Proceedings of 3rd Asia-Pacific Business Research Conference

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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Modeling the Relationship between Servicescape, Self-Image
Congruity and Loyalty Intention of Customers toward
Department Stores
Zuraini Alias, Rosmimah Roslin and Siti Halijjah Shariff
The number of customers shifting to online shopping is increasing, and
gaining their loyalty is becoming increasingly difficult. Thus, to attract
customers to shop at store-based outlets, retailers and policy makers need
to understand how customers experience the store environment and how
such experiences affect their self-image congruity. Reference to previous
studies has shown little or no evidence of agreement on the relationship
between servicescape and self-image congruity on loyalty intention.
Although the importance of servicescape is noticeable, there is still a lack of
strong empirical evidence which focuses on its function in consumption
settings. The objective of this study is to examine the extent of
servicescape’s influence on customers’ self-image congruity and to
determine the extent to which self-image congruity influences loyalty
intention. The scope of this study will cover selected department stores from
five regions in Malaysia. Data will be gathered via questionnaires
administered to customers. Based on previous theories (Mehrabian and
Russell,1974, and Sirgy, 1985), approach–avoidance and self-congruity
have a positive relationship with customer loyalty. Confirmatory factor
analysis and structural equation modeling will be applied to identify the
underlying dimensions of the constructs
1. Introduction
The Malaysia Retail Report forecasts that total retail sales will grow from MYR168.72bn
in 2011 to MYR284.02bn by 2015 (Business Monitor international, 2011).The Malaysian
retail industry is indeed expanding and the number of shopping malls has increased in
this country. As a result, competition among retailers has become more profound.
Retailers are competing with each other in terms of pricing, promotions, products and
services. Customers have become the main focus for retailers when strategizing their
retail activities; indeed, customers are now a major priority for retailers (Ahmed,
Ghingolg & Dahari, 2007). Customers are also becoming more sophisticated and are
aggressively seeking value, more choices, and a consuming experience when they visit
retail stores (Keng et al., 2007). Furthermore, the number of customers shifting to buy
online is increasing, and it is becoming more difficult to gain their loyalty (McBreaty
2011; Baker et al., 2002). Baker et. al (2002) also found that brick-and–mortar retailers
are facing growing competition from online e-retailers because they (the latter) are
carrying similar products at the same (or lower) prices.
________________________________________________________
Zuraini Alias, Faculty of Business, Universiti Selangor, Malaysia. E-mail: [email protected]
Prof.Dr.Rosmimah Roslin, Faculty of Business Management Universiti Teknologi, Malaysia. E-mail:
[email protected]
Assoc. Prof. Dr. Siti Halijjah Shariff, Faculty of Business Management Universiti Teknologi MARA,
Malaysia. E-mail : [email protected]
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
According to the Malaysian Communications and Multimedia Commission (as cited in
Euromonitor International, 2012), this is clear as by the end of the first quarter of 2011,
more than 57 percent of Malaysia household broadband had been diffused. The
demand has increased to new heights for computers, laptops and smart phones and
timely internet connectivity has become wider. As a result, the consumers can surf the
Internet from anywhere, not only from their homes. This situation exposes the consumer
to internet retail and offers them more selection of purchasing channels.
Gull and Tariq (2011) indicate in their research that loyalty programs are not the only
drivers of loyalty among customers. There may be other factors influencing loyalty
intention. On a practical basis, retailers like Bizrate, Groupon, Nextag, and ShopLocal
offer new business models for customers seeking special offers and discounts through
loyalty programs. This is moving traditional retailers to seek innovative measures to
develop competitive advantage when loyalty programs are commoditized. McBreaty
(2011) suggests that there is a need to support the emotional connection to a brand
through a differentiated experience and highlights the need for retailers to outline how to
offer a rich in-store experience as customers shift to buy online. It is important that
brands including retail brands enhance the experiences of their customers based on
their specific lifestyle or usage needs.
It is also important for retailers to be different and more competitive especially in this
aggressive retail environment. Hence, retailers spend millions of dollars each year to
design, build, and furnish their establishments. Aggressive competition has moved
many retailers to employ the store environment as a source of differential advantage
(Brüggen, Foubert , & Gremler, 2011). The differentiating factor that can be adopted by
retailers is through the servicescape that is tailored to meet customers' needs, not only
in terms of products, convenience and pricing but also in providing an enjoyable and,
possibly, exciting shopping atmosphere (Baker, Levy, & Grewal,1992; Tai & Fung,
1997). In addition, according to an expert in retail studio design, traditional shopping
experience is diminishing and therefore retailers need to make some improvements in
in-store environment (face-to-face interview, 23rd July 2012, at Parkson, one of
Malaysia‘s more established department stores). This is also supported by Bodhani
(2012) who claims that new retail technology has emerged in retail brick and mortar
retail that consumers cannot get from online shopping, indicating that some retailers
and their technology partners have started using technology to personalize the
customers shopping experience. Furthermore, customers like to shop at stores where
the store‘s image matches their own self-image (Sirgy, Grewal, & Mangleburg, 2000).
