Service quality gap between Online and Brick and Mortar Store of same Brand

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1 in Eduation Technology (IJARET) Service quality gap between Online and Brick and Mortar Store of same Brand I Jacob Joseph. K, II Dr.Vikas Sharma I Research Scholar, NIMS University, Jaipur, India II Research Guide, Assistant Professor, NIMS University, Jaipur, India Abstract Growth of online stores has led to debate whether brick & mortar store will die. Researches comparing online retail and brick and mortar store are being done on various aspects. This study uses the SERVQUAL model to compare both format of stores of the same brand and evaluate the service quality in terms of tangibility, empathy, responsiveness, reliability and assurance. The study is conducted at the stores in Bengaluru that have presence in both formats. A questionnaire is used to survey among the consumers to measure their opinion about the service quality of the store on both formats. Study reveals that brick and mortar stores have a better service quality than the online store on all the aspects. The results suggest that online stores need to change a long way to provide better service. Till then brick & mortar stores will retain its supremacy. Keyword Service Gap, Online Store, Brick and Mortar Store, Comparison I. Introduction Hundred million Indian are expected to shop online by 2016 and the etailing market will see a rapid growth to Rs 957 billion in sales. However, the challenge is that more than half of the customers are not satisfied with the online shopping experience in terms of sharing personal information, safety in online transactions, trust and return policies (Bhargava 2014). In addition beyond the exclusive online stores like Flipkart, Amazon, Snapdeal, ebay etc., many brick & mortar stores like, Landmark, Sapna Book Store, Sangeetha Mobiles, Croma retail, Reliance digital, RMKV silks, etc., have their online stores too. These stores do not have full integration of omni retail format and therefore has difference in service between the formats. This warrants the requirement of studying the difference on the service quality between the two retail formats. Parasuraman, Zeithaml and Berry (1985) in the SERVQUAL model:reliability, assurance, tangibles, empathy and responsiveness which is also known as RATER model is a suitable framework to understand the service quality of the retail formats. In the SERVQUAL model, the gap between the customer s expectations of a particular service and the perceived service is measured. Customers generally have a tendency to compare the service they experience with the service they expect. If the experience does not match the expectation, there arises a gap. However, in this study the gap model is used to measure the service gap between one retail format to the other by only measuring the perceived services of both the formats. The paper is arranged in the following order: the first section introduced the need and purpose of the study. The second section presents the background of the study in terms of review of the extant of available literature. Third section describes the methodology of the study and the fourth section discusses on the results and the final section concludes by discussing on the implications of the study and provides suggestions. II. Review of Literature Indian Brand Equity Foundation (IBEF) in its Sectoral Report of March 2015 present that Indian retail industry is one of the fastest growing markets in the world. They predict that Indian Retail industry is expected to grow to US$ 950 billion by 2018, registering a compound annual growth rate (CAGR) of 8.9 per cent during The online retail market is expected to grow from US$ 3.1 billion to US$ 22 billion (from 10 per cent to more than 15 per cent of the organised retail market) during FY13-FY18 (IBEF, 2015). India had the highest number of retail outlets in the world at over 13 million retail outlets in It also has the highest number of outlets (11,903) per million inhabitants. The various major retail formats in India include Departmental stores, Hypermarkets, Supermarkets/ convenience stores, Specialty stores and Cash & carry stores (IBEF, 2015). IBEF also report that the organised retail penetration at 19 per cent in 2014 and online retail is also expected to be at par with the physical stores in five years. The share of e-commerce is growing steadily. Customers have an ever increasing choice of products at the lowest rates. India is expected to become the world s fastest growing e-commerce market on the back of robust investment activity in the sector and the rapid increase in internet users. E-Commerce is probably creating the biggest disruption in the retail industry and this trend will continue in the year to come. Almost everything is sold on the internet now and this means that pretty much all of the retail industry faces the challenge of either being a part of e-commerce or taking it head on. E-tailers are betting on more Indians switching to shopping online (IBEF, 2015). Online stores have many advantages like Convenience, time