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

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 2000-18. 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 2014. 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

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 2015. By multimode approach at the end the period around 129

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 314 61.7 Salaried 262 51.5 Female 195 38.3 Professional 106 20.8 Total 509 100 Self-employed 53 10.4 Age Housewife 34 13.99 20 to 25 131 25.7 Others 54 10.6 26 to 35 192 37.7 Total 509 100 36 to 45 110 21.6 Income level Above 45 76 14.9 Less than 2.5 Lakhs 59 11.6 Total 509 100 2.5 to 5 Lakhs 83 16.3 Education 5 to 10 Lakhs 213 41.8 UG 181 35.6 Above 10 Lakhs 154 30.3 PG 115 22.6 Total 509 100 Prof. 157 30.8 Others 56 11.0 Total 509 100 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 13.99 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 1 2 3 4 5 Mean SD TA1 23 42 188 133 123 3.572 0.905 TA2 42 79 217 101 70 3.153 0.912 TA3 60 80 214 104 51 3.012 0.834 TA4 32 39 144 185 109 3.589 0.987 RL1 57 87 190 103 72 3.090 0.814 RL2 79 84 194 94 58 2.937 0.861 RL3 82 89 182 107 49 2.906 0.821 RL4 95 106 221 58 29 2.646 0.847 RL5 84 96 190 77 62 2.876 0.854 RN1 26 38 109 195 141 3.760 0.873 RN2 66 73 208 108 54 3.022 0.807 RN3 61 89 199 109 51 3.000 0.808 RN4 59 90 189 95 76 3.077 0.921 AS1 81 93 195 99 41 2.855 0.887 AS2 59 89 214 93 54 2.988 0.871 AS3 46 78 197 105 83 3.198 0.926 AS4 29 39 93 189 159 3.806 0.836 EM1 42 78 209 94 86 3.204 0.903 EM2 9 19 44 196 241 4.259 0.872 EM3 55 78 203 100 73 3.114 0.861 EM4 40 78 196 99 96 3.261 1.219 EM5 37 85 199 106 82 3.218 0.812 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 1 2 3 4 5 Mean SD TA1 38 86 205 104 76 3.185 0.928 TA2 20 29 123 157 180 3.880 0.746 TA3 18 43 144 177 127 3.692 0.944 TA4 48 82 194 109 76 3.163 0.941 RL1 37 49 117 165 141 3.637 0.959 RL2 24 47 161 171 106 3.566 0.961 RL3 13 33 162 199 102 3.676 0.871 RL4 22 31 141 196 119 3.705 0.853 RL5 27 40 169 157 116 3.580 0.962 130

in Education Technology (IJARET) RN1 72 79 186 101 71 3.039 0.947 RN2 21 35 119 206 128 3.756 0.910 RN3 26 32 110 181 160 3.819 0.830 RN4 47 55 179 129 99 3.350 1.189 AS1 24 49 114 167 155 3.747 0.831 AS2 29 36 204 136 104 3.491 0.942 AS3 23 41 142 159 144 3.707 0.800 AS4 41 82 204 93 89 3.210 0.894 EM1 15 26 88 208 172 3.974 0.841 EM2 39 85 189 106 90 3.242 0.936 EM3 29 31 200 126 123 3.556 1.198 EM4 51 77 206 95 80 3.149 0.865 EM5 61 89 196 85 78 3.059 1.283 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 4 0.775 0.765 Reliability 5 0.783 0.779 Responsiveness 4 0.786 0.746 Assurance 4 0.720 0.758 Empathy 5 0.899 0.905 Table 6: Factor Analysis for Perception on online store Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett s Test of Sphericity Approx. Chi-Square TA1 0.822 Cronbach alpha for B&M SQ.949 9981. 231 df Sig..000 061 TANG RL RN AS EM TA2 0.703 TA3 0.772 TA4 0.689 RL1 0.743 RL2 0.721 RL3 0.643 RL4 0.546 RL5 0.537 RN1 0.772 RN2 0.672 RN3 0.603 RN4 0.515 AS1 0.745 AS2 0.697 AS3 0.673 AS4 0.601 EM1 0.756 EM2 0.704 EM3 0.624 EM4 0.634 EM5 0.514 Total 5.694 4.639 2.910 2.482 1.296 % of Variance Cumulative % 25.883 21.084 13.225 11.280 5.892 25.883 46.967 60.193 71.473 77.365 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 0.949 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 77.36 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- 6020.002 Square df 231 Sig..000 EM AS RN RL TANG EM1 0.755 EM3 0.734 EM4 0.647 EM2 0.628 EM5 0.538 131

in Eduation Technology (IJARET) AS1 0.731 AS2 0.714 AS4 0.677 AS3 0.607 RN3 0.787 RN1 0.685 RN2 0.591 RN4 0.517 RL3 0.706 RL4 0.688 RL5 0.676 RL1 0.586 RL2 0.548 TA1 0.814 TA2 0.796 TA3 0.691 TA4 0.571 Total 3.632 3.296 2.947 2.506 2.092 % of Variance 16.510 14.980 13.395 11.391 9.510 Cumulative 16.510 31.490 44.885 56.276 65.786 % 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 0.879 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 65.78 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 TA1 3.572 3.185 0.387 7.590.000 Tangibility TA2 3.153 3.880-0.727-14.413.000 TA3 3.012 3.692-0.680-11.476.000 TA4 3.589 3.163 0.426 7.023.000 RL1 3.090 3.637-0.547-9.732.000 RL2 2.937 3.566-0.629-11.604.000 Reliability RL3 2.906 3.676-0.770-14.296.000 RL4 2.646 3.705-1.059-19.467.000 RL5 2.876 3.580-0.704-11.756.000 RN1 3.760 3.039 0.721 12.938.000 Responsiveness RN2 3.022 3.756-0.734-12.053.000 RN3 3.000 3.819-0.819-14.424.000 RN4 3.077 3.350-0.273-4.318.000 Assurance Empathy AS1 2.855 3.747-0.892-15.969.000 AS2 2.988 3.491-0.503-8.202.000 AS3 3.198 3.707-0.509-9.282.000 AS4 3.806 3.210 0.596 10.725.000 EM1 3.204 3.974-0.770-14.217.000 EM2 4.259 3.242 1.017 15.447.000 EM3 3.114 3.556-0.442-7.941.000 EM4 3.261 3.149 0.112 1.727.085 EM5 3.218 3.059 0.159 2.249.025 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), 253-268. [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), 17-31. [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, 125-131. [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), 29-51. [6]. Daniel, C. N., & Berinyuy, L. P. (2010). Using the SEVQUAL 132

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