail service quality components and customer’s overall evaluation

of retail service quality This study is also to assess shoppers’ perceptions of the quality of service provided by the convenience shops and the supermarkets in Viet Nam Specifically, this research is

to find the pertinent answers to the following questions:

1 What are the key factors of retail service quality (convenience shops and supermarkets)?

2 What do shoppers generally consider important while shopping in a retail store?

1.2 Research methodology and research scope

The survey questionnaire is originally developed in English and then translated into Vietnamese In-depth interviews are then conducted with five convenience shoppers for each area including supermarket/ convenience shop in order to modify the Vietnamese version of the questionnaire before the survey is implemented in mass The next step is analyzing the collected data The data of this research is processed using SPSS software with three main stages First, Cronbach‟s Alpha is used to test the reliability of the measurement scale Then, the validity of the measurement scale will be checked by Exploratory Factor Analysis (EFA) Finally, simple regression and multiple regression are employed as the main method for investigating the relationships among factors in the research model

Ho Chi Minh City has been chosen to conduct the survey for this study since it is one of the biggest cities in Vietnam and most of international brands centralize here Moreover, Ho Chi Minh City is also one of the wealthiest cities in Vietnam, so people who live here will have higher chance to visit supermarkets and/ or convenience shops, which are usually quite often

1.3 Research contribution

This research complements and adds to previous research by expanding the study of retail service quality to include supermarket and convenience shop with the comparison Therefore, this

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study is very important because it offers a scale to measure service quality that is suitable for supermarkets and convenience shops and which could be modified slightly to expand whole retail industry Based on findings in the end of this research, we hope to provide practical contributions

to the retail service quality industry, particularly to owner of supermarkets and/ or convenience shops who have the intention to develop their business, especially enter Ho Chi Minh City market However, it is essential for owners of supermarkets and/ or convenience shops to find out effective strategies that can maximize opportunities and minimize obstacles This study with deep understanding of consumers’ intent to use supermarkets and/ or convenience shops can help their owners have a higher chance to be successful in Ho Chi Minh City market In summary, the findings of this study would be useful for retail brand marketers who want to penetrate the business

in Ho Chi Minh City and who have already developed in the market and want to maintain the loyalty of their customers

1.4 Research structure

This study is organized into five chapters It starts with the introduction chapter which presents an outline of this research This chapter includes background of the research and research objectives Besides, the significance that this study contributes to management practice as well as scope of the research and methodology of data analysis are also mentioned in the first chapter Chapter two reviews and synthesizes the theories in the literature of five concepts, including physical aspects, reliability, personal interaction, problem solving and policy This chapter also describes research model and proposed hypotheses Chapter third introduces research methodology used to empirically test the research model Chapter four presents the results of data analysis The final chapter discusses summarily the study’s core findings, suggests some recommendations for business strategy of retail companies based on findings and finally points out some limitations of the research

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CHAPTER 2: REVIEW OF LITERATURE

This chapter presents a review of relevant literature related to factors affecting customer’s perception in comparison between supermarkets and convenience shops This chapter also states the hypotheses and propose conceptual model for this study

2.1 Service quality and customers’ perception of retail store service

Service quality is a critical component of customer perceptions about the service as retailers provide both goods and services to their customers Retailing has been characterized as a service with high degree of labor intensity, and low degree of interaction and customization (Tan

& Mehta, 1994) Examples of retailers in Viet Nam include the supermarkets and many others of small shops such as kiosks (very small convenience shop), hawkers, butcheries, fuel stations, bookshops, hotels, chemists, ordinary shops, auto dealers, cloth stores, jewelry stores, gift shops, shoe shop, furniture stores, music stores, etc As thus, the service quality is defined as customers’ perception of how well a service meets or exceeds their expectations (Czepiel, 1990) By growing the research in the service quality, it has made many retailers to understand the importance of service quality in their retail offerings As mentioned earlier, positive customer’s perception of service quality can greatly influence a firm’s performance and competitiveness

Customer’s perception has been defined as a customer’s overall impression of the relative inferiority/superiority of an organization and its services (Bitner & Hubbert, 1994) This perception

is influenced by many factors such as employee’s performance, facilities, price of products and quality of service offered among other factors Further, due to technological developments of education, customer’s perceptions are greatly changing and calling for organizations to have concerted effort to understand these perceptions On the other hand, retail image refers to how a retailer is perceived by customers and other parties According to Berman and Evans (2005) overall retail image is influenced by store location, merchandise attributes, pricing, firm’s positioning, customer service, target market, attributes of physical facilities, shopping experience,

