An Introduction to

Retail Management
&
Marketing
 Book 2
Managing
Retail Stores
 Introduction to Book 2
 Session 2: Aspects of a retail manager's role

 Session 3: Managing the workforce

 Session 4: Managing customers

 Session 5: Managing a retail store

 Session 4 Managing customers
Outline

1. Introduction
2. Shoppers' motivations and missions
3. Retail services
4. Employee culture change at Sears
5. Conclusions
 1. Introduction

• A retail store is a place where shoppers go to

browse, select & purchase a myriad of G&S

• It also creates the environment in which retailers

deliver customer service & this experience can be

excellent, poor or somewhere in-between

 2. Shoppers' motivations & missions
• Important to understand consumer's behavior to
design retail store properly
• Categorize individual shoppers by the way they
shop
 Reasons for shopping other than necessity
• Consumers' behavior are derived from many factors
Less related to P
 More related to personal & social motivations
To understand consumers' motivations for
shopping, consider satisfaction from shopping
a. Motivations for going shopping are:
• Self-reward
• Exercise: Need to get out & get some fresh air.
• Personal stimulation: Need for an experience
• Learning: Acquire new knowledge
• Role-play: Need to play a role; for ex role of provider
• Diversion: Alleviate boredom
• Social experiences: Need to be with friends
• Status & power: Need to exert authority, gain
attention from retail personnel
• Bargain hunting: Need to show expertise in finding
value in purchasing
 b. Shopping missions
Levels of involvement in purchasing affect:
– How we come to a purchase decision
– Number of criteria we use to make the selection
– Amount of time we take to make purchase decision
Key differences between types of shopping:

• Low-involvement shopping: Routine -shopping can

be efficient. Always go to same store in which they find
all needs. Becoming familiar with layout so quickly
• High-involvement product: Consider carefully
several alternative P from ≠ retail providers.
 These differences suggest the way we shop may be

influenced by our shopping mission.

• Reasons to buy vary

Emergency situation

Routine buying

Destination shopping

Browsing
 c. Types of shoppers
• Changes in shoppers' behaviors in relation to 'shopping
missions‘
5 different shopper 'types' :

1. Apathetic - ‘Indifferent towards shopping'. Lack motivation &

aim to complete shopping as effectively & efficiently as possible.

2. Enthusiasts - Enjoy shopping, means of entertainment

3. Destination - motivated primarily by desire to obtain new &

fashionable P. Mall & branded retail outlets are these shoppers'

retail destinations of choice based on shops' image

 5 different shopper 'types' :
4. Basic - No strong satisfaction from shopping. know
P& S they wish to purchase, go directly to most
convenient store, aim simply to select & purchase P
in the least possible amount of time. Shopping as
necessary rather than recreational activity

5. Bargain seekers - Motivated by price reductions &

to a lesser extent. No other aspects of the shopping
experience interest them.
 Helpful for managers to consider their shoppers in
order to identify which P to sell, how to display P,
communicate with customers & determine levels of S
to offer.

Retailers invest in market research to identify shopper

types & to form their target marketing strategy

Different shopper types & implications for customer

service management
 3. Retail services
• Retailers provide G & S for sale to a ≠ customer
• Some retailers sell pure G & others pure S
• Many offer a range of physical P & additional S-ex;
delivery, credit facilities, installation & after-sales
• Additional S creates advantage over competitors
• Once a retailer has identified which additional S to
provide:
– They must decide on the level of S to offer
– Important linkage to shopping missions &
shopper types
 Various types of additional services
a) Product-related services
These are add-on services to a product according to
the type of product:
– Fashion retailer provide changing rooms to try clothing
– A retailer of white goods (refrigerators, washing
machines, etc.) provide guarantees
– A furniture retailer might provide delivery services.
• As additional services are increasingly used to
differentiate retailers from one another, service
offerings are becoming more complex.
 b) Convenience-related services
As consumers have less time to shop, retailers have
responded by putting together packages that aim to
make shopping experience as convenient as possible
– Home delivery
– Restaurant and cafe facilities
– Children's crèche
– Toilets
– Extended opening hours
– Cash machines
• Competition in supermarket sector best service

Payment services
• Range of payment services to avoid any barriers from a
customer's preferred payment method being unavailable
Product availability
• If a retailer is out of stock of a particular item, customer will
be disappointed. Thus, service recovery situation delivering
out-of-stock P direct to customer's home.
Information services
• Retailers provide information about products via call centers
as well as in-store
Customer sales service
• Contact between customer & sales staff is most apparent in a
retail store. It can be passive or highly interactive.
 Retail format and customer sales
Retail format
services
Staffing levels Need for product Profit margins
Staffing levels knowledge and
experience

