Introduction

Retail Industry Australia has seen significant growth across the globe. With increasing globalization and the number of supermarket chains, independent grocery stores and retailers are facing increased challenges to sustain. The arrival of supermarket chains has enabled the customers to purchase many food and beverage items, clothing and may other products under one roof. The supermarkets also provide the customers a greater choice of products, which influences the customers to a great extent. Supermarkets enable the customers to browse along the shelves and select the products themselves, which is also present in independent grocery shops but provides only few choices of products. The independent grocery stores are losing the ability to sustain as more and more customers are switching to super markets as it provides increased customer convenience and enhanced quality of service. The supermarkets focus on providing range of products and offer different types of discounts throughout, which influences the customers to great extent. The independent grocery stores do not have the liberty to provide more discounts and the level of customer convenience is limited. The independent grocery stores have lesser space as compared to the supermarket chains and hence have limited shelves to display the products and hence have reduced range of products. Best Sellers is a well-established Indian Grocery Shop, which is located at Northmead, Sydney. The outlet was once very popular since it offers mix-range of products and did provide variety in its products and services. The shop offered the customers mainly the Indian food items but also included food items from different parts of the world in some of the categories, which had made the outlet quite popular. The retailer sourced all its products from different regions of India and the other items were sourced from local distributors. The retailer had seen consistent growth for several years but from past few years the sales have not been as desired since many of the customers have been switching to the competitors mainly the supermarket chains. This research focuses on identifying the factors, which is influencing the customers to switch from the Best Seller, a local India Grocery store to the supermarket chain located in the same area.

Problem Statement

Australian retail industry is one of the fastest growing industries in the country with few of the top players taking up all the market share. In Australia the top two supermarket chains Woolworths and Coles have the largest market share of around 60% and Metcash and the independent retailers have around 30% of the market share and the rest is shared by international chain Aldi, which is one of the fastest growing supermarket chain currently in the country (Ferrier, 2015). The consistent reduction in the demand for independent retailers is due to lack of various factors related to customer convenience, service quality, product range and price and brand appeal and advertising. The independent grocery shops in Australia have limited space and approaches to influence and retain customers.

 

There is an increase in the competition in Australia in the retail industry standards and Best Sellers is facing increased competition, which has forced it to identify the factors, which it needs to enhance to attract customers and retain them. The stores used to have heavy customer in-flow on weekends, which has reduced drastically and there were many factors, which led to the discontent among customers and influenced them to switch to the big supermarket chains even if they want to buy some minimal items. The main problem, which Best Sellers is facing today is of reduced demand and the consumers being more influenced by the supermarket chain, which is doing well in various aspects of customer satisfaction. The problem faced by the Indian Grocery store is that the demand for independent stores has reduced drastically due to the increasing influence of supermarket chains. This research analyses the following factors, which have been identified as main factors influencing the reduced demand for independent grocery stores. The factors include customer convenience, service quality, product range, product price, brand appeal and advertising. The main aim of this research is to identify the main factors, which has reduced the demand of Best Sellers in Northmead, Sydney.

Literature Review

Retail industry is one of the fastest growing industry across the globe including Australia. The retail sector in Australia has experienced important changes in 2015 as the customers are becoming more digitally savvy and are changing their shopping approaches (Roswell, 2015). Online shopping is on rise and people are shopping in-store and in different platforms. The customers use different applications and devices and 75.2% of people who spend on online shopping buy from the domestic websites (Roswell, 2015). Today, the customers want to be served fast, have a personal touch, be transparent and seamless. The consumers have increased knowledge about the brands and services and hence it essential for the retailers to make use of data and analytics to know the customers better and offer promotional offers or discounts, which the customers are looking for (Berman & Evans, 2012). The increase in online reviews and comments on social media sites have led to increasing transparency in the retail industry and the consumers make decisions by learning from other’s experiences and are quick in switching their loyalties (Bogaisky, 2014). The retail spending has been impacted in Australia after the country opened its doors for foreign retailers, which has impacted the local brands as the competitors try and offer superior in-store experience, competitive pricing and quality products (TimeTrade, 2013). The main factors, which influence the customers to switch their loyalties include customer convenience, service quality, product range, product price, brand appeal and advertising.