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promotion tools (such as advertising, public relations, personal selling, sales promotion) and community service Further, Berman and Evans (2005) note that a retailer's image depends heavily

on its ‘atmosphere’ or the psychological feeling a customer gets when in that retail outlet

2.2 Review of Service Quality Models

Service quality in retail outlets is different from other product or service oriented organizations (Finn, 2004) Service quality is considered as the most vital performance indicator

of an organization in both the marketing literature usually and the service marketing literature particularly A number of models of service quality have been developed A review of service quality scales of retail by Wang (2003) indicates that the two most widely used scales are the SERVQUAL developed by Parasuraman (1988) and RSQS developed by Dabholkar (1996) On the application of SERVQUAL within retail setting, in 1980s, in the attempt to define the service quality as well as to develop a model of service quality affecting customer satisfaction, Parasuraman conducted an exploratory investigation The results showed that regardless of the type of service, consumers used the similar criteria in evaluating service quality (Parasuraman et al., 1985) In deep of review, Wang noted that SERVQUAL fails to provide a precise and efficient measure of service quality in retail settings such as discount stores and apparel specialty stores that offer a goods and services Wang found that there is a broad variety of experiential factor structures that can be obtained which vary in terms of interpretability thus conflicting from five factor structure Reliability, Assurance, Tangibility, Empathy Responsiveness proposed by Parasuraman (1988) This model indicates that consumer perceptions of quality influenced by five gaps occurring in the internal process of service delivery The basic premise is that service quality could be defined by the difference between expected service and perceived service (Parasuraman et

al, 1985) By looking at that model, we can see that the first four factors are those on the service provider side of service (organization side) The last factor (Empathy Responsiveness) relates to the customer side of service However, SERVQUAL applies in the study of different types of

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service industries; there are certain limitations and criticisms Some of the widespread concerns are the five-dimension configuration of the scale, the appropriateness of operationalizing service quality as the expectations-performances gap score, and the scale’s applicability to a retail setting (Bakakus and Boller, 1992; Finn and Lamb, 1991; Reeves and Bednar 1994) Regardless of the Retail Service Quality Scale (RSQS), Dabholkar et al (1996) developed Retail Service Quality Model (RSQS) in order to fit the retail industry RSQS composes of five factors: (i) Physical aspects – Retail store appearance and store layout, (ii)Reliability – Retailers keep their promises and do the right things, (iii)Personal interaction – Retail store personnel are courteous, helpful, and inspire confidence in customers, (iv)Problem solving – Retail store personnel are capable to handle returns and exchanges, customers’ problems and complaints, and (v) Policy – Retail store’s policy on merchandise quality, parking, operation hours, and credit cards On their part, Tan and Mehta (1994) identified five dimensions associated with facility intensive services (offered in supermarkets) such as (i) operational dimension, (ii) the location dimension, (iii) the atmospheric and image dimension, (iv) the consumer use dimension and (v) contact personnel dimension They contend that satisfaction with the facility driven service usually depends on the customer’s ability

to interact with the facility in order to produce a satisfactory consumption experience In other words, customers have two levels of expectations: desired and acceptable levels She further advises that for an organization to achieve the range between acceptable and desired, it has to establish: product and service quality specifications, employee performance metrics, product performance and quality metrics, clear definitions of customer expectations, service process management, service process metrics, on-going interactive customer orientation, iterative process monitoring, controls and corrective action procedures In addition, Zeitham, Bitner and Glemler (2009) argue that perceptions of service quality are the results of consumer’s comparisons of expected service with perceived service They contend that the gaps between expected and actual/delivered service creates dissatisfaction Thus, the retailers’ challenge is to minimize the gaps between expected services and actual services by first understanding customers’ expectation

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and then delivering those expectations