This is another aspect that has not been given much attention by researchers. Barnes
(1998) has suggested image congruency as a variable to explore in the retail setting
because he found that it (image congruency) is an affective variable in influencing close,
pleasing customer relationships and is more important than situational and behavioral
variables.
Addressing the issue highlighted above requires more detailed understanding of how to
attract customers to shop at store-based outlets and understand their self-image
congruity. This understanding is then linked to the aspect of loyalty to the store. Loyalty
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
can impact customer retention and a firm‘s profitability (Crosby, Evans, & Cowles,
1990). Therefore, retailers need an understanding of current customers' store loyalty
intention, and the determinants of such loyalty is an important basis for the identification
of optimal actions (Sirohi, Mclaughlin & Wittink ,1998). Since it is becoming more
difficult for retailers to take advantage of common marketing offerings such as products,
prices, promotions, and retailing network (Ashley, 1997; Templin, 1997; McBreaty,
2011), it has been suggested that servicescape may have a strong influence on
customers‘ loyalty intention (Foxall and Yani-de-Soriano, 2005) and through improving
its in-store environment, a store can create an effective ambience to stimulate
consumers‘ immediate purchasing intention (Hoffman and Turley, 2002). Servicescape
also can reflect customers‘ self-image congruity (Breazeale & Ponder, 2011), and since
customers like to shop at stores where the store‘s image matches their own self-image
(Sirgy, Grewal, & Mangleburg, 2000), the contribution of servicecape can be very
significant.
Although the importance of servicescape is noticeable, there is still a lack of strong
empirical evidence which focuses on its function in consumption settings (Wakefield and
Blodgett, 1999; Tombs and McColl-Kennedy, 2003). For this reason, Hoffman and
Turley (2002, p. 33) have raised the issue of the need for empirical development in the
area and claim that ―to date few empirical researches have been conducted that
investigate the impact of atmospherics as they relate to the customer‘s service
experience‖.
2. Literature Review
This segment focuses on the relevant literature in interaction to servicescape, selfimage congruity and loyalty intention, which leads to the conceptualization of these
identified constructs and development of hypotheses as discussed below:
2.1 The importance of loyalty intention to retailers
Söderlund and Öhman (2005) state that loyalty intention is significantly correlated with
true repurchase behavior but only when ―intention-as-expectations‖ is present as
opposed to when ―intention-as-wants‖ is engaged. In other words, loyalty intention
refers to the possibility of repurchasing or revisiting a retail outlet with only expectation
as the influencing factor. To stress further, Sirohi, Mclaughlin & Wittink (1998) assert
that an understanding of current customers' store loyalty intention and their
determinants is an important basis for the identification of optimal retailer actions. For
example, the research by Reichheld and W.Earl Sasser (1990) reveals that 25 to100
percent profit increases by five percentage-point shift in customer retention. Meanwhile,
Parthasarathy and Bhattacherjee (1998) discovered that it is important to keep existing
customers because given the costs of searching for new customers, it may cost as
much as five times more than retaining existing ones.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Reichheld (1996) reports that relative retention is usually associated with competitive
advantage and it is better in clarifying profits than market share, scale, cost position, or
any other variable. It has been proven in a recent study that strategies focusing on
retaining current customers could improve the profits of the company. Though small
increases in retention rates can significantly increase profits (Reichheld and Sasser,
1990; Fornell and Wernerfelt, 1987), keeping loyalty customers and focusing on one‘s
customers may result in satisfaction and possibly create other benefits such as the
cause of positive word-of-mouth (Urbany, Dickson, & Kalapurakal, 1996).
In addition, Lin and Ding (2006) highlight that for boosting loyalty, identifying the loyalty
antecedent and mediating variables is important in enhancing management strategies.
As a result, management should design suitable strategies to cultivate customer loyalty
due to its impact on customer retention and firm‘s profitability (Crosby, Evans, &
Cowles, 1990). Pritchard, Havitz, and Howard (1999, p. 333) stated that ―understanding
how or why a sense of loyalty develops in customers remains one of the crucial
management issues of our day‖.
2.2 The importance of servicescape to a retailer in creating customers
loyalty Intention.
