BACKGROUND THE IN-STORE CUSTOMER SHOPPING EXPERIENCE CONCEPT

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1 IN-STORE CUSTOMER SHOPPING EXPERIENCES IN A SUPERMARKET AND THE OUTCOMES THEREOF Nic S Terblanche, Department of Business Management, University of Stellenbosch, South Africa BACKGROUND The past decade has witnessed the emergence of various new competitive retailing formats, such as Aldi and Lidl for instance, that supermarkets had to deal with. Although neither Aldi nor Lidl has started trading in South Africa, other new formats specialising in convenience to customers compelled supermarkets to reconsider their offerings to customers. To offset the new competitive arrivals supermarkets offer their customer an in-store customer shopping experience that is difficult for competitors to emulate. The offerings of today s supermarkets differ substantially from that of supermarkets a decade ago. Today s supermarkets, compared with those of a decade ago, now offer a range of amenities to make it attractive for customers to spend more time in the supermarket and hopefully also spend more money during a visit to the store. Supermarkets now offer an extensive assortment of fresh fruit and vegetables, a bakery with a wide range of breads, confectionary and other freshly baked products, a delicatessen counter offering local and imported products, take-away meals prepared by chefs and a section offering a reasonable selection of local and imported wines. The conventional grocery section has also undergone changes in the sense that specific consumers such as health conscious and ethnic consumers are now targeted and more store brands are offered to value seeking customers. All of these additions aim to enhance a more pleasant in-store shopping experience than their competitors. It was therefore expected that the dimensions that constitute the customer in-store experiences in supermarkets in South Africa are likely to differ from previous studies undertaken. The understanding of customers and their experiences are a Tier 1 Priority of the Marketing Science Institute (MSI). The aim of a positive in-store customer shopping experience is to enhance the value that the customer receives from a visit to a retailer. In recent times, firms experience unfamiliar and complex competitive environments with knowledgeable customers that consistently demands value (Sánchez-Fernández, Iniesta-Bonillo & Holbrook, 2009). The awareness to create and maintain a competitive advantage led to an increasing awareness in creating and delivering superior consumer value (Smith & Colgate, 2007). In the search for new ways to differentiate themselves progressively more firms view consumer value as a vital factor in strategic management (Steenkamp & Geyskens 2006). Consumer value has also developed into an important gauge for the evaluation of consumer behaviour (Sweeney & Soutar 2001) and for the essential role of satisfaction in developing long-term relationships with customers (Wang, Lo, Chi, & Yang, 2004). Value is not only the outcome of marketing activities as defined by the American Marketing Association (AMA); it is also a Tier 2 Priority of the Marketing Science Institute research priorities for the 2014 to 2016 period (AMA, 2013; MSI, 2013). THE IN-STORE CUSTOMER SHOPPING EXPERIENCE CONCEPT Various definitions of customer experience have been formulated by researchers over time. Thompson and Kolsky (2004: 5) describe customer experience as the sum total of conscious events. This definition indicates that retailers should use the opportunity to create an experience every time when an interaction with a customer takes place. Mascarenhas, Kesavan and Bernacchi (2006: 399) define customer experience as a totally positive, engaging, enduring, and socially fulfilling physical and emotional customer experience across

2 all major levels of one s consumption chain and one that is brought about by a distinct market offering that calls for active interaction between customers and providers. Gentile, Spiller and Noci (2007) describe customer experience to be created by a set of dealings and exchanges between a customer and a product, a firm, or part of a firm and which elicit a response. The customer experience differs from customer to customer and the personal nature thereof indicates that each customer s experience differ in respect of diverse levels of involvement such as rational, emotional, sensorial, physical and spiritual (LaSalle & Britton, 2003). Essentially the customer experience is a trade-off between a customer s expectations and the interactions with the firm (LaSalle & Britton, 2003). The value of interactions with customers has also been highlighted by Grönroos (2006) as each interaction has the potential to build relationships with customers. Otieno, Harrow and Lea-Greenwood (2005) state that customer experiences occur in three phases. The pre-sales phase is the first phase and comprises of customers expectations about the product, service, benefits and price. The second phase is the in-store interaction phase when the customer experiences the environment, the product, services rendered, delivery, quality and reward from buying. The last phase is the after-sales phase and here the customer relies on support, advice, replacement, refund, repair and effective complaints procedures. This study focuses on the second phase. Fiore and Kim (2007) compared two prominent causal theories that explain the relationships between emotion, cognition, and consumer behaviors caused by shopping environment cues to provide insights in in-store customer shopping experiences. These two theories are the Shopping environment cues-emotion-cognition-consumer behaviour and the Shopping environment cues-cognition-emotion-consumer behaviour illustrated in Figure 1. Figure 1 Two causal theories in-store customer experiences In-store shopping environment cues (décor, product and promotional displays, physical facilities) Emotions (pleasure, pleasant, excitement, joy) Cognition (merchandise quality, product variety, choice, value for money) Consumer behaviour (purchase, intention, store patronage, word-of-mouth) In-store shopping environment cues (décor, product and promotional displays, physical facilities) Cognition (merchandise quality, product variety, choice, value for money) Emotions (pleasure, pleasant, excitement, joy) Consumer behaviour (purchase, intention, store patronage, word-of-mouth) Source: Adapted from Fiore & Kim (2007) In the first model illustrated in Figure 1, emotions created by cues of the in-store shopping environment have a mediating effect on cognitions and consumer behaviours with regard to the retailer. The first model finds theoretical justification from earlier studies that used the PAD-scale of Mehrabian and Russell (1974). The second model in Figure 1 is based on the cognitive theory of emotions of Lazarus (1991). In the second model cues from the in-store shopping environment shape perceptions of the merchandise quality and variety, which in turn influence emotions and the subsequent consumer behaviour (Fiore & Kim, 2007). In the latter instance emotion has a mediating influence on the relationship between cognition and the subsequent consumer behaviour. Ward and Barnes (2001) and Chebat and Michon (2003) found empirical support for Lazarus work. The afore-mentioned definitions infer that a customer experience consists of two key components namely rational and emotional components. The creation and management of a memorable customer experience thus depends on the combination of both these components in a manner that focus on customers