Supermarket Medium Low Low

Speciality store High High High

Department store High High High

Category killer Low High Low

Discount store Low Low Low

Non-store Medium-low Medium-low Low

 What are service encounters?
Types of service interactions
i. Service encounters are a single interaction
between a customer & service provider - retailer.
– From a retailer's point of view, this needs maximum
efficiency - interactions between retail staff &
customers are as short as possible.
– Worker's point of view, repetitive job, monotonous &
routine. Employees need to 'be friendly', to smile & to
use scripted phrases to open & close customer
interactions - Standardized training – ex: fast-food
– Not all retail service encounters are so straightforward -
banking frontline process more complicated tasks
ii. Service relationships: when repeated contact
between a customer & S provider. Transactions
take longer, particularly in the initial stages of a
relationship.
• Appointments scheduled, provider share
information with customer
• Such retail service work is flexible & dynamic.
• Performance is altered to tailor S to each customer.
• Customer & provider may develop a real friendship.
• Providers are well-paid, professionals with
specialized expertise.
iii. Personalized services are tailored to unique
needs of each individual customer
Four aspects that differentiate personalized service:
Customer orientation: Employees offer personalized services
engage in 'communication behaviors to identify a customer's
specific needs & tailor their service to meet those needs'.
Interaction involvement: employees show they are interested &
engaged in interaction by their attentiveness, signaled through
non-verbal gestures such as eye contact. They will be perceptive
in their interpretation of customers' needs.
Information sharing: Means will be deployed to share
information with customer. This means allocating sufficient time
to give customers information that they need if their purchase is
a new & important item.
Social support: Employees help customers to meet personal D of
a situation. Directive guidance; showing interest in customers'
 Gaps between service offered by a
retailer & expectations of customers
Four 'gaps' identified:
• Consumer expectation - management perception gap
(Gap 1)
• Management perception - service quality
specification gap (Gap 2)
• Service quality specification - service delivery gap
(Gap 3)
• Service delivery - external communications gap
(Gap 4).
 Managers face following difficulties at each of
the potential gaps:
• Gap 1 Difficulties managers have in understanding what features of their

service are of particular importance to consumers.

• Gap 2 Difficulties managers experience trying to match or indeed exceed

consumers' expectations.

• Gap 3 Uncertainty related to S performance, even when there are clear

guidelines about how to perform service well & about how to treat consumers

correctly.

• Gap 4 Where external communications are an important part of service

provided. Companies may not inform customers of how hard they are trying to
 Managers face following difficulties at each of
the potential gaps:

Figure 4.1 Parasuraman et al.'s (1985) service quality model (Source: Parasuraman et
al., 1985, p. 50)
 TEN 'determinants of perceived service quality'
consumers form their expectations & perceptions on
 Moments of truth
• Moments of truth are critical points in customer's
experience when critical impressions are formed
that will inform a consumer's further behavior.
• The implications for retail managers are that they
should analyze customer interactions throughout the
operation and identify potential break points and
'moment of truth' opportunities.
What happens when service encounters
go wrong?
• Customers may take their business elsewhere.
• Complaints: a 'defensive' marketing strategy: to retain
dissatisfied customers
 Organizations which paid careful attention to their customers'
complaints could use analysis of complaints to prevent both
current & new competitors
• Contrary to popular belief, businesses try to increase the
number of customer complaints they receive
• By retaining dissatisfied customers, firms can improve market
share, improve profits & lower offensive marketing costs
Business is lost if customers are encouraged not to
voice their concerns.
 Complaints may be divided into three
different types: refer to p. 50
1. Customers may complain to retailer or to
manufacturer formally. This is referred to as a
'voice response'.
2. Customers may complain in an informal manner to
people that are not directly involved, ex: friends &
relatives. This is a 'private response'.
3. Customers may complain to a 3rd party, such as a
newspaper or a legal representative. This is a 'third-
party response'.
 4. Employee culture change at Sears
• Sears' employees were re-educated to engage
successfully in a business in which risk-taking &
market-orientated innovation were encouraged.
• Departure from its previous 'command and control'
management approach.
• Customer at the heart of the business.
• This change was achieved through a new, clarified
vision announced to all employees
• Employees were encouraged to engage actively with
changes in the business.
 The Initial Model: From Objectives to Measures
The first step in creating an employee-customer-profit model was
to devise a set of measures based on our objectives in our three
categories: a compelling place to work, to shop and to invest
 Managers identified five key changes turning
business around:

1. Formulation & communication of a mission, vision

& goals creating ‘compelling place to work', '
compelling place to shop' & ‘compelling place to
invest'
2. Employee education & development through focus
groups.
3. Introduction of performance management &
incentive compensation systems.
4. Deployment of a set of validated selection systems.
5. Competent delivery of the 'HR basics'