A STUDY OF IMPACT OF MERCHANDISE VARIETY AND ASSOSTMENT ON SHOPPING EXPERIENCE OF CUSTOMERS by iaemedu

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									INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
 International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –
   6510(Online), Volume 4, Issue 1, January- February (2013)
ISSN 0976 – 6367(Print)
ISSN 0976 – 6375(Online)
Volume 4, Issue 1, January- February (2013), pp. 85-94
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      A STUDY OF IMPACT OF MERCHANDISE VARIETY AND
     ASSOSTMENT ON SHOPPING EXPERIENCE OF CUSTOMER
      SIN CONVENIENCE STORES IN ORGANIZED RETAIL IN
                          INDIA

                                          VIJAY.R.KULKARNI
                                            Assistant Professor
                   Sinhagad Institute of Management and Computer Application
                                         Pune, Maharashtra
                                E-mail: vijaykulkarni@simca.ac.in


   ABSTRACT

           The study is about finding the impact of merchandize variety and assortment on
   shopping experience of customers in convenience stores format in organized retail in India.
   The study was conducted at Pune during October 2012. Exploratory Research Design is used
   for the study. The sample size is 159 respondents. Survey method is used with customer
   intercepts at Convenience stores and the data was collected with a structured questionnaire.
   Ratio scale was used for Income and Age and for all other variables Nominal Scale was used.
   The data was analyzed with SPSS 17 version and tools like Cronbach Alpha, Kaiser-Meyer-
   Olkin Measure of Sampling Adequacy and Chi-Square. The findings of the study are 1)
   Availability of fresh fruits and vegetables 2) Freshness of fruits and vegetables 3) Chances of
   getting all the products 4) Availability of wide variety of national brands have impact on
   customer satisfaction and happiness 5) Customer happiness due to availability of products he
   intends to buy results in good shopping experience and 6)Customers who are satisfied due to
   availability products which gets translate into wonderful shopping experience for them
   recommend the stores to others.
   Key Words: Customer Experience, Store Image, Intention to recommend

   1. INTRODUCTION

          As a sequel to Globalization and in its quest to be the part of Globalization process
   Government of India initiated the liberalization process setting in process reforms across the
   board. The reforms and the subsequent all round growth in the economy resulted in change in
   the demographic profile of Indian society, improvement in the technologies of production
   processes and entry of multinationals across the board thereby increasing the threshold of

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quality. This coupled with competitive prices due to intense competition has definitely
resulted in benefit and well being of the consumers at large. However this is the beginning
only and the Indian businesses have a long way to go since the bench marks of customer
expectations keep on increasing on a continuous basis.
For decades Indian consumer has faced non availability of products at the right place and at
the right time. The basic need of the customer is availability of products of his/her choice.
The customer’s expectation when he visits convenience stores is availability of variety and
assortment so that he can buy all his requirements under one roof. Therefore all things being
equal availability of right blend of variety and assortment are become a critical element of
convenience stores sales mix in delivering customer satisfaction and positive shopping
experience. The retailers therefore need to be alert to the situation that today they are not
confronted with traditional docile customer but a highly informed and vibrant customer who
when faced with the situation of lack of availability of products at the right place and right
time when he intends to buy may shift to other retailers. The situation is much tougher in
India due to the presence of neighbourhood kirana stores who are going out of the way to
serve their customers.

2. LITERATURE REVIEW

        The ability to satisfy heterogeneous customer preferences in a cost-efficient manner is
a key facet of traditional retail competition. Along with physical location and price, the
selection of products that a store offers to its customers, i.e., the assortment is an important
factor driving store choice. A larger assortment increases the probability that the store will be
able to deliver exactly the product a customer desires. Even if a customer’s tastes are not well
defined, her perception of variety in a store’s assortment may drive her purchasing decisions.1
Variety is the number of different merchandize categories a retailer sells whilst assortment
refers to the number of different items in a merchandize category. The freshness of a product
stimulates repeat visits from the customer. Convenience retailers are businesses with high
turnover, resulting in constantly replenishing stockpiles. Goods are generally not long enough
in the stores to become obsolete. Consumers can therefore expect to buy goods that are fresh
and that have not met their expiration date.. The brands that a store offers can contribute to
customer loyalty. Brands are often linked to certain qualities which the customer often find
attractive or repelling. Consumers with pleasant association will often go out of their way just
to purchase a specific brand. Brands that are associated with higher quality and status
symbols are also able to attract consumers to specific retailers even though they are more
expensive than the competing brands.2 Perhaps the most vexing problem facing retailers is the
challenge of getting the right merchandise in the right quantities to the right stores at the time
that customers want it. Beginning with the consumer, Mantrala et al. (2009) examine
previous research and conclude that it is difficult to predict what customers will want because
they enjoy flexibility. Consumers rarely know what they really want when they buy, and then
their choices change over time because they often buy now and consume later, As their goals
change (see Puccinelli et al. 2009), they may not actually buy their first choice first. That is,
even if a retailer has a consumer’s first choice, he or she might not buy it ultimately. At the
same time, too much choice can be frustrating and confusing, so retailers must balance
having a wide enough assortment that consumers do not shop elsewhere, but not so wide that
they are overwhelmed.3 The number of available options can influence consumer choice in
multiple ways. Decades of research suggest that choice increases satisfaction (e.g., Langer