RSQS has been used by some researchers in measuring service quality in certain types of retailers such as department stores, supermarkets and discount stores in Western and Eastern countries Kim et al (2001) conducted a study with U.S and Korean customers of discount stores The findings showed that customers' perceptions of service quality do not view service quality in

as similar manner, nor do U.S and Korean customers of discount stores In other words, the dimensionality of service quality is not universal across industries or across countries (Kim

et al, 2001) Mehta et al (2000) conducted a research on service quality in the contexts of supermarkets and electronic good retailers in Singapore The results showed that “RSQS was superior within the context of more good and less service environment Moreover, Kaul (2003) found that RSQS dimensions were not valid in India In Vietnam, Nguyen (2006) tested a model

on the relationships between service quality, customer satisfaction and loyalty in supermarkets in HCMC and found that retail service quality composes of five dimensions: goods assortment, personnel, appearance, physical aspects and safety The results found that SERQUAL and RSQS could be applied in Vietnam if they are adjusted to the specific context of study Wang (2003) proposes the development of a new, more consistent, culturally bounded and precise measure of retail service quality which can be applied globally but also helpful to retail managers in more accurate assessment of service quality within retail stores In a competitive environment, service quality is critical for service firms to maintain a stranglehold position as

it is an indicator of business performance Based on superior service, smaller stores could compete with larger and more dominant stores as they could not compete on price factors

In addition, focusing on service quality is significant in markets where product offerings are similar, as typically found across grocery retail stores Improvement of the quality of services requires recognition of the service quality dimensions that are important to retail consumers Although the research into the dimensions used by consumers to measure service quality in the service sector is extensive, there is lack of empirical studies on factors of quality

Secondly, reviewing of factors influencing choice of convenience shops: Ed Watkins (1976) identified six important factors in the choice of convenience stores and arranged in order of importance as: quick service, hours open, location, products available, employee attitude and parking space As a contract with supermarket, Watkins noted that the relative importance of these factors associated with convenience stores does not appear to shift significantly over time or between trading areas However, very few customers identified convenience stores as their primary source of food but identified as a source for fill-in items

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2.3 Model and hypothesis

Service quality Dimensions

(H1)

(H2)

(H3)

(H4) (H6abcde)

(H5)

Figure 1: Conceptual model of retail service quality in Viet Nam

Based on the above review, Retail Service Quality Scale (RSQS) is employed in this empirical study of service quality in Vietnam However, to be independent from the result of Nguyen (2006) and tested whether that model can be applied globally or not, thus this study adopts the original model of Dabholkar et al (1996) with a minor modification as a moderating variable (supermarkets/ convenience shops) was added in the model The model (Figure 1) proposed a structure for retail service quality consisting of five dimensions of service quality: Physical aspects, Reliability, Personal interaction, Problem solving and Policy and a moderating variable In this study, five dimensions of service quality are tested with overall evaluation of retail service quality and compared the impacts of supermarkets and convenience shops on the overall evaluation of retail service quality in Viet Nam based on the individual dimensions of retail service quality

Physical aspects are defined as an appearance of the store and store layout that makes it convenient for customers Physical aspects of retailer include equipment and fixtures which related

to variables such as store decor, lighting, air-conditioning; Physical facilities which related to

Overall Evaluation

of Retail Service Quality

Physical Aspects

Reliability

Personal Interaction

Problem Solving

Policy

Supermarkets/

Convenience shops

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variables such as building, ambience; Materials associated with this retailing’s service, convenience of physical facilities and layouts According to Dabholkar, Thorpe & Rentz (1996), the store image as well as the cleanliness of the store, the cleanliness of the public facilities, the store layout and ability to find products easily have been important elements in previous research The retail literature suggests the importance of the store layout and design (Teas, 1994; Gomez, McLaughlin & Wittink, 2004) This dimension is similar to the tangibles dimension of service quality but includes additional items such as the convenience of the shop and the store layout (Kim & Jin, 2002) This factor has broader meaning than does the SERVQUAL’s tangible factors In addition to the appearance of the facilities, it also takes into account the convenience offered the customer by the layout of physical facilities The higher customers appreciate on the physical aspects, the higher the satisfaction on the retail service quality from customer is

H1: There is a positive impact of physical aspects of retail service quality on customer’s perception of retail store service

Reliability is defined as keeping promises, doing things right and the availability of products Reliability of retailers includes evaluation of how well retailers keep their promises and does the right things, providing right service, available merchandise and error-free sales transactions and records Dabholkar, Thorpe & Rentz (1996) pointed out that keeping promises and doing it right, that were identified during their interviews, were important sub dimensions The higher customers’ appreciate on reliability, the higher the satisfaction on the retail service quality from customer is

H2: There is a positive impact of reliability of retail service quality on customer’s perception of retail store service

Personal Interaction is defined that the employees are helpful, courteous and treat

customers with respect In the retail position, sellers contact directly with the customers that they mostly are final customers of goods and services Retail sellers can be a very important element in

