Thesis summary: Determinants deciding the attraction of department store: The case of Ho Chi Minh city

Discover how to understand the attraction of department stores under perspective of shoppers, rather than from the perspective of operators of department stores. Since then, seeks way to measure it. Discover the determinants of customer attraction of the department stores under the perspectives of shoppers, measure the impact of these factors to the attractiveness of the department stores. Conduct shopper segmentation based on their expectations for factor of attraction of going department stores.

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HCMC

DINH TIEN MINH

DETERMINANTS DECIDING THE ATTRACTION OF DEPARTMENT STORE: THE CASE OF HO CHI MINH CITY

Major: Trading Code: 62.34.01.21

THESIS SUMMARY

HO CHI MINH CITY – 2016

The thesis was completed in: University of Economics HCMC

Tutors:

1 Ph.D Ngo Thi Ngoc Huyen

2 Ph.D Trieu Hong Cam

1

CHAPTER 1: OVERALL INTRODUCTION

1.1 Urgency of the topic

In the context of international integration of Viet Nam (VN), almost all business sectors are more or less affected which is impossible to not mention the domestic retail sector So far, the retail sector has experienced strong transformation from state owned economic sector to market-oriented competition since

1995 Total retail sales of goods and services in real prices of all country steadily increased between 1995 and 2014, from approximately VND 122,000 billion to nearly 2,945,000 billion VND (GSO, 2014) The growth was also reflected in the strong growth of number of markets, supermarkets and department stores, from a few hundred markets, 10 supermarkets and 2 department store in 1995 to 8,547 market , 659 supermarkets and

115 department stores in 2012 (GSO, 2013) Beside that, the system also has major department stores like the Lion Corporation (Malaysia) with 9 Parkson Department stores; Vingroup with seven department stores and 2 Mega mall; AEON Corporation (Japan) with 2 department stores Besides, other department stores are still operating as Diamond Plaza, Nowzone, Pandora, Cresent mall, Zen Plaza The foreign retailers who are very famous in the world are also showing their great interests to VN market in the future as Walmart (USA), Auchan (France), Carrefour (France), Tesco (UK), South Investment (Singapore) and E-Mart (South Korea) According to the forecast until 2020, VN will have 1,200 supermarkets and 180 department stores The proportion of retail sales through supermarkets and department stores will account for about 45% of total retail sales of merchandise and service revenues for the whole country (MTI, 2013)

An increase in the number of trading centers results in the fact that the shopper tend to select more They prefer returing the department stores who knows how to attract them, with many diverse and numerous stores, many types of goods soled, suitable

to their preferences However, it is the fact that department store can attracts such buyers, but can not attract other buyers because each customer has different characteristics and then of course their behaviours are not the same Therefore, the department store managers need to know what aspects which a department store should attract shoppers to come to them (Wong et al, 2001) Given the strong growth and the increasingly fierce competition

2

of this kind of department stores in VN on the path of international integration, understanding the factors that attracting customers to the department stores becomes an essential and important issue not only for managers but also bring practical sense to the process of local development in improving the living standards of the people and to attract more companies engaged in this business sector

In addition, in terms of academic review, the researches in the world related to the retail industry in general and department store model in particular are rich and diverse in topics, from understanding the factors that make the image of a small shop, the shopping motivation of customers, intentions and behaviors of their visit to the elements that make up the attraction of retail model whether it is located near or far from the residential areas

In VN, there are many studies related to the retail industry, particularly the supermarket model, while the department store model is quite modest The studies focused largely on evaluation

of customer loyalty, customer satisfaction, the required attributes

of a retail store or even the articles in order to build the macro operating management policies in retail sector The review on such theory has inspired the author, besides the practical problems

mentioned above in the selection of topics about factors attracting shoppers in department stores to make his thesis with the desire to

contribute to the treasury of world experimental studies a typical case of emerging countries such as VN

1.2 Objectives of the study and research questions

Objectives of the study

Discover how to understand the attraction of department stores under perspective of shoppers, rather than from the perspective of operators of department stores Since then, seeks way to measure

it

Discover the determinants of customer attraction of the department stores under the perspectives of shoppers, measure the impact of these factors to the attractiveness of the department stores

Conduct shopper segmentation based on their expectations for factor of attraction of going department stores

3

Research questions

What is the attraction and how to measure? For department store model, how to understand the attraction? Do factors such as human servicing, products for sales, pricing policies, promotion programs or services have an impact on attracting customers to a department stores or not? In addition to the above factors, the comfort, the convenience of shopping or space of a department store create more positive effects in attracting of a department store or not? How is the influence and impact of these factors to the attractiveness of the department store? Are there differences in the intention and behavior among diverse customers of department stores on demographic matter? The group of customers may have to a department store model?