 

Customer Convenience

Customer convenience has different aspects to it. There are various factors, which cause inconvenience to the customers. Two of the factors include parking space and opening hours. With increased number of working population the people always seek for opening hours, which are convenient and long. If the retailer closes down early in the evening the customers might never visit that retailer as they can never adjust their timings to it. Parking space is another aspect, which people today look at as there is increase in the number of people visiting the supermarket as people find everything under one roof (Averwater, 2013). The lack of adequate parking space among the customers since they have to either go back or park it at a distance. The checkout time has a dramatic impact on customer’s perception about the service and causes inconvenience if not maintained effectively (Bogaisky, 2014). In the brick and mortar settings the checkout time has huge influence on the customer’s opinion about the service quality. If the queue is too long in the retail outlet, then most of the customers will not wait even if the products are priced low (Cox, 2011). The retailers have to address this issue or else they can lose the customers to their competitors. According to a research carried out on queueing and the customer’s perception about it, around 36% of the people were found to overestimate their wait time (Berman & Evans, 2012).

The uncertainty as to when the customer will be attended increases the stress of waiting but if the customers informed about the expected waiting time and the explanation for it, the customers tend to wait (Bogaisky, 2014). The long queues in the retail outlet have a negative impact on the sales in three ways, which are cart abandonment, wherein customers leave the checkout line without buying as the line is too long (Dudley, 2013). Put-backs, which refers to customers seeing the long queue leave the items back in the shelve and drive-bys wherein the customer do not enter the store just by seeing the long queue at the check outs. This can have further bad impact on the sales through word of mouth (Averwater, 2013). There are very few dissatisfied customers who make efforts to complain to the store or the company instead they talk about the queue and the inconvenience to family and friends (Bogaisky, 2014). Almost all the shoppers in the world view that standing in queue for more than mins has a negative impact on the customers. Most of the customers avoid visiting the retailer again and visit the competitor

The other factor, which affects the customer convenience and service quality is the availability of the desired product’s stocks in the outlets. An American Customer Satisfaction index has showed that there is significant increase in customer satisfaction level when the retailer has increased stock values (Cox, 2011). The customer satisfaction in retail outlets depend on location, price, behaviour of sale staff, and inventory. The customer convenience and service quality is also affected by the inventory management approach adopted by the large companies (Berman & Evans, 2012). The lack of effective inventory management can not only affect the sales but also lead to loss of customer trust, which is central to the success of the retailers (Doucet, 2012). The retailers face increased loss in their business and revenues due to stock-outs. The reason behind the poor management of inventory include poor data sync wherein the organizations fail to overcome the database inaccuracies and poor supply chain process. The other reason, which leads to stock outs is of distorted forecasting.

 

Service Quality

Service quality can be referred to as the overall attitude towards delivering a service fulfilling the customer expectations. According to Letinen (2000), service quality cab be defined in terms of physical quality, quality of interaction, and the corporate quality of the organization. Lovelock (2004) states that tangible elements of services help in influencing the customer perceptions towards the service quality (Berman & Evans, 2012). The product range, its layout, after sales service, etc.  are the tangibles, which can help create an effective brand image in the consumer’s mind (Bevan, 2005). According to Foxall (2006), servicescape and tangible appearances have a strong influence on the loyalty intentions of the customer (Averwater, 2013). The servicescape refers to the design of physical environment and service staff qualities. The service staff behaviour is of great importance due to the intangible elements of the services. According to Sum (2009), empathy is an important aspect for gaining customer loyalty (Naik et al., 2010). The retailers find that familiarity of the staff can persuade customers to visit the outlet frequently and can ultimately lead to loyalty (Mario et al., 2005).

 

Product Price

Product price continue to be one of the deciding factors for the consumers to purchase a product.  Many of the market researchers indicate that greater demand at particular price suggesting that demand falls at prices just above and below a critical price point (Doucet, 2012). The psychological pricing based on the situation are referred to as customary prices, odd types of pricing (Berman & Evans, 2012). Customary price removes all the alternative prices and maintain a single price point (Dudley, 2013). The organizations get adapted to changes in costs and the market conditions and adjust the product size or quality assuming that the customers will not pay more or less for the product offering. Old pricing refers to the process that end with an odd number, which is found to increase customer sensitivity (Bogaisky, 2014).  The psychological pricing refers to type of pricing by the organization wherein the buyer tends to expect certain prices after knowing the product or service for long period (Randall & Seth, 2011). The economic theory states that price is considered to influence the buyer’s choice as the price indicates the purchase cost (Fisher & Raman, 2010).  The retailer’s success to some extent depends on its pricing strategy. The people are cost sensitive and always opt for products, which cost less.