Kotler (1973) defined atmospherics as an effort to create a conducive shopping
environment to produce arousing effects in the shopper that increase his/her buy
intention. According to Bitner (1992), service environment or servicescape is associated
with the appearance and style of the physical surroundings and other experiential
elements experienced by customers at service delivery sites. Both the definitions can be
said to be consistent with each other. Furthermore, by creating a unique physical
environment, service providers are able to differentiate themselves from their
competitors and create brand equity in the minds of the consumers. Bitner (1992) also
stresses that servicescape influences consumer and employee behavior to either
approach or to avoid a physical situation.
Baker et al. (1994) discovered that store environment influenced customers in making
conclusions about store merchandise and service quality and had significant impact on
the overall store image. The impact of servicescape on quality perception (Reimer &
Kuehn, 2005) shows that it (servicescape) played a greater role in most previous
studies. Servicescape is not only a sign for the expected service quality but also
impacts customers‘ evaluations of other factors determining perceived service quality.
Thus, servicescape has both a direct and an indirect effect on perceived service quality,
leading to a high overall effect. Thang & Tan (2003) revealed that servicescape is a
more important variable to persuade consumer preference. It certifies that a positive
relationship exists between the emotive response of consumers and the physical
aspects of stores. A pleasing servicescape which offers comfort and gratifications that
contribute to consumers‘ sense of well being in the stores enhances the quality of their
visit and this increases consumer preference for the store. The appropriateness of
product-image-store image is significant in predicting purchase intention (Naderi, 2011).
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
A well-blended product assortment and store environment can enhance both product
quality and image. The service environment or the atmospheric changes will positively
influence consumer emotions and also stimulate positive purchasing behavior and
therefore lead to higher buying and spending. Shoppers who are having a pleasant
experience will build a more lasting relationship with the store and seek to return.
Sherman (1997) finds that the store environment plays a mediating role on consumer
emotion and hence on customer purchasing behavior.
Hoffman (2002) has mentioned servicescape in broad term comprising three parts:
1) Outdoor service, for example, outdoor plans, signage, parking, landscaping, and the
surrounding environment
2) Indoor service, for example, example indoor plan, tools, signage, layout, air quality
and temperature
3) Other tangibles like business cards, stationary, billing statements, reports, employee
appearance, uniforms and brochures
In addition, Baker, Grewal, & Parasuraman, (1994) and Harris and Ezeh, (2008) have
determined that the servicescape dimension includes ambient conditions, design
factors, staff behavior and staff image. The current research examines these indoor
factors. A lot of studies (Baker et al., 1994; Sherman ,1997; Harris and Ezeh, 2008; Lin
and Liang, 2011) have proven that these dimensions have a positive relationship with
the behavior. Mehrabian and Russell‘s (1974) approach–avoidance framework has
been used to explain the effect of the environment on consumer behavior. This theory is
based on the Stimulus-Organism-Response (S-O-R) paradigm. This widely referenced
S-O-R model proposes that servicescape stimuli affect emotional states of consumers
and thus leads to approach-avoidance responses. This relationship is confirmed in
extensive literature (Donovan and Rossiter,1982). As noted by Ezeh and Harris (2007),
that customers do indeed respond to servicescape stimuli. Their behavioural responses
can be classified as either approach or avoidance. Mehabrian and Russell (1974)
suggest that consumers‘ individualized reactions to an environment result from one or a
combination of the following responses—pleasure, arousal and dominance.
The above theories guide the authors to the following hypothesis:
H1: There is a relationship between servicescape and the loyalty intention of
customers of department stores.
2.3 The importance of Self-Image Congruity to a retailer in creating
customers loyalty intention.
According to Sirgy (1982), consumer attitudes can be executed by the retailer‘s
personality and the apparatus called self-image congruence (SIC). The SIC process
works on the principle that the cognitive and affective judgment on a brand (store) is
affected by the the qualities of the consumer's own self-image (Sirgy, 1982). According
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
to the image congruence theory by Sirgy (1985), when the personality characteristic of a
consumer‘s self-image matches with the brand image, the consumers have a tendency
to form a positive approach to the brand when making purchasing decisions or
repurchasing a product.