3 demands. As customer experiences engage all five of the senses it is imperative that the role of all the senses is considered when customer experiences are designed. DIMENSIONS OF IN-STORE CUSTOMER SHOPPING EXPERIENCE The literature analysis as well as the knowledge gained from the focus group with the customers of the particular retailer led to the identification of six dimensions that make up the in-store customer shopping experience construct. The six dimensions are discussed below. Merchandise value: Merchandise value represents customers combination of price and quality of merchandise. Prices are also used to indicate a particular value. The sources consulted for the merchandise value dimension, are the following: Sirohi, Mclaughlin & Wittink, 1998; Walsh, Shiu, Hassan, Michaelidou & Beatty, 2011; Sweeney & Soutar, 2001; Baker, Parasuraman, Grewal & Voss, 2002 and Terblanche & Boshoff, Internal shop environment: The internal shop environment embodies the décor and in-store physical facilities such as check-out counters and shelves that are used as product and promotional displays. The layout of the shop and the role thereof to enhance shopping are also part of the internal shop environment dimension. The sources consulted for the internal shop environment dimension, are: Marques, Cardoso & Palma, 2013; Sánchez-Fernández et al., 2009; Baker et al., 2002; Bonnin & Goudey, 2012; Dabholkar, Thorpe & Rentz, Interaction with staff: Customers positive emotions, such as excitement and delight can result with interaction with courteous and knowledgeable staff. Personal attention and prompt service by staff can lead to satisfactory in-store customer shopping experiences. The sources consulted for the interaction with staff dimension, are: Baker et al., 2002; Marques et al., 2013; Dabholkar et al., 1996; Machleit, Meyer & Eroglu, 2005 and Hennig-Thurau, T Merchandise variety: Merchandise variety essentially refers to the choice that customers have in respect of brands, sizes and variety offered by the supermarket. The sources consulted for the merchandise variety dimension, are the following: Marques et al., 2013; Terblanche & Boshoff, 2006 and Machleit et al., Presence of and interaction with other customers: In-store customer shopping experiences are for the most part social activities that other customers can influence considerably. The degree to which a customer wants interaction with other customers, such as suggestions and advice from other customers are largely determined by the type of retailer. For instance, customers of an outdoor adventure retailer will most likely share experiences and consider recommendations from other customers. The sources consulted for the presence of and interaction with other customers dimension, are the following: Martos-Partal & González- Benito, 2013; Cox, Cox & Anderson, 2005; Rosenbaum & Massiah, 2007; Dawson, Bloch & Ridgway, 1990; Harris & Baron, 2004 and Brocato, Voorhees & Baker, In-shop emotions: In-store customer shopping experiences can stimulate pleasant in-shop emotions such as excitement and joy. The sources consulted for the in-shop emotions dimension, are the following: Naylor, Kleiser, Baker & Yorkston, 2008; Dawson et al., 1990; Donovan, Rossiter, Marcoolyn & Nesdale, 1994; Im, Bhat & Lee, 2015; Baumgartner & Steenkamp, 1996; Kim & Eastin, 2011 and Diep & Sweeney, THE OUTCOMES OF A POSITIVE IN-STORE CUSTOMER SHOPPING EXPERIENCE Fiore and Ogle (2000) regard perceived value as the culmination of the perceived benefits derived from an in-store customer shopping experience. Providing a good in-store customer shopping experience has a number of positive outcomes for a retailer. A positive in-store

