Retail Paper

Topics: Factor analysis, Principal component analysis, Retailing Pages: 9 (2162 words) Published: April 25, 2013
Determinants of retail store choice: An empirical analysis
Dr. Namrata Sandhu

Dilpreet Singh


Richa Dhall


Purpose of research: The current study makes an attempt to establish the most important determinants of retail store choice. Methodology: A well drafted and pretested questionnaire was conveniently administered to 200 respondents in Tricity (Chandigarh, Mohali, Panchkula). The data was collected over a two month period from December 2011 to January 2012. The collected data was reduced with the help of Factor Analysis. The extraction method used was Principal Component Analysis and the rotation method used was Varimax with Kaiser Normalization. The reliability of the data was establised using Cronbach’s coefficent Alpha. Major results: The study revealed that store atmospherics, schemes and offers, quality of products and merchandise availability are the most important factors influencing retail store choice. Most of the respondents prefer to shop with the retailer, who as compared to the competion, provides better store ambience, product quality, promotional schemes and service delivery. Implications: With a number of retailers in news for cutting down expenditures to improve bottom-line growth and in some cases even closing down the stores; the challenge lies in determining the right trade-off between the store choice determinants and costs involved in maintaining the same. Keywords: Shopping, retail stores, retail marketing, store choice, factor analysis

Introduction and Need of the Study

The shift from mom and pop stores to organized retail is apparent. This change is more common with the youngsters than with the older generation (Baltas and Papastathopoulou, 2003). With the retail sector showing signs of growth over the years, a number of companies have put high bets and invested a huge capital in this sector. With increasing competition from the counterparts, comes the challenge to meet and exceed the customer expectations. As a result, what customers buy, how much they buy, from where they buy and why they buy are intriguing questions faced by the companies and researchers. A number of researchers have talked of factors such as customer service, variety, ambience, promotional schemes etc. that influence the customers’ choice of the stores and the basket size of purchases (Bhalla and Bhaskar, 2011). These factors when working positively influence customer satisfaction and purchase behaviour (Bhalla and Bhaskar, 2011). For companies, it is very difficult to focus on all the factors simultaneously because of the high cost involved in sustaining these factors. Given this scenario, a need was felt to conduct a study aimed at determining the most important determinants of retail store choice and discuss its implications for companies powering the retail sector.

Literature Review

Determing what attracts a customer to a retail store has aroused the interset of many researchers in the past. As early as 1983, Arnold et. al. pointed out that quality and assortment of products, followed by display techniques and price of the products were important factors critically influencing store choice decision. Mahadevan and Kaur (1991) further established store ambience and shopping experience as the most important factors driving the costomers’ decision of where to shop from. The results of this study were reinforced by a research conducted by Baker et. al. in 2002. While being in syncronization with the results of previous similar studies, this study also establised perceived merchandise value and shopping experience costs as having a bearing on the choice of retail store.

Baltas and Papastathopoulou (2003) further established a strong corelation between retail store choice and demography of the customers. Their study revealed that while shopping convenience appeals to customers of all demographic profiles, it...
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