 

Product Range

Product range is one of the important elements for attracting the customers. The retailers require to plan the range from setting concept, direction, selecting products, finalizing price, sales forecasting.  and distribution in an effective manner to be able to retain the customers (Bevan, 2005). The product range plan is complex as since the retailers have to consider various aspects and the customer preferences. The retailers have to consider the right depth and width of the range, which ensures sufficient choice and range completeness (Ailawadi et al., 2009). The product range also involves retailer to determine the right price, which can help the employees to choose the right brand (Varley, 2014).  The product range also involves making decision about the right quality and value of the product, which ensures that the brand and product proportions is met (Doucet, 2012). The retailer to should display the product range effectively on the shelf, which is easily visible and available to the consumers.  The product range also influences the customers to stay loyal to one retailer and if the retailer fails to provide range of products the customers it will influence them to look for other brands and retailer (Zeithaml, 2010).

 

Brand Appeal and Advertising

Appeal can be defined as the power to please, attract, stimulate or build interest (Varley, 2014). Appeal not only attract the customers but also keeps them returning and sharing their experiences with their own networks (Lewis & Dart, 2014). According to Lindstorm, the mainstream brands and companies are starting to appeal to the emotions of the customers (Fisher & Raman, 2010). The brands incorporate different sense to the branding techniques. According to Franke et al. (1999), customers buy products and services for emotional or rational reasons (LeBoeuf & Simmons, 2010). In case of rational reason, the brand can appeal to the customer by assuming that consumers process information while making the buying decisions and is based on logical or utilitarian decisions (Ruben & Paparoidamis, 2007). In such cases the brand appeals the customer through rational messages included in the advertising of the brand and include strong messages in the marketing communication, which can convince customers on buying the advertised brand (Ailawadi et al., 2009).  In such cases the brand managers use economy, product quality, price performance to persuade customers towards a decision. The emotional appeal on the other hand involves experiential consumption and hence the brand should design advertisements, which are based on motions and make the consumer feel good about the product by creating effective brand associations (Bogaisky, 2014). According to Copeland (2004), emotional appeals lead to positive or negative emotion resulting in purchase motivation (Levy & Weitz, 2011).

The brand managers use marketing communication having a positive emotional appeal like love, affection, humour, patriotism, joy and pride foe creating a positive brand attitude among the consumers (Fisher & Raman, 2010). Emotion is considered to be a major component of consumer’s consumption experience, which directly affects the quality of life of the people and their loyalty towards the company (Averwater, 2013). It is found that emotional advertisements have shown to influence customers’ reactions to advertisements and enhance their attention and attitude towards the brand (Panda et al., 2013). By creating an emotional impression of intangible aspects of the products enables the brand to appeal to the customer to a great extent. It is found that if the customers are motivated to buy products based on emotions they do not look for cognitive information during the pre-purchase stage (Richards, 2013). When the brands appeal the customers through emotional route it enables them to reduce the post-purchase dissonance.

 

Methodology

Research design is one of the important parts of every research. To effectively design a research there are three questions central to the research. The first being what are the theoretical perspective does the researcher the researcher has considered, second is what strategies for inquiry would provide information about the procedures to be followed and what data collection methods and analyses would be used. The theoretical perspective discusses, strategies and methods together provides a research design, which can be either qualitative, quantitative or mixed. Qualitative research is mainly used in the first stages of research to identify the trends in the opinions and thoughts associated with any given situation and the people involved in it (Creswell, 2013). This design uses primary sources and secondary sources. The primary sources include interviews, surveys and focus group and the secondary sources refer to the articles, researches carried out by other researchers etc. (Flick, 2015). This design emphasizes on understanding the underlying cause and motivation behind the chosen research study. By nature, qualitative design is exploratory and provides detailed description of the research area (Kumar, 2014).  The researcher using qualitative design has a subjective approach and seeks to understand human behaver and the reason behind it. This design is a precursor to quantitative research. Qualitative research often includes interviews, survey design techniques and individual case studies, which enables thee researcher to evaluate finding over a broader area (Kumar, 2014).

