Quality

By

Quality Management in Retail Marketing Abstract

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In this paper we, have studied the quality of retail industry in India. The reader can get a clear definition of retail and its types. The paper also further explains the importance of quality. What can be done to improve quality, and what are the consequences if the quality of a products sold does not meet the standards in the retail sector. We did a case study on Big Bazaar one the emerging retail chains in India started in the year 2001 by Mr. Kishore Biyani. Big Bazaar is a venture by the Pantaloon India Limited. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress. The researchers visited the Chennai Big Bazaar located at Vadapalani very close to the Saligramam Signal. The Rs.15 crore, store with an area of over 50,000 sq ft on the ground floor is being operated by Anandram Developers Pvt Ltd, agents of Pantaloon Retail (I) Ltd.

There we conducted a survey, where we interviewed 30 random

customers. Due to time constrain we were notable to interview more customers and also had chatted with them about their view on Big Bazaar. Customers were surveyed on the following four questions: 1. Are you a regular shopper of Big Bazaar? 2. What do you think about the price offered? 3. What is your opinion on the customer service provided in store? 4. What is your quality perception on the products available? The following were the results that we got with the above survey.

93.3%

customers were frequent visitors to the store. While the rest 6.8% it was their first time,

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as they were living quite far from the location of the store. 23.3% surveyed felt that the pricing of products was low, 70% felt that the price was moderate or medium while the rest 6.6% had said that the price was high. The customers were also happy about the Shakthi card offered by Big Bazaar and issued by ICICI bank for home makers, which gives them special benefits like redeemable points, one kilo sugar free every month etc. 36.6% had a fair shopping experience, 50% had a good experience and 13.3% were not satisfied. Customers were saying that the products are easily accessible and there are no long lines that they have to wait. Further they say that the sales associates are helpful with decision and choice making. 36.6% said that the product that they purchased was fair, 50% said the product was good in quality and 13.3% said it was excellent. Customers said that the store only carried standard products that lasted long. They also said when a product was bought at bulk the saving is high. To conclude the survey clearly reviled that Big Bazaar was the most sought of shop by Chennites. People visit Big Bazaar frequently and they love to shop in a big store with a wide assortment of products. Majority of the customers felt that the pricing was moderate, the customer satisfaction with the store display and salesman attitude was moderate, and the quality of merchandise available in Big Bazaar is good. All the above information clearly indicates that the retail market has taken a big leap in the Chennai cosmopolitan.

The feature retailing scene will offer the emerging market more

challenges and opportunities in the neighborhood.

Quality Management in Retail Marketing “If you don’t have a competitive advantage, don’t compete” By Jack Welch, GE 3

Retailing is the set of business activities that adds value to the products and services sold to consumers for their personal or family use.

Retailers are directly

involved with final consumers. They are involved in strategy planning which is very critical for their survival.

They offer assortments of goods and services advice to

customers, convenience in parking and other value additions to the consumers. If they are engaged in service retailing like dry cleaning, fast food, photo-processing etc., then retailer also functions as a producer. Retailers attempt to satisfy consumers’ needs by having the right merchandise, at the right price, at the right place, when the consumer wants it. Retailers also provide market for the producers to sell their merchandise. Retailers are the final distribution channel that links the manufacturer to the consumer. Pelligrini suggests that retail companies have three options for growth: vertical integration, retail diversification, and internationalization. Retailing has often been slow to expand globally because of the high level of investment needed to set up.

Functions of the Retailer:  Providing Assortment: Supermarkets typically carries over 20,000 to 30,000 different items made by over 500 companies. Offering an assortment enables their consumer to choose from a wide selection of brands, designs, sizes, colors and prices in one location.  Breaking Bulk: To reduce transportation and shipping manufacturers typically send cartoons of a single product. Retailers then offer the product in smaller

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quantities tailored to individual consumer needs. It’s also easy for the consumer to purchase smaller and much manageable quantity of a product.  Holding Inventory: Retailers always hold inventory of products available in their stores. By this a customer can always count on the retailer to have the product. The consumer does not have to worry about the storage of the product.  Providing Services: Retailers make it easier for consumer to buy and use the product. They offer credit so a consumer can have the product now and pay for it later. They have displays where consumers can test the product before they buy. Some retail chains are opened 24/7 where consumers can buy items at any time of the day. There is an option given to the consumer to pick the items with them or to get it shipped.  Increasing the value of products and services: By providing the above elements to the consumer, the value of a product is increased.