1.3 Subjects of study and research scope

Subjects of research: The attraction of a department store Research scope: On the research subjects, this study focuses only to a target group of shoppers; About retail model, this research limits in type of department store; Regarding the scope

of space, this study only examines the department stores in HCM City market; Regarding the scope of time, this study conducted a survey and market observation for a period from January 2013 to June 2015 or in other words the content shown as an overall picture taken back in distance that time

1.4 Research Methodology

This research project is conducted by mix-method: Qualitative research is conducted through in-depth interviews with experts and managers in the retail sector and group interviews with regular customers to department stores Quantitative research is conducted through individual interviews form of questionnaires with minimum sample size of 700 people aged 15 and older

1.5 Practical significance of research

This study will contribute to generalize theory of consumer behavior Results will well serve a very important business sector

of the economy- the retail sector in the context be understood as conversion economies like VN Research also helps department store managers to seize is the determining factor of the attraction

of a department store, which factors are most important and less important in courts the customer's shopping Since then, administrators will develop appropriate business strategies to

4

attract the right customer segments they want to target, satisfy their needs and better focus for the planning, service improvement and distribution of resources Finally, this research also contributes to the worldwide experiment research collections on the attractiveness of the department stores, but in a transition market like VN Also, this can also be used as a reference for academic research in the next research in the fields of retail, for university lecturers, students and fellows in commercial business sector

CHAPTER 2: THE THEORETICAL BASIC AND

RESEARCH MODEL 2.1 The theoretical basic

2.1.1 Theory of Motivation

The motivation has long been regarded as the main cause for the personal behavior The nature of the motivation derived from the needs and satisfaction of human Can understand the motivatio

as the answer to the question "Why do we do and what we do?" From that perspective, many researchers have developed many different theories to explain more to this motivation theory and every theory that only focus on a limited field

Motivation theory is divided into two branches: the first branch concerning the internal forces within the human that is the drive reduction theory of Clark L Hull (1935), Arousal Theory of Motivation of Kendra Cherry (2015) and Instinct Theory of William McDougall; the second branch relating to external forces, such as the encouragement theory of BF Skinner (1953) Besides, there are many theories about the contents of the motivation as the theory of system need level of Abraham Maslow (1943), two-factor theory of Fredrick Herzberg (1959), the theoretical model

of Clayton ERG P Alderfer (1969) and the need theory David McClelland (1961)

Within the scope of this study, the relevant theories focuses on branch one and branch two This is the theoretical foundation as a basis for the explanation of human behavior to satisfy their diverse needs

2.1.1.1 Drive-reduction Theory of Motivation, Clark L Hull

1935

Drive-reduction theory became popular in the 1940s and 1950s

as a way to explain the behavior, learning and motivation This

5

theory was developed by Clark L Hull and further developed by his colleagues He developed a theory around the idea that the active body to maintain a state of balance or equilibrium Hull used the term "drive" to just stress, discomfort or stimulating demand caused by biology or physiology, and it should be reduced

2.1.1.2 Arousal Theory of Motivation, Kendra Cherry, 2015

Arousal theory shows that people can have certain actions, or reduce or increase the level of stimulation level to maintain optimal levels of mental arousal For example if the level of stimulation of a too low, they can be considered to watch an action movie or jogging If the level of excitation is too high, they will find ways to relax such as meditating or reading a novel

2.1.1.3 Instinct Theory of Motivation, William McDougall

This theory suggests that all behavior is motivated by instinct Instinct is innate behavior and target oriented, rather than the result of learning or experience For example, children have an innate reflexes help them to find the nipple and nutrients from the mother, while the birds have an innate to build nests or migrate in winter

2.1.1.4 Incentive Theory of Motivation, B.F Skinner, 1953

Incentive theory shows that behavior is motivated by the desire for reward Fundamental rule of economics that increased or decreased physical motivation will control human behavior People want to do something to increase material reward However, people want to decrease something, just do so costs increased by the rules or penalties

2.1.1.5 Maslow’s Hierarchy of Needs Theory, 1943

Maslow said that human behavior is derived from the demand and the needs of the people arranged in a priority order from low

to high importance Accordingly, the demand at higher levels wants to appear, the demand at lower levels must be satisfied before The higher demand will arise and desire to satisfy more intense when all basic needs in low importance have been met adequate

2.1.2 Factors attracting customers to department stores

In the world, there are plenty of authors focused on the retail market but due to the complex nature of its appeal By

6

chronological order, we may list the typical authors such as Martineau (1958), Lindquist (1974), Bellenger et al (1977), Howell & Rogers (1980), Nevin & Houston (1980), Gautschi (1981), Finn & Louviere (1990, 1996), Bloch et al (1994), Wakefield & Baker (1998), Wong et al (2001), Sit & et al (2003), El-Adly (2007), Diana et al (2011), Rasa & Sonata (2013) All

of them focus attention on the problem to find out the factors that build up the image of a retail model, the determinants attract customers to the retail model to that adopted the measure by different criteria