4 customer shopping experience leads to experiential, hedonic and utilitarian value (Rintamäki, Kanto, Kuusela, & Spence, 2006; Fiore & Kim, 2007). McLellan (2000) see in-store customer shopping experience as to create experiences that are functional, purposeful, engaging, compelling, and memorable. Pullman and Gross (2004) found that a major advantage of a well designed and implemented experience is that it increases loyalty through functional and emotional bonds it creates in an attractive and consistent manner. A positive in-store customer shopping experience also leads to customer satisfaction and loyalty (Pullman & Gross, 2004). METHODOLOGY The methodology followed consisted of conducting a focus group, questionnaire development, sampling, data collection and the statistical analyses of the data. Focus group The focus group consisted of 10 participants that were experienced customers of the retailer studied. The overarching purpose of the focus group was to learn from the participants what they experience when they visit the particular supermarket. The focus of the experiences is confined to the time from when they entered the shop until the time they left the shop. Below are the typical questions that participants had to respond to. Experience when entering the shop: How would you describe your emotions/feelings when you step into the shop and what caused the typical emotions/feelings that you experience when you enter the shop? Experiences during shopping: 1. What are the typical emotions that you experience in the shop? 2. What influence does staff have on your in-shop experience? 3. What influence do other customers have on your in-shop experience? 4. How would you describe the atmosphere inside a XYZ shop? 5. Do you ever talk to other customers (strangers) in the shop and what do you talk about? 6 Do you enjoy contact with other customers in the shop? Feelings on exiting the shop: 1. How do you feel when you leave the shop? 2. What are the benefits you when you visit the shop? 3. Do you feel that you have seen or heard new ideas after shopping? 4. After a trip to the shop do you experience that your time was well spent? 5. Write down the typical things that you experience as positive when shopping at XYZ. Questionnaire used in the study The questionnaire consisted of 29 items that measured 6 dimensions. The dimensions were discussed in an earlier paragraph. All the items in the questionnaire were measured on a 10- point Likert scale, where 1 represented Strongly disagree, and 10 Strongly agree. Items measuring the outcome of in-store customer shopping experience, namely satisfaction (3) and value (5) were measured with a scale similar to the afore-mentioned Likert scale. Sampling procedure and method of data collection A random sample of addresses of customers of the particular retailer was purchased from a data supplier. A web-based questionnaire was posted on a website to collect data online. The questionnaire was accompanied by a letter that briefly referred to the purpose of the study and customers were requested and encouraged to participate in the study. The number of fully completed questionnaires received was 298. Statistical analyses The PASW Statistics 22 software programme was utilised to conduct a series of exploratory factor analyses to identify the factor structure of the in-store customer shopping experience. The exploratory factor analyses (EFA s) were undertaken with the following settings:

5 Principal Axis extraction, Direct Oblimin rotation (because the factors/dimensions were correlated), Factor loadings greater than 0.04 were regarded as sufficient. A factor was retained if it was interpretable and had an Eigen value of at least 1. A four-dimensional structure emerged from the EFA s. A CFA was conducted with LISREL version 8.80 using the Robust Maximum-Likelihood method. Three factors emerged from the CFA, namely: Interaction with staff this dimension refers to staff s willingness to assist, give personal attention, provide prompt service and behave courteous to customers. Store layout and atmospherics this dimension includes items from both the internal shop environment and in-shop emotions dimensions and refers to the décor, layout and physical facilities as well as the exciting experiences created and curiosities satisfied by the store atmosphere. Merchandise value and variety this dimension is a combination of the items of the initial merchandise value and merchandise variety dimensions and is representative of the merchandise value and merchandise variety offered by the store. The dimensions and items of the in-store customer shopping experience model for a supermarket are set out in the Appendix. The fit indices of the CFA suggest a reasonable fit of the in-store customer shopping experience model to the data (Degrees of Freedom, 317; Minimum Fit Function Chi-square, ; Satorra-Bentler Scaled Chi-square, (p=0.0); X 2 /df, 2.71; RMSEA, ; ECVI, and NFI, 0.986). An assessment of the internal consistency of the dimensions of the in-store customer shopping experience was undertaken. All the Cronbach alpha co-efficients of the dimensions were above the generally accepted cut-off value of 0.7 (Nunnally and Bernstein, 1994). The reliability results are reported in the Appendix. The strength of the relationships between the in-store customer shopping experience model and customer satisfaction as well as the value realised are illustrated in Figure 2. Figure 2: Empirical model

