An Empirical Investigation Into Service Quality Dimensions Of Organized Retail Supply Chains In India

The supply chain, which is also referred to as the logistics network, consists of suppliers, manufacturing centers, warehouses, distribution centers, and retail outlets, as well as raw materials, work-in-process inventory, and finished products that flow between the facilities. Retailing is one of the emerging sectors which determine the efficiency of supply chain management and changing more rapidly than ever before (Dabholkar, 1996). The retail supply chain is characterized by rising competition from both domestic and overseas companies, a wave of mergers and acquisitions, and more sophisticated and demanding customers who have great expectations (Sellers, 1990; Smith, 1989). Consequently, retailers today must differentiate themselves by meeting the needs of their customers better than their competitors. There is general agreement that a basic retailing strategy for creating competitive advantage is the delivery of high service quality (e.g., Berry, 1986; Hummel and Savitt, 1988; Reichheld and Sasser, 1990).

Retailing in India is gradually inching its way towards becoming the next boom industry. A successful retail enterprise needs to have a vast network of people and error-free processes in place.  At the same time, the urban Indian household income and purchasing power are also on the rise. Under such circumstances, the success of organized retailing in India mainly depends on delivery of services through quality improvements. In service organizations, customer-perceived service quality is considered as one of the key determinants of business performance. In this study, Quality aspect of SCM in retail sector is used to describe various management efforts for managing supply function through establishing close and long-term buyer-supplier relationship in order to improve the overall organizational quality performance. The development of research instrument is then described and scale items are examined to ensure reliability and validity as well as the results of analysis are discussed and recommendations for future study are given.

REVIEW OF LITERATURE:

Over the years, many researchers have proposed and evaluated alternative service quality models and instruments for measuring service quality. Among these models, SERVQUAL (Parasuraman, et al. 1985) is the most prominent and the most widely used. The authors of this model proposed that the consumer’s opinion of quality is formed by an internal comparison of performance with expectations. Good service quality means that the customers’ perceptions of service performance meet or exceed their expectations of what the service firm should provide. Through in-depth interviews and focus group discussions with firms in four different service industries, Parasuraman, et al. (1985) identified five determinants of service quality which include tangibles, reliability, responsiveness, assurance, and empathy. The SERVQUAL proposes a gap based conceptualization of service quality where the gap indicates the extent to which the service obtained confirms to expectations (Parasuraman, et al., 1988).

Dabholkar, et al. (1996) proposed an instrument based on SERVQUAL which measures service quality in a retailing environment is known as Retail Service Quality Scale (RSQS) method. This instrument also captures, apart from the common dimensions that are likely to be shared by pure service environments and retail environments, additional dimensions of retail service quality relevant to the retail environment. However, very few studies have utilized the instrument for evaluating service quality of retail stores. Like SERVQUAL, the reliability and validity of this instrument could also be questioned in RSQS. Only one study by Boshoff and Terblanche (1997) was found which evaluated the reliability and validity of the instrument in South African retail environment. Although the study found the instrument to be valid and reliable for measuring retail service quality in South Africa, its applicability in India must be investigated through a formal research.

Dabholkar, et al. (1996) proposed RSQS method consists of five dimensions such as physical aspects, reliability, personal interaction, problem solving, and policy. The first proposed dimension is physical aspects include the appearance of the physical facilities and the convenience offered to the customer by the layout of the physical facilities. Retail literature suggests that store appearance is important to retail customers (Baker, et al. 1994). The second proposed dimension is reliability encompasses as a combination of keeping promises (Dabholkar, et al. 1996). Westbrook (1981) found that availability of merchandise is also a measure of reliability. The third proposed dimension is personal interaction. The customers view as service employees inspiring confidence and being courteous / helpful. The fourth proposed dimension is problem solving which addresses the issues of handling of goods returned and exchanges as well as complaints. Service recovery is recognized as a critical part of good service (Hart, et al. 1990; Kelley and Davis, 1994). Recognizing and resolving problems should emerge as a separate factor in customer evaluation. Westbrook (1981) found that customers were quite sensitive to how service providers attend to problems and complaints. Westbrook (1981) and Mazursky and Jacoby (1985) also mentioned that the ease of returning and exchanging merchandise is very important to retail customers. The fifth proposed dimension is policy captures aspects of service quality that are directly influenced by store policy. It is viewed as whether the store’s policy is responsive to customers’ needs. Westbrook (1981) and Mazursky and Jacoby (1985) reported that an important criterion on which customers evaluate stores is the credit and charge account policies of the store. Customers also appear to value parking availability for retail shopping (Oliver, 1981).