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and Rodin 1976) band that larger assortments increase the likelihood that consumers will find an
option that matches their preferences (Baumol and Ide 1956; Lancaster 1990). People actively seek
variety (see Kahn and Ratner [2005] for a review), whether to satisfy the need for stimulation
(Berlyne 1960) or for other reasons, and larger assortments help consumers satisfy these needs.4 This
study has reviewed the major forms of “varied” consumer behavior (i.e., direct and derived) and
indicates that each can require a different type of retail assortment strategy. It also presents a
framework delineating the major factors and dimensions which define the arena in which retailers
must develop their assortment strategies. Additionally, evidence is presented which indicates that the
shape of the utility function for assortment size is bell-shaped for both the consumer and the retailer.
Hopefully this paper will increase our understanding of the dynamic interplay between the numerous
forms of a consumer’s “varied behavior” (especially variety seeking) and their subsequent
implications for the retailer’s assortment strategies. Rather than treat each of these activities in
isolation as has been done in past research, this paper suggests the need for their integration. Viewing
the consumer’s need for varied behavior and assortment size decisions as ‘opposite side of the same
coin’ should lead to more effective marketing strategies by increasing our understanding of each
area.5 Consumer heterogeneity was also found to influence the effect of assortment on shopper’s store
choice. Unobserved heterogeneity, reflected in the distribution of household level response
parameters, was much greater for assortment than for the other determinants of store choice. While
shoppers uniformly prefer lower prices and shorter travel distances, our analysis of parameter
heterogeneity and assortment elasticities suggests that shoppers prefer different assortment
characteristics. Specifically, unlike most consumers, a substantial minority prefer stores that offer
more SKU’s/brand, more sizes/brand, and more unique SKU’s but fewer different brands. Our
analysis of heterogeneity covariance’s reveals that response to assortment is correlated to response to
travel distance (r=0.43). Thus, the less importance a household assigns to assortment, the more it
values conveniences and vice versa. This finding is consistent with the tradeoff promulgated by
Bamoul and Ide (1956) and Brown (1978). The heterogeneity in assortment response suggests that
retailers should not necessarily match each others’ assortment levels. Ideal assortment levels could
differ substantially between retailers depending on the preferences of their customers.6 Together the
results of these experiments all suggest that the congruence or incongruence between the internal
organization inside the consumer’s heads and the external organization of the assortment provided by
the stores influences how consumers perceive th variety offered. This work contributes to the existing
literature on the application of categorization theory to consumer domains ( e.g., Sujan 1985, Meyers-
Levy and Tybout 1989, Goodstein 1003), by examining the role of internal categorizations schemas in
the evaluation of the external structure of an assortment. This work also contributes to the perceived
variety literature (e.g., Broniarczyk, Hoyer & McAlister 1998, Hoch, Bradlow and Wansink 1999,
Kahn and Wansink 2004) that suggests consumer perceptions of variety are dependent on more than
just the actual number of individual items in the assortment. Retailers should be aware of several
factors in order to try and get consumers to perceive more variety in their assortments.7 This study, a
collaborative efforts with a Dutch retailer, shows that reducing the variety of an item may actually
boost sales. In this case the retailer offered fewer types of detergent items. While initially lowering
sales for the short term, the effort did not lessen sales in the long run. The reduced selection may
have also aided consumers; they found it easier and quicker to make a selection when the variety was
reduced. The reduced sales are caused initially by former buyers who purchase fewer items in the
category. But sales losses are offset by new buy new buyers attracted by the streamlined selection.8
Assortment is a specific type of product set. A set is any grouping of products or items, and an
assortment is a product set in which the items come from the same product category. Although
consumers' product assortments are claimed to be important for understanding consumer behaviour,
they have rarely been studied. There are some related but quite different areas of study, such as
stockpiling behaviour. Both stocks and assortments are sets of products from the same product
category that are owned by a consumer. However, while stocks consist of items that have not yet been
used, and which are perfect substitutes (e.g. stocks of sugar or paperclips), assortments consist of
heterogeneous products, which have the same overall usage goal but different specific applications