For example, Wong et al (2001) developed a SCATTR tool to assess the attractiveness of the shopping center under the management of the joint enterprise SCATTR Tools include twenty properties divided into five factors: location, quality and diversity, popularity, service and sales incentives Sit & et al (2003) synthesized 14 different studies of many authors from

1977 until 2001 and made seven groups typical image of a shopping center which are considered important by customers in attracting them They are commodity, accessibility, service and atmosphere like the previous author Also, Sit & et al first added three images related group entertainment needs of customers, the demand for food and safety in the mall El-Adly (2007) in the UAE - a country of many nationalities and multiculturalism discovered seven key factors to attract customers to the shopping center, there are: comfort, leisure activities , the diversity, the core characteristics of shopping centers, convenience and appearance

In summary, the differences between these studies are attributes never grouping in the same way They can be separated individually but can also be combined with other attributes It all depends on the characteristics of consumer consumption in that country from which they lead to different behaviors, different assessment models for the department stores

2.1.3 The attractiveness of the department store

The attraction is the researchers interpreted in two ways Firstly, in terms of physics, it is understood like gravity theory developed by Isaac Newton in 1680 By this view, there are some pioneering studies of Huff (1964) and Nakanishi & Cooper (1974) applying to the retail sector Second, in terms of social psychology study, which is the attraction, passion, willingness to overcome geographical distances and a certain amount of time to

7

come up with something or somewhere That (Cliquet, 1997) Applications in the retail sector, the attraction is divided into two phenomena, one is the presence of a selling point to attract almost

a natural way most customers, the other attraction is due from the efforts of the media program or the trade policies of point of sale (Cliquet, 1997)

Summary of multiple studies show that the attractiveness of the department store is measured through many different ways, from intent to customer behavior Maenpaa et al (2008) measured the lure past the average frequency of visits by customers for a department store in a determined time period Howell & Roger (1980) measured by the number of trips a department store in a determined time period and the average frequency of visits by customers to a department store Wakefield & Baker (1998) and Wakefield & Blodgett, (1994), the environmental explore department store affect desire to stay and come back next time of purchase Sit & et al (2003) was first one to add entertainment elements in attracting customers of department stores represented

by deciding department stores

In terms of psychology, the attraction is also defined by scientists as the ability to activate the wake or the desires of customers, leading them to act in order to meet the individual needs as well as meet social needs (Kendra Cherry, 2015; Russell

& Pratt, 1980) Ying & Cheng (2006) suggested that the wake has

an impact on perceived service quality and satisfaction in the service environment to enjoy, but there is no environmental impact of utility services Department store is a service environment to enjoy, the managers always try to evoke the wake

of our customers through a variety of factors such as space, decorate, display, merchandise, and senses make them go there for shopping, entertainment, stress, regain balance in your life, or

at least find inspiration in life

2.1.4 Segmenting shoppers

Segmenting shoppers through image properties with very thorough look and feel throughout the characteristics of each customer because individual consumers are heterogeneous in seeking benefits when shopping Each shopper is interested in various image attributes (Steenkamp and Wedel, 1991) Several academic studies have explored the contribution of image attributes for customer segmentation in the department stores

8

Pioneering works were done by Bellenger et al (1977) as identifying two segments of the shoppers because it is economical and shoppers because of entertainment Dennis et al (2001) clasified image area of four properties (goods, accessibility, service and atmosphere) to recognize two customer segments in the shopping center as "shop" shopper and "service" shopper "

2.1.5 The concept of retail operations and department store

model

2.1.5.1 The concept of retail operations

Retailing is all activities related to the direct sale of products or services to end customers, serving the needs of individuals or non-commercial (Philip Kotler & Gary Armstrong, 2012) Sales in this manner is characterized by goods traffic off the field and into the consumer sector, the value and use value of goods was done Retail activities are varied in size and form from the hawkers, traditional markets to grocery stores, supermarkets, department stores, department stores, convenience stores, direct sales online, television sales, telephone sales and growing sales appear new ways as sales through vending machines and retailers at home or MLM

2.1.5.2 Model of Department store

According to the decision 1371/2004/QD-BTM of the Minister

of Trade of VN (now the Ministry of Industry and Trade) signed September 24, 2004 promulgating the Regulations on

Supermarkets, Department stores, "Department store is type of business organization of modern, multifunctional trade business, including a combination of the type of stores, facility services, halls, meeting rooms, offices for lease layout set medium, uninterrupted in one or several adjacent buildings to meet the standards of business space, technical equipments and management skills, business organization Having served the civilized methods, conveniently meet the development needs of business operations and satisfying the demand for goods and services of customers."