6 FINDINGS The results of this study differ substantially from those reported in earlier studies on customer in-store shopping experiences in supermarkets. An earlier study by Terblanche & Boshoff in 2006 found that the customer in-store shopping experiences in a supermarket consist of five dimensions. The earlier study s dimensions also had complaint handling as a dimension and merchandise variety and merchandise value were two separate dimensions. The CFA results indicate that the in-store customer shopping experience consists of three dimensions, namely Interaction with staff, Store layout and atmospherics and Merchandise quality and variety. All five of the items initially identified in the literature and focus group to measure Interaction with staff remained after the CFA. The items that measure Store layout and atmospherics consists of items that are from the original Internal shop environment and In-shop emotions dimensions. Merchandise variety and value are measured with seven items from the initial 10 items that measured the Merchandise value and Merchandise variety dimensions. The Presence of and interaction with other customers dimension did not emerge as a dimension of the in-store customer shopping experience construct. This can in all likelihood be attributed to the manner in which customers undertake shopping in a supermarket. Shopping for groceries in a supermarket seldom require inputs from other people and in the event of a need for assistance or advice, staff will be approached. The results of the CFA suggest a reasonable fit of the in-store customer shopping experience model to the data. The t-values in Figure 2 also confirm strong relationships between the in-store customer shopping experience dimensions and the outcome variables of customer satisfaction and value for customers. MANAGERIAL IMPLICATIONS AND LIMITATIONS OF THE STUDY The first and foremost implication is the role of staff in the in-store customer shopping experience. Staff need to be trained in more than functional product knowledge and presentations. Competent and well prepared staff is able to elicit positive responses such as delight and joy from customers and which are important components of the in-store customer shopping experience. If staff is skilled in engaging customers in interactions where emotions are involved, competitors will find it difficult to emulate such engagements. The influence of emotions in shopping behaviour is important and it has become necessary to continually measure the extent to which customers emotions have been elicited and attended to by a supermarket as part of a shopping trip. As consumers expect to find a variety of merchandise that offers value to them, it is important that a supermarket determine the merchandise variety and the depth of assortment that customers seek. Analyses of basket/trolley contents should be valuable to determine merchandise variety. The quality and price trade-off is known to impact on customer satisfaction because customer satisfaction is an important consequence of a customer s perception of the value received compared to the price paid. Frequent comparisons with competitors are therefore essential. The internal store environment shop layout contributes to customers in-store shopping experience and tangible as well emotional shop features should therefore be provided as the "means" by which a consumer is able to attain a desired "end", such as a satisfying in-store shopping experience. Thus, when a supermarket is aware of the dimensions that comprise the in-store customer shopping experience, and the supermarket is capable of meeting and maintaining the demands that customers associate with such dimensions, they can deliver memorable in-store customer shopping experiences for their customers. The major limitation of the study is that respondents from only one supermarket firm were involved in the study.

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11 APPENDIX Dimensions and items of the in-store customer shopping experience model Dimensions Items Cronbach alpha STAFF 1 XYZ s staff give me personal attention STAFF 2 XYZ s staff are always willing to help me Interaction STAFF 3 XYZ s staff provide me with prompt service with staff STAFF 4 XYZ s staff are courteous.952 STAFF 5 XYZ s staff are knowledgeable to assist me INVEMO 1 XYZ has attractive product and promotional displays INVEMO 2 XYZ has attractive décor XYZ has attractive in-store physical facilities (checkout counters, shelves, etc) INVEMO 3 Store layout and XYZ has attractive materials associated with their.953 INVEMO 4 atmospherics service (shopping bags, brochures, etc) INVEMO 5 It is a pleasure to experience the atmosphere of the shop INVEMO 6 Shopping at XYZ satisfies my sense of curiosity INVEMO 7 Shopping at XYZ offers exciting experiences MERC 1 XYZ offers a good selection of well-known brands MERC 2 XYZ offers a wide variety of products XYZ offers a variety of brand names that are available Merchandise MERC 3 in many different sizes quality and MERC 4 XYZ s products function the way they are supposed to variety MERC 5 XYZ offers a choice of different brand names.938 MERC 6 XYZ s products are free from defects and flaws MERC 7 XYZ s product prices represent good value Overall.968 Relationship of the in-store customer shopping experience with customer satisfaction and value realised by customers Cronbach alpha Items that measured customer satisfaction SAT1 I am very satisfied with the service provided by XYZ.930 SAT2 XYZ does a good job with the satisfaction of my needs SAT3 The experience that I have had with XYZ has been satisfactory Items that measured value realised VAL1 My visit to the shop enabled me to become aware of new products and services VAL2 I always feel that I have seen and heard new ideas when I leave the shop.923 VAL3 When I leave the shop I am usually informed about prices of products and services VAL4 After a trip to the shop I usually experience the shopping as time well spent VAL5 I usually learn a lot during a visit to the shop