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and which are used on and off. Assortments can exist for both durables and nondurables (e.g.
assortments of soft drinks or biscuits), and although this study will focus on durable product
assortments, it can be easily extended to nondurable assortments9.

3. RESEARCH OBJECTIVES

For the purpose of the study the following objectives are formulated

    1. To find out whether the availability of large variety of fruits and vegetables results in
       Customer Satisfaction and Happiness
    2. To find out whether Freshness of the fruits and vegetables results Customers Satisfaction and
       Happiness.
    3. To find out whether chances of getting all the products the customer is planning to buy results
       in Customers’ Satisfaction and Happiness.

    4. To find out whether the happiness due to availability of products results in overall satisfying
       shopping experience for the customers

    5. To find out whether availability of wide variety of national brands results in Customers
       Satisfaction and Happiness.

    6. To find out whether customer satisfaction due to availability of variety and merchandize
       results in retail store image building in customers mind.

    7. To find out whether customers intend to recommend the stores to other customers due to
       Satisfaction and Happiness due to availability of variety and merchandize.

4. RESEARCH METHODOLOGY

        For the purpose of the study Exploratory Research Design is used. The sample size for the
study is 159 respondents. Convenient Sampling method is used. Interview method is used for this
study through intercepts at the convenience stores. A structured Questionnaire with close ended
questions is designed and used. Effort was made to interview respondents across the various
demographic variables. Nominal scale is used. The study is conducted at Pune during October, 2012

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .749
Cronbach Alpha                                             .805

5. DATA ANALYSIS TOOLS

       Based on the data collected through an exhaustive questionnaire the following analysis has
been done using appropriate statistical tools like:

    •   Frequencies
    •   Tables/ Percentages
    •   Pie Charts
    •   KMO and Bartlett's Test-Test for Sample Adequacy
    •   Cronbach Alpha-Test- Scale Reliability
    •   Chi-Square Test


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6. RESEARCH HYPOTHESIS

For the purpose of the study the following Hypothesis are formulated

Hypothesis 1

Ho: Availability of large variety of fruits and vegetables does not result in Customer Satisfaction and
Happiness

H1: Availability of large variety of fruits and vegetables results in Customer Satisfaction and
Happiness

Hypothesis 2

Ho: Freshness of the fruits and vegetables does not result in Customers Satisfaction and Happiness.

H1: Freshness of the fruits and vegetables results in Customers Satisfaction and Happiness

Hypothesis 3
Ho: Chances of getting all the products the customer is planning to buy does not result in Customer
Satisfaction and Happiness.

H1: Chances of getting all the products the customer is planning to buy results in Customer
Satisfaction and Happiness.

Hypothesis 4:
Ho: Customers Happiness due to availability of products does not contribute to overall positive
shopping experience for the customers

H1: Customers Happiness due to availability of products contributes positively to overall shopping
experience for the customers

Hypothesis 5:
Ho: Availability of wide variety of national brands results in Customers Satisfaction and Happiness.

H1: Availability of wide variety of national brands results in Customer Satisfaction and Happiness.

Hypothesis 6:

Ho: Customers do not intend to recommend the stores to other customers due to Satisfaction and
Happiness due to availability of variety and merchandize

H1: Customers intend to recommend the stores to other customers due to Satisfaction and Happiness
due to availability of variety and merchandize

Hypothesis 7:
Ho: Overall satisfaction based on shopping experience due to availability of variety and merchandize
does not result in image building of the store

H1: Overall satisfaction based on shopping experience due to availability of variety and merchandize
results in image building of the store.