RESEARCH OBJECTIVES:

Based on the above dimensions, the proposed measurement tool by Dabholkar, et al. (1996) may be suitable for studying retail businesses that offer a mix of services and goods, such as department or specialty stores, gathering benchmark data regarding current levels of service quality, and conducting periodic ‘checks’ to measure service improvement. The instrument could also serve as a diagnostic tool to determine service areas that are weak and that need attention. If the RSQS is found to be valid and reliable it will be the first such instrument available to Indian retailers. If not, then researchers and retailers alike would be forewarned about using an unreliable scale for measuring retail service quality in India. Therefore, the study had three research objectives:

1. To assess the internal reliability of the retail service quality instrument proposed by Dabholkar, et al. (1996).
2. To evaluate the validity of the scale in retail supply chain management.
3. To carry out the gap analysis and identification of areas for improvements in retail service quality.
4. The objective of this study is to assess the applicability of the RSQS for measuring service quality in India.

LIMITATION OF THE STUDY:

There are several limitations that need to be acknowledged. The prime limitation is the time factor i.e., the short time duration is the most obstacles to complete the study. The data were collected in a small sample and due to busy schedule of customers and also personal problems etc. It is very difficult to get information from them. Finally the data collection is affected due to personal bias of the customers. Also, the measurement instrument used in this study i.e., RSQS measures was used by fewer researchers in their studies. However, in spite of its wide applicability and rigorous development, the use of the instrument should be properly tested under different contexts in order to determine its validity and reliability.

METHODOLOGY AND MEASURES:

Population was defined as active retail shoppers. The sample consisted of 100 retail shoppers in a mall intercept-type situation. In this study, half of the respondents (53%) were female and half (48%) were housewives. The respondents were mostly between the ages of 22 and 50 (72%). Sixty-five per cent (65%) of the respondents were married. Personal interviews were conducted immediately after the completion of the shopping experience. Retail shoppers were selected for analysis because they offer a mix of merchandise and service while individual retail shops were identified on a convenience-sampling basis. In the study, 15 retail stores were selected from Bhubaneswar, varied in their size from small grocery stores to hypermarkets across industries such as food, clothing, consumer durables, books, music, etc. Shoppers were selected randomly and interviewed while they waited in a queue to pay for their goods. Some of them were interviewed while they were having refreshments after they had finished their shopping. There are altogether 26 items were included in the questionnaire pertaining to the customers’ perception and expectation about the stores with the objective of assessing the predictive validity of the RSQS.

The instrument RSQS, proposed by Dabholkar, et al. (1996) was used as the questionnaire which employed a 5-point Likert scale (1-strongly disagrees, 5-strongly agree). Further it is hypothesized that there will not be any significant gaps in the perceived and expected service quality as responded by the customers of retail sector. The hypothesis has been tested against the personal and demographic profile of customers, and the results thereof have been presented accordingly. In order to test the validity of the RSQS structure in retail service quality for Indian retail stores, an exploratory factor analysis on perceptions, expectations, and gap scores for respondents was performed. This was performed separately on perceptions, expectations, and gap scores for checking the applicability of gap analysis for the factor structure (Zhao, et al. 2002) using the principal components factoring method and Varimax rotation with Kaiser normalization. In order to test the reliability of the overall instrument, Cronbach’s Coefficient Alfa was computed using data on the perceptions, the expectations, and the differences between the perceptions and the expectations.

ANALYSIS AND INFERENCES:

The analysis of the reliability and validity of the RSQS scale is followed by the assessment of the scale component factor structure. The gap between perception and expectation of customers of 26 items are shown in Table 1 and consequently, Table 2 represents the significant gap between perception and expectation of customers of 5 dimensions.  Both the tables contains factor values for the significance of the study are revealed below.

Table 1: Gaps between Perception and Expectation (P-E) of overall items

From Table 1, it is clear that a negative gap was found in all items except item 17 & 22. This indicates that the service quality of retail stores at an overall level falls far behind the customer expectations. The highest gap (-1.16) among all the items was found to be in item 23 which is quite greater than the gaps in other statements. Though big retail stores promise comfortable parking of their vehicles in their communication to customers, this happens only in non-peak hours. During peak hours, the parking facilities fall short of customers’ requirements. This may be due to lack of proper planning and design of parking facilities. In most of the cities in India, prevalent multi-storied parking is still not well adopted and the ground level parking takes a lot of space which multiplies the parking problem. The second largest gap (-1.9) among all the items was found to be in item 7 and the lowest gap (0.09) was found to be in item 22  followed by item 17 with gap (0.01) which shows that while stores are indeed successful in ensuring availability of high quality goods, they have, however, failed in fulfilling promises. Proper maintenance of customer information database can help in reducing this gap.

Table 2: Gaps between Perception and Expectation (P-E) of overall Dimensions