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achieving differentiation and competitive advantage and getting the value by customers in

organization Sellers play an important role in this field because they contact with customers

directly Thus, the personal interaction factor of retailers includes availability of knowledge from employees to answer questions, inspiring confidence, providing prompt service, willing to respond to customer’s requests, giving customers individual attention, showing consistent courteousy with customers and even treat customers properly on the phone This factor is a

combination of the ‘responsiveness’ and ‘assurance dimension’ of SERVQUAL and includes the employee’s helpfulness and the ability to instil trust (Kim & Jin, 2002) The higher customers’ appreciate personal interaction, the higher the satisfaction on the retail service quality from

customer is

H3: There is a positive impact of personal interaction of retail service quality on customer’s perception of retail store service

Problem solving is defined employees are trained to handle returns and to deal with

complaints This is a new dimension that is different to the dimensions of SERVQUAL and was added as a part of service recovery (Kim & Jin, 2002) This factor has no sub-dimensions and was added to deal with the interaction between the store employees and the customers, and the manner in which problems are handled Problem solving addresses handling of returns, exchanges and

complaints This dimension of retailers is the ability of retail store personnel in willingness to

handle returns and exchanges, sincere interest in problem and handling customer complaints

directly and immediately Literature reviewed also suggests the importance of returning and

exchanging items and the way employees solve those problems (Dabholkar, Thorpe & Rentz, 1996) The higher customers appreciate problem solving, the higher the satisfaction on the retail service quality from customer is

H4: There is a positive impact of problem solving of retail service quality on customer’s perception of retail store service

Policy includes the store policy such as operating hours, payment methods and

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so on This is also a new dimension, which is not similar to any of the SERVQUAL dimensions; it has no sub-dimensions and measures the service quality that is affected by the store policies such as the opening hours of the store, parking and quality of products This dimension was added based on literature reviews and the interviews (Dabholkar, Thorpe & Rentz 1996) This factor captures aspects of service quality that are directly influenced by retailers’ policy It includes high quality merchandise, convenience of parking and operating hours as well as accepting major credit cards The higher customers appreciate policy, the higher the satisfaction on the retail service quality from customer is

H5: Policy has positive impact of retail service quality on customer’s perception of retail store service

Overall evaluation of service quality: Parasuraman, Zeithaml & Berry (1998) defined that,

is as consumers’ judgment about a business’s overall distinction or dominance In simple words Jiang and Wang, (2006) defined perceived service quality as the consumer’s evaluation of the service performance received and how it compared with their expectation Another aspect Jiang and Wang, (2006) pointed out that, evaluations are not based on service attributes; rather these depend on a customer’s feelings or memory Therefore, customers measure service quality in terms

of how much pleasure they have received from a service The definition of service quality can be given on the basis of the results of Parasuraman et al, (1988), who state,

“Perceived service quality is therefore viewed as the degree and direction of discrepancy between consumers’ perceptions and expectations” (p 17)

2.4 Moderating effect

This study examines the moderating effects of supermarkets and convenience shops on the impacts of service quality dimensions on the overall evaluation of retail service quality Survey of customer analysis and market strategy on supermarkets and convenience stores by Ed Watkins (1976) found that the factors that determined selection of a supermarket by customers including

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nine factors arranged in order of importance: prices, cleanliness, food quality, variety, store location, employee attitude, meat quality (freshness), produce quality (freshness) and store atmosphere Further, Watkins notes that the relative importance of all store factors identified by supermarket customers shifted over time and between trading areas due to economic competitive changes and shifts in customer’s priorities For the factors influencing choice of convenience shops, Ed Watkins (1976) identified six important factors and arranged in order of importance as: quick service, hours open, location, products available, employee attitude and parking space Unlike the supermarkets, Watkins noted that the relative importance of these factors associated with convenience stores does not appear to shift significantly over time or between trading areas However, very few customers identified convenience stores as their primary source

of food but identified as a source for fill-in items Youssef et al (2002) stated that the different sizes of firms were said to have several critical differences The researchers posited that the flat structure of small to medium sized firms leads to a more flexible work environment where managers or owners will tend to interact directly with customers, tend to be ‘people oriented’ instead of ‘system oriented’, and tend to be more flexible Large firms are typically highly structured with formalized procedure set for all activities with high emphasize on standardization and specialization (Youssef et al., 2002) The effects of the structure in relations to the size of the firms are reflected in the retail sector On the other hand, a study on the service quality of supermarket in Singapore found that "personal interaction" and "physical aspects’ were the only two important determinants in the respondent’s evaluation of the service quality of a supermarket (Mehta et al, 2000) The other dimensions namely "Policy", "Problem solving" and "Reliability" were found not to be important in the measure of service quality for a supermarket (Mehta et al, 2000) In addition, the supermarkets tend to offer lower prices, provides more efficient climatically controlled shopping area, and more consistency in its service offering as compared to supermarkets (Arnold and Luthra, 2000) Large store chains emphasize and compete on the basis of a wide and deep mix of merchandise (Klemz & Boshoff, 2001; Odekerken-Schröder et al, 2001) Larger stores