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7. DATA ANALYSIS
         Table No. 1. Demographic Profile of Respondents (Source: Field Survey)
      Parameters            Frequency     %             Parameters           Frequency    %
        Gender                                        Mother Tongue
          Male                48         30.2             Marathi               103      64.8
         Female              111         69.8               Hindi                30      18.9
          Total              159        100.0             Gujrathi               8        5.0
           Age                                           Malayalam               3        1.9
          20-25               49         30.8             Kannada                4        2.5
          26-35               52         32.7              Telugu                1         .6
          30-45               42         26.4              Sindhi                1         .6
          46-55               13          8.2             Punjabi                3        1.9
          55-65               2           1.3             Marwari                4        2.5
           65+                1           .6              Bengali                2        1.2
          Total              159        100.0               Total               159      100.0
    Type of Family                                      Occupation
          Joint               57         35.8             Student                27      17.0
        Nuclear              102         64.2           House wife               24      15.1
          Total              159        100.0            Employee                83      52.2
           1-2                21         13.2              Doctor                17      10.7
           3-4                83         52.2             Engineer               4        2.5
           5-6                33         20.8              Retired               4        2.5
           7-8                8           5.0               Total               159      100.0
           9-10               8           5.0    No of Earning Members
           10+                6           3.8                 1                  38      23.9
          Total              159        100.0                 2                  97      61.0
    No of Children                                            3                  18      11.3
             0                42         26.4                 4                  6        3.8
             1                63         39.6               Total               159      100.0
             2                40         25.2       Income PM (000’S)
             3                8           5.0             20-50 K                66      41.5
             4                4           2.5             51-70K                 36      22.6
            5+                2          .1.2             71-90 K                16      10.1
          Total              159        100.0            91-110 K                12       7.5
Educational Qualification                               110-130K+                29      18.2
          HSC                 9           5.7               Total               159      100.0
        Graduate              32         20.1          Social Status
     Post Graduate            85         53.5          Middle Class              86
    Post Graduate +           33         20.8          Higher Middle             54      34.0
          Total              159        100.0          Upper Lower               4        2.5
                                                       Upper Middle              14       8.8
                                                       Upper Upper               1         .6
                                                            Total               159      100.0
                       Which one of the following stores you visited last?
       Spencer's              22         13.8              D.Mart                16      10.1
     Reliance Fresh           23         14.5            Big Bazaar              71      44.7
          More                13          8.2            Any Other               12       7.5
         Kmart                2           1.3               Total               159      100.0


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                                Table No. 2 Descriptive Statistics
                                                          Mini   Maxi                  Std.
                                       N       Range      mum    mum       Mean      Deviation       Variance
Availability of large variety of      159        6         3      9        6.22       1.698           2.882
fruits & vegetables
Freshness of the fruits and           159        6         3      9        6.15       1.635           2.673
vegetables
Chances of getting all the products   159        6         3      9        6.40       1.567           2.456
I am planning to buy
Availability of wide variety of       159        6         3      9        6.42       1.600           2.561
national brands
Happiness due to availability of      159        6         3      9        6.42       1.576           2.485
products I need
Image building                        159        4         4      8        6.72        .880           .774
Intention to recommend the store      159        6         3      9        6.81       1.499           2.247
to others
Overall satisfaction based on         159        6         3      9        7.01       1.389           1.930
shopping experience
Source: Field Survey

                                            Table 3. ANOVA
                                                     Sum of
                                                     Squares          df    Mean Square          F        Sig.
Availability of large         Between Groups          78.538       6              13.090      5.281      .000
variety of fruits &            Within Groups         376.758      152              2.479
vegetables
                                   Total             455.296      158
Freshness of the fruits and Between Groups            88.309       6              14.718      6.697      .000
vegetables                   Within Groups           334.068      152              2.198
                                 Total               422.377      158
Chances of getting all the    Between Groups          89.663       6              14.944      7.613      .000
products I am planning to      Within Groups         298.375      152              1.963
buy                                Total             388.038      158
Availability of wide          Between Groups         124.148       6              20.691      11.214     .000
variety of national brands     Within Groups         280.456      152              1.845
                                   Total             404.604      158
Happiness due to              Between Groups          88.618       6              14.770      7.385      .000
availability of products I     Within Groups         303.986      152              2.000
need                               Total             392.604      158
Satisfaction of getting all   Between Groups          11.420       6              1.903       2.610      .020
the products during the        Within Groups         110.844      152              .729
visit results in image             Total             122.264      158
building of the store
Intention to recommend        Between Groups         188.809       6              31.468      28.789     .000
the store to others            Within Groups         166.147      152              1.093
                                   Total             354.956      158


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The Table value of F @.05 Significance level & df 6/152 is 2.12. The calculated value of F
is more than the Table value as can be seen from the Table for all the Experience
Characteristics. Therefore it can be inferred that the Sample Means are different.