saving, travel and waiting time etc. Online stores are available 24/7 and easily reached anytime and anywhere. Online stores provide rich information about the product and services. They also provide tools to compare products and find products at competitive prices. However, online stores also have disadvantages compare to brick-and-mortar stores. In online stores customers experience is varied because they cannot feel the product physically. Trust on online stores is a big challenge and many consumers restrain because of safety issues in payment and personal details being shared. In addition, grievance address and return policies are challenges in online retailing. Parasuraman, Zeithaml and Berry (1988) define Service quality as a global judgment or attitude, relating to the overall superiority of the service. Service quality measure has been tested in various service sectors and it has also found application in retail industry. Within the retail industry many retail service quality models have been used such as service quality models are SERVQUAL and 128

2 in Education Technology (IJARET) GAP model by Parasuraman et al. (1988), SERVPERF by Cronin and Taylor (1992), Retail Service Quality Model by Dabholkar et al. (1996). In SERVQUAL and Gap Model Parasuraman et al. conducted an exploratory investigation initially through 10 dimensions: access, communication, competence, courtesy, credibility, reliability, responsiveness, security, tangibles and understanding/knowing the customer. This was later simplified into five dimensions including tangibles, reliability, responsiveness, assurance and empathy. The basic principle of service quality framework is defined as the difference between expected service and perceived service. However, the applicability of SERVQUAL model in retail industry is of concern to many researchers (Babakus and Boller, 1992; Finn and Lamb, 1991; Reeves and Bednar 1994). Because of certain limitations of SERVQUAL model in terms of measuring the expectations and perception of services, SERVPERF model was developed by Cronin and Taylor (1992). This model was developed on performance-based service quality measurement scale without considering expectations. However, Brady et al. (2002) question the superiority of SERVPERF over SERVQUAL. For specific application in retail industry, Dabholkar et al. (1996) developed Retail Service Quality Model (RSQS) extending the SERVPERF model. RSQS has 5 dimensions, namely (1) Physical aspects, (2) Reliability, (3) Personal interaction, (4) Problem solving and (5) Policy. The applicability of RSQS in Indian context has been tested by Kaul (2007). In addition the relation between service quality and customer satisfaction has been proved by Sivadas & Baker-Prewitt (2000). Since the context of the present study includes both online and brick & mortar stores, RSQS model has items specific to brick and mortar stores and cannot be used for this study. The objective of the study is to find the difference in the service quality between online and brick & mortar store, SERVQUAL model is the suitable one. III. Methodology The methodology of the study follows a descriptive approach. The study measures the perception of consumers wherein there is no direct control of the manifested variables and is described as it is after analysis using statistical tools. An available research instrument of Daniel & Berinyuy (2010) is used for data collection. Table 1 Details of variables measured Dimension Tangibles 4 Number of items Item for Online SQ TA1 TA2 TA3 TA4 Item for B & M SQ Measurement aspect TA1 Updated. TA2 TA3 TA4 Presented neatly and attractively. Good appearance Clean or Not Cluttered Reliability 5 Responsiveness 4 Assurance 4 Empathy 5 RL1 RL2 RL3 RL4 RL5 RN1 RN2 RN3 RN4 AS1 AS2 AS3 AS4 EM1 EM2 EM3 EM4 EM5 RL1 RL2 RL3 RL4 RL5 RN1 RN2 RN3 RN4 AS1 AS2 AS3 AS4 EM1 EM2 EM3 EM4 EM5 Business promises Grievances addressed courteously. Satisfy at First attempt Timely service Accurate records Information access Prompt Services Willing to help. Available to Help Build confidence Safe Transactions Customer care polite Knowledgeable. Individual attention. Convenient Accesses Personal attention. Serve interests Understand needs The instrument has 22 items under five sub dimensions. The items are measured on a 5-point Likert-scale 1 denoting strongly disagree and 5 denoting strongly agree. A printed questionnaire is used for the survey for direct contact. In addition online survey using Google docs is also used. Since there is no database available for the sampling with the required characteristics that the one should have shopped in both online and traditional formats, a convenience sampling method is used. For the direct mode, a store intercept method is used to pick the respondents. For online survey, the link of the questionnaire is distributed through known network and further using a snow balling in which the recipient were asked to further circulate the link. The respondents were first filtered by asking if they have shopped in both online and traditional formats. The data through direct mode was collected in the following stores: Landmark at Forum Mall, Sapna Book Stores, Koramangala, Croma retail and ezone at Jayanagar, Sudarasan Silks and RMKV Silks, and Housefull furniture. Data was collected during January to March By multimode approach at the end the period around 129