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provide convenience as large amounts of goods can be purchased during one shopping trip and can easily be transported by car (Klemz & Boshoff, 2001) This convenience is supported by increased mobility as consumers have more choices of where

to shop and how much to shop (Clarke, 2000) Based on the above discussion, it appears that the moderating effects of supermarkets and convenience shops on the impacts of service quality dimensions towards overall evaluation of retail service quality Therefore, hypothesizes are as followings:

H6a The impacts of the physical aspects on overall evaluation of retail service quality are stronger for the supermarkets than for the convenience shops

H6b The impacts of the reliability on overall evaluation of retail service quality are stronger for the supermarkets than for the convenience shops

H6c The impacts of the personnel interaction on overall evaluation of retail service quality are stronger for the supermarkets than for the convenience shops

H6d The impacts of the problem solving on overall evaluation of retail service quality are stronger for the supermarkets than for the convenience shops

H6e The impacts of the policy on overall evaluation of retail service quality are stronger for the supermarkets than for the convenience shops

In summary, this chapter presents theoretical background of each concept in the

model Based on discussion of literature review, retail service quality is affected by five

factors, these are: physical aspects, reliability, personal interaction, problem solving and policy

Then, the comparison between supermarkets and convenience shops is also discussed Such

factors are selected to build the model because their relationship has already tested by many

previous scholars through their studies Hence, there are ten hypotheses proposed for this

research The next chapter will discuss about methodology that used to analyze the data and test

hypotheses of the research model

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time of independent variables, but not less than 100”

n>= 100 and n>=5k (where k is equal to number of variables) This study has 28items, so the minimum size for each convenience shop data and supermarkets data in this research is n = 5*28 = 120

3.2.2 Pilot survey

Two phases of study were undertaken in this study: a pilot study and a main survey The pilot study was a qualitative study The qualitative exploratory study using in depth interviews with five convenience shoppers for each area (supermarket/ convenience shop) At this step, researcher conveniently selected shoppers, who had shopped at any supermarket/ convenience shops in the last three months and spent a significantly large amount on shopping during such store visits A face-to-face questionnaire administration applied to those shoppers The purpose of this study was to check the contents in order to see any perceived ambiguity, omissions or errors of the measures

3.2.3 Main survey

The Population of study (main study) included shoppers of convenience shops and supermarkets in Ho Chi Minh City, the biggest city in Viet Nam Thus, there are two data sets were collected, one for the supermarkets and another for the convenience shops Data were collected using convenience sampling method with a structured questionnaire The official survey was conducted with final questionnaire by face-to-face interview, online survey and sending email

to convenience customers These scales (see Appendix I), which were translated into Vietnamese using a translated and back-translated procedure, were a seven-point Likert type

3.3 Measurement scale

Five service quality dimensions were measured by 28 items in the Retail Service Quality Scale (RSQS), which borrowed from Dabholkar et al (1996) and the scale for overall evaluation of service quality was adjusted from Fornell et al (1996) in which articulated/ showed in appendix 1

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However, these were contextualized for ease of understanding by the shoppers These variables are integrated and tested using a seven-point Likert type, anchored by 1 – strongly disagree and 7 – strongly agree

3.4 Methodology of data analysis

to another In generally, the value of Cronbach’s Alpha for acceptable reliability is 0.7, it could decrease to 0.6 in exploration research, and any variables, which have the value of Correlated Item-Total Correlation below 0.4, would consider to be rejected (Hair et al, 1998)

3.4.3 Exploration factor analysis

Exploration factor analysis (EFA) could be described as orderly simplification of interrelated measures EFA, traditionally, has been used to explore the possible underlying factor structure of a set of observed variables without imposing a preconceived structure on the outcome

By performing EFA, the underlying factor structure is identified For this study, Exploration factor analysis will be conducted by Varimax rotation in condition of KMO value more than 0.5 and factor loading are over 0.5

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3.4.4 Multiple regression analysis