2.2 Design research model

2.2.1 Designing qualitative research

This study was conducted to collect qualitative data by direct observation techniques in twelve department stores selected in HCMC, which are Diamond District 1, Nowzone District 1,

9

Unionsquare D.1, Vincom Center Dong Khoi District 1, Parkson SGN District 1, Parkson Cantavil District 2, Parkson Hung Vuong Street District 5, Crescent mall District 7, Parkson Le Dai Hanh District 11, Parkson Tan Son Nhat Tan Binh Dist (CT Plaza), Pandora City Tan Phu District and AEON Celadon Tan Phu District The process of observing a department store will record a lot of data from external data, such as distance from the department store to downtown, the main roads leading to the department stores, capable traffic congestion during peak hours in the road to internal data and how to manage the car in park, walkways from parking inside the department store, the signage, the number and location location of elevators / escalators, security staff on duty, the activities of customers to a department store, the layout of the floor space, the number of booths in each floor, value added services in a department store On average, each department store is performed twice observations at two different times (in weeks/weekends, during office hours and evening) by moving all the stories, take notes, take pictures (if possible), ask at reception and customers right there, or sit at the dining booths in a department store and observe

Combined with observation techniques, qualitative research conducted with three experts discussed in the retail sector, which are Ms Tran Thi Bich Tram - Deputy Manager in Retail Division

of Crescent Mall, Mr Nguyen Quoc Trung - Assistant Floor Manager at Diamond and Mr Tran Khac Kinh - Price Management and data Analysis of Big C VN and group discussion with twenty different objects, including regular customers coming in many department stores of age (pupils, students, office workers, business owners), owner of the booth, salesman, guard at a department store The combination method, has recently confirmed discovery used in group discussions

2.2.2 Results of qualitative research

Combining records on actual observations and the results of discussions with experts and twenty three subjects show that the typical customers are interested in twelve different elements of a

department store, which is: Space, Commodities, Facilities, Personnel, Safety, Price, Value Added Services, Convenience, Advertising, Location, Entertainment and ONE NEW FACTOR is the Management

10

Besides, the results of further discussions showed ONE NEW POINT in demonstrating the attractiveness of the department stores, which is when it is considered in terms of psychology It can be understood as the gaining sympathy and trust of those who have to or even less than that ever It is the impact entice them towards department store, feels first impression, stimulate curiosity, interest and desire to explore the customer and the customer is shown by the attitude very concretely in the positive

direction New findings are completely matching with Motivation Awaking theory of Kendra Cherry (2015) and Theory of Needs of

Abraham Maslow (1943)

CHAPTER 3: STUDY DESIGN 3.1 Study model

Twelve hypothesis from H1 to H12 are: There is a positive

relationship between Xi (i=1:12) and customer attractiveness of department stores

3.2 The process of study and the process of sampling

Study process is designed to conduct in three phases: (1) discussion with experts and group discussions (qualitative); (2) preliminary investigation (quantitative); (3) official survey (quantitative)

The process of sampling is divided into five steps: (1) Identify the research crowd, (2) Identify the paradigm, (3) Determine the sample size, (4) Select the sampling method, (5) Progress selection

11

3.3 Method of testing research models

Main testing method used in this research is multiple linear regression, namely considering the impact of these factors contributing to the attraction (Xi) to the attraction (Y) Meanwhile, the study also tested the model through the effect of moderator variables These variables will affect the quality of the relationship between the independent variables Xi and the dependent variable Y and enhancing the scope of the regression model In this study, K-means analysis is used to segment customers according to the observed variables of the factors of

attraction After the clusters have been formed, the next step will

be to interpret and describe the customer segments according to the demographic characteristics and their behavior in the department stores The difference between the segments is considered significant at a significance level of less than 0:05 (Litwin, 1995)

3.4 Scale of study model

A measurement scales for these concepts were also developed Specifically, the scale of the factors of attraction includes twelve

ingredients: Space (8), Commodities (5), Comfort (4), Staff (4), Safety (4) , Prices (3), Additional services (3), convenience (4) Advertising (3), Places (4), Leisure (3) and Quality management (3); Scale the results of the attraction include two components: Intent and behavior (3) and Psychological status (5) A total of 56

observed variables

3.5 Preliminary investigation on assessment of scales

The survey was conducted directly with lecturers of HCM City Economics University, students of International Trade and Commerce K39 of HCMC Economics University, students of Diploma in Accounting 2 of HCM Economics University of Economics, staff of VN Collagen Drink Co., Ltd - HCMC Branch, and persons doing morning exercise at Tao Dan Cultural Park Number of questionnaires provided 180 and collected of150 satisfactory sheets Time of survey conducted to from March 01st

2015 to March 20th 2015 Results evaluating the reliability of the scale achieved from 0.779 to 0.956

Scale of "The factors of the attraction": There are SEVEN

factors extracted with the total variance is 71.17%> 50% The variations in the scales are load factor> 0.5 However, in the