3 in Eduation Technology (IJARET) 543 responses were received. The collected data was entered into a spreadsheet and the initial analysis showed that there were 34 incomplete or erroneous responses. Deleting these cases produced 509 valid cases which are used for further analysis. Using SPSS for statistical analysis the data was tested for reliability and validity initially and further the inferential statistics are done. IV. Results and Discussion This section presents the results of the data analysis and the inferences. First, the descriptive statistics of demographic factors and the test variables are presented. The reliability and the validation by factor analysis are presented. Further, the gap between perceptions of service quality between online store and brick & mortar store is calculated and the significant difference tested statistically using independent sample t-test. Table 2 Demographic characteristics of respondents Gender Occupation N % N % Male Salaried Female Professional Total Self-employed Age Housewife to Others to Total to Income level Above Less than 2.5 Lakhs Total to 5 Lakhs Education 5 to 10 Lakhs UG Above 10 Lakhs PG Total Prof Others Total Firstly, the gender of the sample respondents shows a representation of 61.7 percent of male and 38.3 percent of female. Secondly, on educational background, it is observed that about 35.6 percent of the respondents are under graduates. About 22.6 percent of respondents have completed their post graduation. About 30.8 percent of respondents have completed their professional courses and rest (about11%) are having other qualifications. On the age of the respondents, about 25.7 percent of respondents are 20 to 25 years. About 37.7 percent of respondents are 26 to 35 years. About 21.6 percent of respondents are 36 to 45 years old and about 14.9 percent of respondents are above 45 years. On occupation it is observed that, 51.5 percent of respondents are salaried. About 20.8 percent of respondents are professional. About 10.4 percent of respondents are self employed. About percent of respondents are housewife and about 10.6 percent have other professions. Finally, on the income level, about 11.6 percent of the respondents have annual income less than Rs 2.5 Lakhs. About 16.3 percent of respondents are in income range of Rs 2.5 to 5 Lakhs. About 41.8 percent respondents are between 5 and 10 Lakhs and 30.3 percent of respondents have income above 10 Lakhs. Table 3 : Distribution and Central tendency of Perception on Online Stores Mean SD TA TA TA TA RL RL RL RL RL RN RN RN RN AS AS AS AS EM EM EM EM EM The case summary of variables measuring the perception on online service quality is presented in Table 3. The results show that for online stores, building confidence (Mean=2.855) safe transactions (Mean=2.988), grievances addressed courteously (Mean=2.937), service at first attempt (Mean=2.906), timely service (Mean=2.646) and accurate records is found to less because their values are found to be less than three which is the mid value on a scale of 5. On the other side, Updated products (Mean =3.572), Clean or Not Cluttered (Mean= 3.589), Information access (Mean=3.760), Knowledgeable (Mean=3.806) and Convenient Accesses (Mean=4.259) are perceived high for online stores. Table 4 : Distribution and Central tendency of Perception on B&M Store Mean SD TA TA TA TA RL RL RL RL RL

4 in Education Technology (IJARET) RN RN RN RN AS AS AS AS EM EM EM EM EM The case summary of variables measuring the perception on Brick and Mortar store s service quality is presented in Table 4. For brick and mortar stores, neat and attractive presentation of products (Mean=3.880), Timely service (Mean=3.705), Prompt Services (Mean=3.756), willing to help (Mean=3.819), Build confidence (Mean=3.747), Customer care polite (Mean=3.707) and Individual attention (Mean=3.974) are found to be higher. Updated products (Mean=3.185), Clean or Not Cluttered (Mean=3.163), Information access (Mean=3.039), Serve interests (Mean=3.149) and Understand needs (Mean=3.059) are found to lower. However, all the values are above three which is the mid value on a scale of 1 to 5, meaning that majority of respondents agree on the service quality aspects of brick and mortar store. Table 5 shows the reliability of the measures using cronbach alpha values. The values are shown for all the five dimensions for both perception of online service quality and perception of Brick & mortar Service quality. Assurance in Online Service quality has lowest cronbach alpha value (0.720) and Empathy in Brick & mortar Service quality has the highest cronbach alpha value (0.905). However, for all the dimensions the values are above 0.7 threshold level, therefore all dimensions are found to have reliability. Table 5 : Reliability Coefficient (Cronbach s alpha) Dimension Number of items Cronbach alpha for Online SQ Tangibles Reliability