The main task of statistical analysis is applied in the Multiple Liner Regression in order to study the correlation and measure the prediction level of 5 independent factors on dependent factor

3.4.5 Data analysis

The procedure to analyze the data collected included test of reliability, EFA and SEM test This research employed SPSS 21.0 software to implement the data analysis procedure

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CHAPTER 4: RESEARCH RESULTS

This chapter presents the results of the data analysis The data analysis & discussion part is divided into the following sections: descriptive analysis, reliability test, factor analysis, and multiple regression analysis

4.1 Data statistical analysis

In order to get the high rate of response, the face to face interview is the best way in getting the answers but due to time constraint there are only 250 questionnaires were sent directly to shoppers and 250 indirectly by email with attached file or the link for doing online There were only 355 respondents considered analysis but only 315 answers were valid (63% in total) Out of

315 respondents, that includes 151 responses of convenience shoppers and 164 responses for supermarkets giving a rate of approx 48% and 52% respectively as presented in the table 4.1 below:

Table 4.1: Demographic Profile

or University (75% of convenience shops and 87% of supermarkets) On the level of occupation, most of them were students (46% of convenience shops and 37% of supermarkets) and then changed differently for the admin officer (26% of convenience shops and 24% of supermarkets) and management level (15% of convenience shops and 32% of supermarkets) The income level represented a decrease of number shoppers in term of increase the income for convenience shops

as showed a less than 5 million worth 43%, 5-10 million worth 30%, etc However, it is slightly different for the supermarket as it represented a greatest number of shoppers with income from 5-

10 million and then it is an equal level of shoppers with income of less 5 million and from 11 - 15 million as showed 23%

The results showed those high-income shoppers, high-level of occupation and education preferred shopping in the supermarkets rather than shopping in the convenience shops The importance however varied according to levels of education With those, the levels of high school education considered convenience, cheap price and reliability as the importance reasons for their shopping With those, the levels of College or University education indicated variety, good communication, cheap price, prompt service, honest trust and confidence as the importance reasons for their shopping, and therefore they look for the supermarkets

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4.2 Cronbach’s Alpha coefficient of reliability test

Cronbach’s alpha was used to test the reliability of the measurement scales; the acceptable value of Cronbach’s alpha is over 0.6 and any variable that the Item-total correlation is smaller than 0.3 will be deleted There were 3 multidirectional factors (physical aspect, reliability and personal interaction) which were tested the cronbach’s alpha for each of small factor such as Appearance and Convenience (physical aspect ); Promises and Doing-it-Right (reliability);

Inspiring Confidence and Courteousness/ Helpfulness (personal interaction) Based on the result of

the first reliability testing of all proposed factors, there were 10 variables should be deleted because those have the Item-total correlation smaller than 0.3 or minus as showed in Table 4.2

Table 4.2: Rejected variables

Factor Variable name/ scale to be deleted

Correlated Item-Total Correlation

Cronbach's Alpha if Item

Deleted

Physical

Aspect

Appearance PA1 The store has modern-looking equipment and

PA2 The store and its physical facilities (trial

rooms and restrooms) are visually attractive 0.202 0.724

Convenience PA5 The store layout at this store makes it easier

for customers to find what they need 0.139

-

PA6 The store layout at this store makes it easier

for customers to move around in the store 0.139

-

Reliability

Doing-it-Right RE5 This store has merchandise available when

Personal

Interaction

Courteousness/ Helpfulness PI6 Employees in this store are never too busy to

respond to customer’s requests 0.258 0.777

PI7 This store gives customers individual

PI8 Employees in this store are consistently

PI9 Employees in this store treat customers

Policy PO3 The store has its own credit card 0.172 0.731

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The final reliability testing were conducted after deleted unsanctified variables in table 4.2 above and gave a good result which all correlated item-total correlation value in all scale are over 0.3 and the Cronbach’s alpha value of all factors were higher than 0.6 (it should be acceptable) according to Table 4.3

Table 4.3: Results of reliability test

d

Corrected Item- Total Correlatio

n

Squared Multiple Correlatio

n

Cronbach 's Alpha if Item Deleted

Cronbach 's Alpha

N

of Ite

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4.3 Exploratory factor analysis (EFA)

The main aim of factor analysis is to describe a larger number of variables by means of a smaller set of composite variables Therefore, the purpose of this part was to take 21 items from the questionnaires survey and reduce them into a smaller number of factors that summarize the essential information contained in the variables; since the number of simple correlations among the variables is quite large it would be difficult to summarize by inspection what the patterns of correlations represents To verify whether the data set was suitable for factor analysis, the strength among items was tested using exploratory factor analysis (EFA)