Classification of retailers:  Departmental Stores: Nilgiris’, Reliance Fresh, Trinethra, Subhiksha are few examples of Departmental stores in Chennai. Here, we find product lines laid out into separate departments, as groceries, toiletries, cosmetics, beverages, vegetables, stationeries, etc. Companies may operate as ‘shops-within-shops’ and pay rent as a percentage of takings to the host store. Departmental stores are often considered retailing leaders in a community. They generally cater to consumers’ seeking shopping product.

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 Supermarkets: Big Bazaar and Saravana Stores. These are large, self service stores carrying a very wide range of Fast Moving Consumer Goods (FMCGs). They are typically located in out-of-town retail parks, although many supermarket chains have recently opened smaller city center sites. The supermarket chains are often the first with new customer initiatives such as loyalty cards and in store bakeries. For example Big Bazaar has tied with ICICI Bank for issue of the SHAKTI card exclusively for women who are home makers. Low prices based on large –scale efficiency are hard for smaller independent store to match. To boost sales some super market operators are opening “super warehouse” stores which carry more non perishable items than supermarkets – package goods and canned items with fast turnover and they do not stock any perishable item they carry.  Discount Sheds or ‘Category Killer’: Wavetel, Univercell, Vasanth & Co., and Viveks’. These stores often stock bulky items such as furniture and electrical goods. The ‘Category Killer’ terminology results from the tendency of some very large specialized stores to put competing independent retailers out of business.  Specialty Shops: Nalli, Kumarans’, and Bata. These type of stores are conventionally limited - line stores. It is usually small & has a distinct “personality”. Since the size of the shop is small, the management and sales people come to know the customers well and have an advantage to serve them better. These are typically found in central business districts of towns where prime sites are vitally important. As it is frequently only the large national chains that can afford the high rents of such sites.

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 Convenience Stores: Petty shops (Petty kadai). Geographically and also in terms of the range of products offered, these stores fill the gap between edge–to-town supermarket and the ‘traditional’ corner shops situated close to housing estates. These stores do not offer a wide range of assortments rather they carry basic needs and act like mini-retailers as they do not stock a large quantity of any product. In spite of all this, they have steady and regular customers. While independently owned convenience stores have tended to decline in number, in the recent years.  Catalogue Showrooms: Dell, Apple, etc. These stores lower their costs by maintaining only a limited display of goods, with consumers making their selections via a catalogue and collecting their purchase from a stockroom attached to the showroom site. They major advantage in a catalogue showroom is that there are no added costs therefore the consumer gets the product at a concessional or discount price. 

Market Traders: “Uzhavar Sandhai” (local farmers market). These are significant outlets for many low-value products and their importance has greatly declined in the recent years.

 Online Retailers: Some online retailers, like Amazon.com, hindhushopping.com, futurebazaar.com have no physical shops that interface with the public. However, most online retailing is in fact accounted for by ‘bricks and mortar’ retailers.  Telephone and Direct-Mail retailing: Teleshopping network is an example of Telephone and direct mail retailing. They allow consumers to shop from home by

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placing order via mail or by calling a toll free number and charging the purchase to a credit card directly.  Door to Door Retailing: Amway, Oriflamme and local small scale business people selling vegetables, fruits, snacks, books and other needs are certain examples of door-door retailing. Door to Door selling means going directly to the consumers’ home. It meets consumers’ needs for convenience and personal attention.  Vending Machine: Cool drink vending machines in a mall, coffee vending machine in a railway station, vending machine in a milk booth are some examples for vending machine retailing. In this a customer deposits the money in the vending machine and the product is dispensed.