Responsiveness Assurance Empathy Table 6: Factor Analysis for Perception on online store Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett s Test of Sphericity Approx. Chi-Square TA Cronbach alpha for B&M SQ df Sig TANG RL RN AS EM TA TA TA RL RL RL RL RL RN RN RN RN AS AS AS AS EM EM EM EM EM Total % of Variance Cumulative % Factor analysis is done to test the convergent and divergent validity of dimensions of the perception on service quality of online stores. The results are presented in table 6. The test is used to confirm whether the items load into their respective factors/dimensions. Service quality measures using SERVQUAL has five dimensions, tangibility, assurance, empathy, responsiveness and reliability. The results show that the items loaded into their respective dimensions. The KMO was found to be which shows that the sample size was adequate to explain the factors. The Bartlett s Test of Sphericity was also found to be significant meaning that adequate numbers of factors were created. The results show that the 22 items loaded into five components and explained a total variance of percent of the service quality of online stores. Table 7: Factor Analysis for Perception on online store Kaiser-Meyer-Olkin Measure of Sampling Adequacy..879 Bartlett s Test of Sphericity Approx. Chi Square df 231 Sig..000 EM AS RN RL TANG EM EM EM EM EM

5 in Eduation Technology (IJARET) AS AS AS AS RN RN RN RN RL RL RL RL RL TA TA TA TA Total % of Variance Cumulative % Table 7 presents the factor analysis for the dimensions of the perception on service quality of brick and mortar stores. The test is used to confirm whether the items load into five dimensions of Service quality measures using SERVQUAL i.e. tangibility, assurance, empathy, responsiveness and reliability. The results show that the items loaded into their respective dimensions. The KMO was found to be which shows that the sample size was adequate to explain the factors. The Bartlett s Test of Sphericity was also found to be significant meaning that adequate numbers of factors were created. The results show that the 22 items loaded into five components and explained a total variance of percent of the service quality of brick & mortar stores. Table 8 : Gap between online and physical stores Dimension Statement Mean Mean Gap F Sig Online B&M Score TA Tangibility TA TA TA RL RL Reliability RL RL RL RN Responsiveness RN RN RN Assurance Empathy AS AS AS AS EM EM EM EM EM Table 8 presents the difference between the perception on online and brick and mortar store s service quality. On updated products, clean or not cluttered, Information access, knowledgeable, convenient access, serve interest and understand needs the gap scores are found to be positive. This means the online stores are perceived to be better in these aspects. Except for serves interest all other variables described above have significant difference with the brick and mortar store. For all other variables the gap score is found to be negative, meaning that for these variables brick and mortar stores have better service quality than online stores. Among them, Timely service, Build confidence, Presented neatly and attractively and willing to help are having a higher difference with online stores. Contrarily, Customer care is polite, Safe Transactions, personal attention and available to help are having a lower difference to online stores. V. Conclusion The study reveals that the service quality of online stores compared to the brick and mortar stores are lower in many aspects. Brick and mortar stores still has better service quality on timely service, confidence and helping customers. The study provides two implications. One is that the online stores cannot kill the brick and mortar stores immediately and if the physical stores can provide better information and knowledge on the product they can still sustain over the online stores. However, the accessibility will be an advantage to the online stores. Trust and service support need to be improved in the online stores to increase the sales. However, unlike online only stores, because of their physical presence the reliability factors does not have much gap. References [1]. Babakus, E., & Boller, G. W. (1992). An empirical assessment of the SERVQUAL scale. Journal of Business research, 24(3), [2]. Bhargava, Y., (2014) Indian e-commerce sector to hit $15 b by 2016: Study The Hindu: NEW DELHI, November 20, 2014 [3]. Brady, M. K., Cronin, J. J., & Brand, R. R. (2002). Performanceonly measurement of service quality: a replication and extension. Journal of business research, 55(1), [4]. Cronin Jr, J. J., & Taylor, S. A. (1994). SERVPERF versus SERVQUAL: reconciling performance-based and perceptions-minus-expectations measurement of service quality. The Journal of Marketing, [5]. Dabholkar, P. A. (1996). Consumer evaluations of new technology-based self-service options: an investigation of alternative models of service quality.international Journal of research in Marketing, 13(1), [6]. Daniel, C. N., & Berinyuy, L. P. (2010). Using the SEVQUAL 132

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