The conceptual framework of this study has been defined 28 independent variables of retail service quality affecting to customer’s perception As mentioned above, totally 10 variables were deleted when conducted the reliability analysis Therefore, there were 21 variables before do the EFA analysis

In EFA, The Kaiser-Meyer-Olkin (KMO) and Barlett‟s test are two of important criteria The aim of KMO measure of sampling adequacy is to test whether the partial correlations among variables are small Bartlett's test of sphericity tests whether the correlation matrix is an identity matrix which demonstrating that the factor model is inappropriate

In order to conduct the factor analysis, the following criteria should be considered First, the value of KMO must be higher than or equal to 50% and Bartlett’s Test of Sphericity value should be significant at the 5% level On the other hand, the maximum absolute value of any factor loading must be higher than 0.5 In addition, according to Jabnoun and Al-Tamimi (2003), for any item, the difference between the maximum absolute value and minimum absolute value of loading factors must be greater than or equal to 0.3 Finally, the total variance explained must be greater than or equal to 50%

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Table 4.4: The result of KMO and Bartlett’s Test conducting EFA

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of

Sampling Adequacy

.764

Bartlett's Test of Sphericity

Approx

Square

it is appropriate for conducting exploratory factor analysis

Table 4.5: Total variance explained conducting EFA

Extraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings Total

% of Variance

Cumulative

% of Variance

Cumulative

% 4.677 22.271 22.271 3.258 15.515 15.515

as expected in proposed theoretical model

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser Normalization.a

a Rotation converged in 6 iterations

Based on the results of last time conducting EFA, all the remaining variables (both supermarkets’ and convenience shops’ data) whose factor loadings were greater than 0.5 grouped into six factors as expected in proposed theoretical model for convenience shops and slightly changed for supermarkets as followings:

• Conceptual model:

Factor 1 – Physical Aspect: PA3, PA4

Factor 2 – Reliability: RE1, RE2, RE3, RE4

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Factor 3 – Personal Interaction: PI1, PI2, PI3, PI4, PI5

Factor 4 – Problem Solving: PS1, PS2, PS3

Factor 5 – Policy: PO1, PO2, PO3, PO4

Factor 6 (dependent factor) - Overall Evaluation of Retail Service Quality: OSQ1,

OSQ2, OSQ3

4.4 Multiple regression analysis for common model

The multiple regression analysis was applied to determine the significant relationships between independent variables and dependent variable After conducting the various tests, the final step was conducting multiple linear regression In this study, multiple linear regression was applied

to analyze relations between the independent variables and dependent variables; The result of Multiple Linear Regression is indicated in Table 4.7

Table 4.7: Model summary

Square

Adjusted

R Square

Std Error

of the Estimate

Watson

a Dependent Variable: Overall_OSQ

b Predictors: (Constant), Overall_PO, Overall_PS, Overall_PI, Overall_PA, Overall_RE

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As result in Table 4.7, the value of R square is 0.191 meaning that these independent variables can explain only 19.1% of the variation of the dependent factor Overall Evaluation of Service Quality; however, there is still leave 80.1% unexplained It means the dependent factor and independent factors are not much relation It means that there are other additional variables that are important in explaining Overall Evaluation of Service Quality that have not been discussed in this study

The ANOVA (Table 4.8) shows that the F value of 14.578 and the p-value is 0.000 (p < 0.05) Therefore, the model has reached the statistical significant at the 0.05 level In general, the regression model with those five independent factors was suitable to explain the variation in overall evaluation of service quality

Table 4.9: Coefficients of multiple linear regression analysis

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig

Collinearity Statistics

a Dependent Variable: Overall_OSQ

The next part of the output is the coefficient section, the general rule of thumb was that VIFs exceeding 4 threaten further investigations, while VIFs exceeding 10 were signs of serious multicollinearity All the VIF values in our analysis were between 1.191 and 1.225 (refer Table 4.9) As a result, multicollinearity really did not represent a threat to the final result analysis The Sig column in Table 4.9 shows that the significant values of three variables (physical aspects, reliability and policy) are all less than 0.05 which were 0.032, 0.014 and 0.000 respectively It can

be stated that the physical aspects, reliability and policy are making a significant contribution to

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the prediction of dependent variable (overall evaluation of service quality) On the other hand, the significant values of problem solving and personal interaction were 0.076 and 0.451 respectively (Sig > 0.05), it can be stated that the variable of these factors did not make a significant contribution to the prediction of the dependent variable