Quality: Delivering service quality, also means managing expectations. Because high expectations can be a two-edged sword (especially if delivering on them is unrealistic), avoiding negative experience is often as important as creating positive ones. Quality determinacy could be performance, conformance to specification, features, customer support, process quality, aesthetic design. The prototype of differentiation is a quality strategy in which a retail business will deliver and be perceived to deliver a product or service superior to that of competitors. A reputation for quality was the most frequently mentioned sustainable competitive advantage for retailers in the emerging retailing markets. What is required is quality focused management system that is comprehensive, integrative and supported throughout the organization. Such systems are well developed in Japan and are know in US as total

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Quality Management. They consist of a host of tools and precepts. The commitment of senior management to quality as evidenced by substantial time commitment and an emphasis on TQM values. Cross functional teams that focus on quality improvement projects and are empowered to make changes. These teams are sometimes called quality circles but that phrase is associated with early quality efforts and it too limiting. There should be a team oriented recognition or reward. The focus is on developing and improving process that will lead to improved quality. Teams should use problem- solving tools and methods to develop programs. A focus on the problem and the underlying causes of customer complaints and areas of dissatisfaction. One approach used in TQM is to explore a problem in depth by repeatedly asking, “Why?” This process has been dubbed the five whys. Benchmarking performance comparisons are made with other firms inside and outside the industry and inside and outside the country. Ambitious goals are set. Successes are recognized. The involvement of suppliers in the system with supplier audit, ratings, and recognition, as well as joint team efforts. Quality is defined in terms of customer satisfaction. Customer Focus:  The quality option is designed ultimately to improve customer satisfaction.  The problem is to distinguish between lip service and a culture and a set of programs that together represent a meaningful successful customer approach.  One indicator of a customer service focus is the involvement of top management. Most retailers who want an excellent customer service have one-on-one contact with customers.  Another indicator is a link to the compensation and measurement system.

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 Commission is now based on 60% on profitability and 40% on customer satisfaction and 0% on sales.  Customers are surveyed to determine whether they are happy with the local sales team and whether the sales representative had helped them achieve their business objectives.  Indicator of a customer focus is knowledge of what drives customer choice and satisfaction. As a minimum, customer motivation should be identified and their relative importance assessed.

Quality Function Deployment:  Is a formal method to prioritize attribute based on their links to customer motivation  In transferring customer motivations to operational measures there is always the concern that a quality measure can be counterproductive. Examples:  Broadband Suppliers: A professional attitude on the part of the installation team means quality.  Tomato Juice: Thickness means high quality  Cleaners: A lemon scent can signal cleaning power  Supermarket: Produce freshness means over all quality  Cars: A solid door-closure sound implies good workmanship and a solid, safe body  Clothes: Higher price means higher quality

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Signals of High Quality:  Quality attributes such as performance, durability, reliability a d serviceability.  Customers assume if a product does not fit or have the right finish then the product is a low quality product. This is known as the “fit and finish” dimension.  In pursuing a quality strategy, it is usually critical to understand what drives quality perception and to look to the small but visible elements.

The GAPS Model for Improving Retail Service Quality: The GAPS model indicates what retailer needs to do to provide high-quality customer service. When customers’ expectations are greater than their receptions of the delivered services, customers are dissatisfied and feel the quality of retailer’s service is poor. Thus, retailers need to reduce the service gap (the difference between customers’ expectation and perception of customer service) to improve customers’ satisfaction with their service four factors affect the service gap: 1. Knowledge Gap – The difference between customer expectation and retailer’s reception of consumer expectation 2. Standard Gaps – The difference between the retailers’ perceptions of customers’ expectations and the consumer service standards it sets.