                            Table No. 4 Results of Chi Square Test
                                               Pearson   DF          Signi-   Table  Alternate
        Alternative Hypothesis (P =0.05)         Chi-               Ficance   Value Hypothesis
                                               Square              (2 sided)
H1a: Availability of large variety of fruits    64.164a 36               .003    51 Accepted
& vegetables * Overall satisfaction based on
shopping experience
H1b: Freshness of the fruits and vegetables    80.865a       36         .000       51 Accepted
* Overall satisfaction based on shopping
experience
H1c: Chances of getting all the products I     89.008a       36         .000       51 Accepted
am planning to buy * Overall satisfaction
based on shopping experience
H1d: Availability of wide variety of national 119.328a       36         .000       51 Accepted
brands * Overall satisfaction based on
shopping experience
H1e: Happiness due to availability of          95.299a       36         .000       51 Accepted
products I need * Overall satisfaction based
on shopping experience
H1f: Satisfaction of getting all the products  48.205a       24         .002    36.42 Accepted
during the visit results in image building of
the store * Overall satisfaction based on
shopping experience
H1g: Intention to recommend the store to      261.550a       36         .000       51 Accepted
others * Overall satisfaction based on
shopping experience

Findings

   1. Availability of large variety of fruits and vegetables results in Customer Satisfaction
      and Happiness’

   2.    Freshness of the fruits and vegetables ‘results in customer Satisfaction and
         Happiness.

   3. Chances of getting all the products the customers intend to buy results in Customer
      Happiness and Satisfaction.

   4. Customers Happiness due to availability of products contributes to overall shopping
      experience

   5. Availability of wide variety of national brands results in Customer Happiness and
      Satisfaction.

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   6. Due to satisfaction as a result of getting all the products customers tend to recommend
      the stores to others.

   7.   Overall satisfaction based on shopping experience due to availability of variety and
        Merchandize leads to building positive store image in the minds of the customers

8. CONCLUSIONS & IMPLICATIONS FOR RETAILERS

         The research study makes a systematic effort to fulfil the research objectives. The
retail industry in India is on upswing. Government of India finally got through with entry of
global retailers in multi brand retailing in the country with reservations from some States for
the entry of multi brand retailing. However sooner or later all states will give in and multi
brand retail will have pan India presence. With their matured experience in managing all
aspects of retailing with excellence, ensuring low cost structures and supply chain
management skills, the retailers are going to carve out a niche for themselves in India in short
span of time. This in addition to the neighbouring kirana stores is going to pose severe
challenges to the organized retailers. It is a proven fact that Customer satisfaction cannot be
viewed in isolation but calls for integrated approach. Other things being equal consistent
availability of merchandize variety and assortments are going to be the cornerstone for
success for the retailers. Indian retailers need to take cognizance of the same and gear up to
ensure customer satisfaction by meeting customer requirements of products and services on
an ongoing basis.
 Merchandize variety and assortment are differentiating and essential feature because of
which the retailers are known for. Therefore it is a critical element of the retailer’s strategy to
identify with the target markets needs, choose the right product/sales mix which aligns with
the organizational objectives. The variety, range and assortment are necessary requirements
for the customers to patronize a particular retail store. Customers may visit a new store as a
trial visit but their conversion to repeat and regular customers largely depends on the retailers
success in making quality merchandize variety and assortment and differentiate the offerings
from the other retailers on an ongoing basis.
Ensuring customer satisfaction is the necessary basic but only satisfaction is not the end in
itself but on the contrary it is a new beginning in the customer-retailer relationship. For the
retailer to survive and grow the retailers needs to have clientele which is dedicated and
committed. Hence in order to achieve their objectives of growth and profits retailers need to
factor in these objectives in their strategies, indentify the needs of their target customers, and
consistently ensure that the customer’s needs are met better than the competitors and create
and retain a whole generation of dedicated and loyal customers for the life time.

9. REFERENCES

1. Preneet singh, Harry Groenevelt & Nils Rudi, Product variety and supply chain structures.
http://faculty.insead.edu/rudi/personal/documents/ProductVarietySupplyChainstructures.pdf
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3. Journal of Retailing Volume 85, Issue 1, March 2009, Pages 1-14, Enhancing the Retail
Customer Experience. www.sciencedirect.com/science/article/pii/S0022435909000025

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4. Aner Sela, Jonah Berger & Wendy Liu*. Variety, Vice, and Virtue: How Assortment Size
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