In addition, the beta coefficient of reliability and policy were 0.141 and 0.364 respectively

It means that these variables make the positive contribution to the explaining the dependent variable – overall evaluation of service quality, when the variance explained by all other variables

in the model is controlled; the beta coefficient of physical aspects was -0.120 It means that this variables makes the negative contribution to the explaining the dependent variable – overall evaluation of service quality, when the variance explained by all other variables in the model is controlled

4.5 Hypothesis testing for Common model

Hypothesis 1: There is a positive impact of physical aspects of retail service quality on customer’s perception of retail store service

As shown in the table of Coefficients (table 4.9), the Beta of physical aspects was -0.120

and the Sig value was 0.032 ( lower than 0.05) This meant the factor of physical aspects had positive impact on attitude towards customer’s perception in Ho Chi Minh City, Viet Nam In comparison to the tested result of this relationship in the previous research of Dabholkar et al (1996), it found that there was a strong relevance between two results Therefore, the hypothesis 1 (H1) was supported for the research model

Hypothesis 2: There is a positive impact of reliability of retail service quality on customer’s perception of retail store service

As result in the table of Coefficient (table 4.9), hypothesis 2 (H2) was supported as

indicated β = 0.141 and P-value = 0.014 (<0.05) It indicated that there was an impact between

34

reliability towards customer’s perception in Ho Chi Minh City, Viet Nam This result was

consistent with the findings of the previous study of Dabholkar et al (1996)

Hypothesis 3: There is a positive impact of personal interaction of retail service quality on customer’s perception of retail store service

As result in the table of Coefficient (table 4.9), the hypothesis 3 (H3) is not supported by

the data as β = -0.041 and P-value = 0.451 (>0.05) It indicates that there was no impact between

personal interactions towards customer’s perception in Ho Chi Minh City, Viet Nam This result was not consistent with the findings of the previous study of Dabholkar et al (1996) It might due

to the difference in perception of respondents in Vietnam with respondents from other countries However, in order to find out the best explanation for that discrepancy, the researcher has re- interviewed with five respondents by using nice items of personal interaction measurement scale It aimed to investigate why they think personal interaction did not affect their perception towards the overall evaluation of service quality Overall, most of respondents agreed that they visited convenience shops and/ or supermarkets for shopping just considered to the convenience and quality of goods rather than the service quality Therefore, respondent’ sopping decision was usually made by the convenience Hence, it was reasonable for H3 not to be supported

Hypothesis 4: There is a positive impact of problem solving of retail service quality on customer’s perception of retail store service

As shown in the table Coefficient (table 4.9), the hypothesis 4 (H4) was not supported by

the data as β = 0,101 and P-value = 0.076 (>0.05) It indicated that there is no impact between

policy towards customer’s perception in Ho Chi Minh City, Viet Nam This result shown that there was no relationship to the previous study of Dabholkar et al (1996) The researcher had not taken

35

again the interviews as hypothesis 3 but it could be explained that due to the difference in

perception of respondents in Vietnam with respondents from other countries

Hypothesis 5: Policy has positive impact of retail service quality on customer’s perception

of retail store service

As shown in the table 4.9, the β = 0.364 and P-value = 0.000 (<0.05) It indicated that this

analysis found a quite strong effect of problem solving towards customer’s perception in Ho Chi Minh City, Viet Nam Therefore, it could be concluded that hypothesis 5 was well confirmed

4.6 Multiple regression analysis of supermarkets

The multiple regression analysis was applied to determine the significant relationships between independent variables and dependent variable of supermarkets After conducting the various tests, the final step was conducting multiple linear regression In this study, multiple linear regression was applied to analyze relations between the independent variables and dependent variables; The result of Multiple Linear Regression is indicated in Table 4.10

Table 4.10: Model summary Model Summary b

R Square

Adjusted

R Square

Std Error of the Estimate

Watson

a Predictors: (Constant), Overall_PO, Overall_PA, Overall_RE, Overall_PS,

Overall_PI

b Dependent Variable: Overall_OSQ

As result in Table 4.10, the value of R square is 0.255 meaning that these independent variables can explain only 25.5% of the variation of the dependent factor Overall Evaluation of Service Quality; however, there is still leave 74.5% unexplained It means the dependent factor and independent factors are not much relation It means that there are other additional variables that are important in explaining Overall Evaluation of Service Quality that have not been discussed in this study