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Service Gap

Customer expectations for service quality

Knowledge gap

Standards specifying services to be delivered

Management perceptions of customer expectations

Standards gap

Annual service delivered

Delivery gap

Retailer communicati ons about service quality Communication gap

Figure 1: Gaps Model for Improving Retail Service Quality

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Customer perception of service quality

3. Delivery Gaps – The difference between the retailer service standards and actual service provided to customers 4. Communication Gap – The difference between the actual service provided to customers and the service promised in the retailers promotion program

The latest innovation of retail marketing - BIG BAZAAR was studied by the researchers: Inspiration for the creation of Big Bazaar: The inspiration to set up big bazaar came not from any foreign super market, but from a relatively small family run shop in Chennai, called “Saravana Stores”. In the book “IT HAPPENED IN INDIA” authored by Mr. Kishore Biyani, the founder of Big Bazaar gives all the credit to Saravan Stores for the innovation Big Bazaar. The store was created to target the middle class people who shy to go into posh looking stores but prefer a store with crowd and but still providing quality products. History: Big Bazaar, the value retailing concept of Pantaloon Retail and a part of Future group was started in the year 2001. The chairman and the main architect of Pantaloom Retail group is Mr. Kishore Biyani. Big Bazaar mainly caters to the needs of a family, while keeping the prices low but still manages to supply quality goods. A customer can get all the products needed for running a home under one roof at a guaranteed price and the quality of product being excellent. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation

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(NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Future Group’s vision is to, “deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner.” Their vision statement do not indicate anything about “customer satisfaction” which is an important parameter for quality. With the above great idea Big Bazaar has become a success story in the retail world.

OBJECTIVE: The researchers visited the Chennai division of Big Bazaar to understand whether quality products were offered to the customers, and also wanted to understand whether the customers were satisfied.

METHODOLOGY: The researchers interviewed customers on random basis on the following aspects: Frequency of visits to Big Bazaar, Price offered to them, customer service satisfaction and their perception on quality. Due to constrain of time and resources the researchers could only interview 30 customers. More over the visit was held on a Saturday being a busy day for Big Bazaar the manager would not permit us to continue our survey.

The survey was conducted using an interview schedule

covering four aspects mentioned above.

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Chennai Big Bazaar: Big Bazaar in Chennai is located at Vadapalani very close to the Saligramam Signal. The Rs.15 crore, store with an area of over 50,000 sq ft on the ground floor is being operated by Anandram Developers Pvt Ltd, agents of Pantaloon Retail (I) Ltd. The store has huge parking space for cars and two wheelers, for customers’ convenience they also provide trolley till the parking space.

Figure 2: Front view of Big Bazaar in vadapalani Chennai.

Inside the store the products are categorically divided into aisles, Big Bazaar carries over 1, 60,000 products. Big Bazaar store manager has considerable authority to take most of the decisions on the spot or floor planning. That is to decide what item goes 15

in which part of the store. The following are the categories of products that the Big Bazaar, the first counter that a customer walks in is the medicine bazaar where all medications for acute ailment are found, and then there is the cosmetics counter along with the ladies accessories, followed by the cell phone counter and a wide range of shoes and apparels for men, women, children and infants. Then there is a large variety of books and stationeries, gift items, furniture, home décor, car accessories, electronics, utensils and crockery, kitchen appliances, home essentials like cleaners and personal hygiene products, grocery, fruits and vegetables, beverages, dairy and frozen products are the other categories of products available. The merchandising of the products at Big bazaar is done by local vendors and manufactures. Except for apparels and clothing related items as they are sourced primarily from Pantaloon’s manufacturing units. Figure 3: Interior of Big Bazaar at Vadapalani Chennai.

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RESEARCH FINDINGS: 1. Frequency of Visits Figure 4: Showing frequency of visits at Big Bazaar Frequency of Visits

Percentage

100

93.3%

80 60 40 20

6.6%

0 yes = 28

no = 2 Yes/No

Source: Primary data

We found that 93.3 % customers were frequent visitors to the store. While the rest 6.8% it was their first time, as they were living quite far from the location of the store. The graph below shows the data that we obtained from 30 random customers shopping at Big Bazaar.