Barnes (1998) has suggested image congruency as a variable to be explored in the
retail setting because he found that image congruency is an affective variable in
nurturing close, pleasing customer relationships, and more influential than situational
and behavioral variables. In addition, it also provides perceived value to customers
when the store‘s image has compatibility with the customer‘s image. Thus retailers need
to consider synergising it with core service, service delivery and servicescape in order
to make the most of customer preferred stores (O'Cass & Grace, 2008). Chebat, Sirgy,
& St-James (2006) claim that every shopping mall will reflect customers' stereotypic
images. For example, chic customers may be perceived to shop at one mall while
another mall may be perceived as being frequented by average customers. As a result,
the stereotypic image of customers will contribute to the store or mall being referred to
according to the image of its customers. Customers like to shop at stores where the
store‘s image matches their own self-image (Sirgy, Grewal, & Mangleburg, 2000).
Consistent with this self-image congruity process, the theory also includes the idea that
a main brand (store) should have cognitive and affective judgment qualities that reflect
the consumer's own self-image (Sirgy, 1982). According to Orth, et al.,( 2012)
managers will be able to build personality impressions more precisely when they refer to
the taxonomy of generic design factors and holistic types and the variation in evaluative
responses that they have created. Levy (1959) mentioned that consumers made
purchases to show not only their capability, but also to indicate what they mean. He
added that the image of the person and what he /she wants to be must be consistent in
order to improve his/her sense of self.
Therefore, based on the earlier study, the following hypotheses are proposed:
H2: There is a relationship between servicescape and self-image congruency of
customers of department stores.
H3: There is a relationship between self-image congruity and loyalty intention of
customers of department stores.
Referring to the above research context, we strongly believe that the proposed
hypothesized model is novel as it attempts to explain the effect of servicescape and in
turn, its subsequent effect on self-image congruity and loyalty intention.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
Figure 1 : The Hypothesized Model
H2
Servicescap
e
SelfImage
Congruity
H1
H3
Loyalty
Intention
3. Research Methodology
This section describes the methods to be used to achieve the research objectives and
test the research hypotheses that were put forth earlier. This study adopts the
descriptive method as the main mode of data collection. For the purpose of this study,
stratified sampling methods will be chosen where the states in Malaysia will be divided
into five zones or regions, namely, the Northern Region, Central Region, Eastern
Region, Southern Region and the region of Borneo (comprising of Sabah, Sarawak and
Labuan). The samples of respondents are customers of department store and will be
selected based on the regions or the zones representing Malaysia as a whole (Cedric
Hsi-Jui Wu & Liang, 2009). The department stores will be selected based on the store
popularity where there must be more than five outlets operated by the chain in
Malaysia, the location of the malls and the condition that the department stores must be
anchor tenants in the malls.
The target population is adult consumers (over 18 years of age) who have been
shopping at the selected department stores in Malaysia. This field of study will be
chosen because the researchers want to get the information directly from customers
about their opinion, observations, and experiences with the retail stores that will be the
center of the study and in the real shopping mall (Wakefield & Baker, 1998; Dawson,
Bloch, & Ridgway, 1990).
The researcher will undertake a mall intercept method of encountering respondents at
the cash register and ask consumers to complete the questionnaire after they make a
purchase. The reason for stationing the researchers near the cash register is because
we believe that the customers who have made the purchases have already enjoyed or
experienced the department store‘s environment and therefore are in a better position to
answer the questionnaire. The sample size is 384. The questionnaire will be selfadministered with clipboards and pencils provided by the interviewer. The method
allows collection of anonymous data from a large number of respondents at a low cost
(Strand and Weiss, 2005).
The respondents will randomly chosen by using quota sampling according to race, that
is, Malays, Chinese, Indians and others (the combination of other small races). 23
respondents will represent each race in each department store.
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Proceedings of 3rd Asia-Pacific Business Research Conference
25 - 26 February 2013, Kuala Lumpur, Malaysia, ISBN: 978-1-922069-19-1
All the data will be analyzed using Structural Equation Modeling (SEM) so that:
a) the causal process under study is represented by a series of structural (i.e.,
regression) equations, and
b) these structural relations can be modeled pictorially to enable a clearer
conceptualization of the theory under study.
The hypothesized model can then be tested statistically in a simultaneous analysis of
the entire system of variables to determine the extent to which it is consistent with the
data.
5. Conclusion
Mehrabian and Russell‘s (1974) approach–avoidance theory reveals that servicescape
has been used to explain the effect of the store environment on consumer behavior.
There are significant effects of servicescape on loyalty intention where the customers
will approach overwhelming store environment that influence their purchasing behavior.
The servicescape also influences the customers‘ self-image congruity that have effects
on loyalty intention. Modeling the relationship between servicescape , self-image
congruity and loyalty intention will result in retailers providing a more interesting and
comfortable store environment that can impress customers‘ shopping experience. This
will increase the purchases and will in turn attract more tourists to shop in Malaysia.
Indirectly, it will increase the profits for retailers and boost the economy of the country.
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