Quantitative research design is objective and involves carrying out precise measurement and analysis of chosen research area (Flick, 2015). This design is a systematic process, which uses numerical data for gaining knowledge and information about the respective research area (Marczyk et al., 2005). This research design uses information only from primary sources, which is obtained through interviews and surveys topic based on the response of the interviewee, which was not thought off earlier (Creswell, 2013). Quantitative research design is used to prove a hypothesis right or wrong (Flick, 2015). The results gained in quantitative experiments eliminates external factors and hence can provide real and unbiased results (Marczyk et al., 2005). This research design is time consuming and requires increased investment and also it has to be well-planned.

This research will use qualitative research design as the researcher aims to learn about the human behaviour and habits of the customers who are switching their loyalties to the growing number of supermarket chains instead of the independent grocery stores. This design will enable the researcher to identify the changing trends, buying behaviour of the customers and their preferences, which can help bring required changes in the grocery stores to attract the customers and gain their loyalty. This study will enable the researcher to understand the competitive edge the competitors have against them and improvise in the approaches, which will enable them to be as effective as the competitors. The primary data will be collected through interviews and survey.

 

Data Collection methods

Interviews: Interviews will be conducted with the manager of Best Sellers and semi-structured questionnaire will be used. The semi-structured questionnaires help the researcher to probe further questions about a certain topic based on the response of the interviewee, which was not thought off earlier (Creswell, 2013). The semi-structured questionnaire enables the researcher to further investigate the research area based on the knowledge of the person being interview. Interview with the main personnel in the grocery store including the manager will enable the researcher to analyse the problem of reduced customer in-flow from the perspective of the organization. The researcher would take interviews personally and will be carried out with the managers and two supervisors. The interviews would be carried out by taking prior appointment.

Survey: Survey includes a set of questionnaire, which enables the researcher to ask structured questions. In surveys there is a specific set of questions, which has specific answers to it. The survey will enable the researcher to have better understanding of the research area. The survey can also have semi structured questionnaire. A survey will be carried out with 80 customers living in Northmead area and who do and have previously visited the grocery store and there will be 200 other participants who will participate in an online survey. The participants of survey will be randomly chosen, which will enable the researcher to analyse the research topic effectively without any bias. The survey will be carried out throughout the week and at different location within the area. The researcher will include few semi-structured questions in the questionnaire to have better understanding of the situation.

The research will include interviewing two managers and 280 participants overall. The survey participants were found by identifying the exiting loyal customers of Best Sellers and contacting them over the phone and asking their willingness to participate in the survey. If the agree, an online survey questionnaire was sent to the customers. The survey participants with whom eth researcher took a face-to-face survey were randomly chosen in the premises of the Best Seller grocery and outside some of the supermarket chains in the Northmead area. The researcher took the face-to-face survey in a week. The interviews of the two manager was taken as per their convenience in the store. The online survey was taken of the customers who used to visit Best Sellers often out of which some have switched to the rival supermarket chains. The purpose of choosing this online sample was that these customers are discontent and already switched to other retailers and will be able to highlight the reasons behind the drop in the business of Best Sellers. The random choice of people in face-to-face survey will enable the researcher to learn about the different perception of the customers who visit the Best Sellers as well as customers who visit other supermarket chains. This will enable the researcher to have an idea the overall expectation and preferences of the customers and not just with respect to the Best Sellers store, which will help in making recommendations for improvements in the Best Sellers. The interviews with the managers will help in analysing the perspective of managers about the loss in business and the customer switching to the competitors.

 

The survey and interviews conducted with the participants was done by considering all the ethical factors. The participants were clearly explained the purpose of the research and their personal details were kept confidential. The participants were not forced to participant in the survey and included people who are willing to participate in the survey. The participants did not force the participants to answer every question. The interviews with the managers were taken with their permission and as per their convenience. The managers were allowed to skip certain questions if they did not prefer answering it. The participants of survey were allowed to quit at any point of time during the survey. The interviews and survey was conducted by taking the permission of the respective authorities and was ensured that it did not cause other customers any inconvenience. None of the details of the customers were disclosed and the result will be destroyed once the purpose of providing recommendations is over.