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2. Price Offered: Figure 5: Showing Price offered by Big Bazaar Price Offered by Big Bazaar 80

70%

Percentage

70 60 50 40 30

23.3%

20

6.6%

10 0 low =7

medium = 21

high = 2

Low / Medium /High

Source: Primary data Most customers that we surveyed felt that the price of the apparels, house décor and electronics was low. But the price of grocery and house hold were only sold at MRP. Customers also save more when they buy things on daily special, special offers, seasonal sales and also when they use their SHAKTI card offered by Big Bazaar and issued by ICICI bank, a customer gets points for every Rs.100 / 4 points that can be redeemed. 23.3% surveyed felt that the pricing of products was low, 70% felt that the price was moderate or medium while the rest 6.6% had said that the price was high.

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3. Customer Satisfaction: Figure 6: Showing customer satisfaction of Big Bazaar

Customer Satisfaction 60

50%

Percentage

50 40

36.6%

30 20

13.3%

10 0 fair = 11

good =15

bad = 4

Fair/Good/Bad

Source: Primary source Customers shopping at Big Bazaar say that the quality of customer service provided by the associates, easy availability and accessibility of products, and the many choices offered under a single roof are main high lights that attract them to come back again. This clearly shows the quality of management staff in store is good. 36.6% had a fair shopping experience, 50% had a good experience and 13.3% were not satisfied.

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4. Quality Perception: Figure 7: Showing quality perception of Big Bazaar

Quality Perception of Big Bazaar 60

50%

Percentage

50 40

36.6%

30 20

13.3%

10 0 ok = 11

good = 15

excellent = 4

Ok/Good/Excellent

Source: Primary source Finally when we asked about the quality perception that is the quality and durability of the product sold at Big Bazaar, customers said that the store only carried standard products that lasted long. They also said when a product was bought at bulk the saving is high. 36.6% said that the product that they purchased was fair, 50% said the product was good in quality and 13.3% said it was excellent.

Conclusion: The researchers after the survey felt that the Big Bazaar was the most sought of shop by Chennites. The survey reviled that people visit Big Bazaar frequently; majority of them felt that the pricing was moderate, the customer satisfaction with the store

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display and salesman attitude was moderate, and the quality of merchandise available in Big Bazaar is good. Customers who had been to Bombay and Bangalore Big Bazaar said that the Chennai Big Bazaar has to develop and improve. Some felt because of Big Bazaar smaller shops and departmental store suffer. Besides many agreed that in small shops they do not get a wide assortment of products that is offered in places like Big Bazaar and also the quality of product and service is better in big retailers than in smaller stores. Child labor can be eradicated in places like Big Bazaar they do not hire children to deliver goods and for other jobs. Customers also felt stores like Big Bazaar create a lot of employment opportunity in the neighborhood. A customer felt that the most of the goods are sold at the MRP (maximum retail price). Over all Big Bazaar has satisfied and happy customers. All the above information clearly indicates that the retail market has taken a big leap in the Chennai cosmopolitan. In the dynamic environment mass merchandising - the modern Philosophy has come to stay.

The all purpose departmental store is an

expectation of the customer in combination with mail order and electronic ordering. The feature retailing scene will offer the emerging market more challenges and opportunities in the neighborhood.

THANK YOU !!!

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Bibliography Books:

1. A. Aaker, David. Strategic Market management. New York: John Wiley & Sons,2001, pp.154-162. 2. Levy, Michael. A. Weitz .Barton. Retailing Management. New York: McGrewHill,2004,pp.6-8, 627. 3. Palmer, Adrian. Introduction to Marketing. India: Oxford University Press,2004, pp.350-351,363.

Web Sites:

1. Prabu, Sundara. “Saravana Stores Behind Big Bazaar.” http://nycablecar.sulekha.com/blog/post/2007/09/saravana-stores-behindbigbazaar.htm, Sep 30, 2007. 2. Retailer, Pantaloon (India) limited. “Company Profile.” http://www.pantaloon.com/companyinfo.htm, Sep 29, 2007.

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