Service quality in retailing: relative efficiency of alternative measurement scales for different productservice environments

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

The authors Subhash C. Mehta is Associate Professor in the Department of Marketing, National University of Singapore, Singapore. Ashok K. Lalwani is a Lecturer in the School of Business, Temasek Polytechnic, Singapore. Soon Li Han is Senior Trade Officer at the Singapore Trade Development Board, Singapore. Keywords Retailing, Service quality, Singapore, Supermarkets, Consumer goods Abstract Current measures of service quality do not effectively capture customers' perceptions of service quality for different types of retail stores. Explores the usefulness of SERVPERF, the perceptions component of SERVQUAL and a retail service quality scale (the DTR scale) in measuring the service quality of different product-service retail environments. Specifically, investigates the relative performance of two scales measuring the service quality of retailers where goods purchase is the primary focus, against another where both goods and services are equally important. Results showed that the DTR scale was superior within the context of a ``more goods and less services'' environment, i.e. a supermarket, while SERVPERF was better for a retailing context where the service element becomes more important, i.e. an electronic goods retailer. This modified scale measured the service quality of an electronic goods retailer more effectively than either the DTR scale or the SERVPERF. Implications for retailers are discussed Electronic access The current issue and full text archive of this journal is available at http://www.emerald-library.com
International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . pp. 6272 # MCB University Press . ISSN 0959-0552

Introduction
The business environment is becoming increasingly hostile and unforgiving. Intense competition from both domestic and foreign companies, coupled with an increasing awareness of consumer rights, has led to greater expectations and demands by customers (Smith, 1989; Sellers, 1990). For competitive survival, companies are focusing on areas in their operations that might give them an edge over their competitors. A key area has been the delivery of high levels of service quality. Service quality is increasingly being offered as a strategy by marketers to position themselves more effectively in the marketplace (Parasuraman et al., 1988; Brown and Swartz, 1989; Cronin and Taylor, 1992). Because of the fundamental differences between goods and services, marketing academicians make a distinction between goods retailing (e.g. department stores, boutiques) and service firms (e.g. airlines, restaurants). According to Berry (1986), it would be more helpful to classify them as either ``goods'' or ``services'' retailers. Even so, virtually all ``goods'' retailers still offer some form of service to facilitate the sale of goods. Thus, retailing environments differ from primarily goods retailers with some customer services, to retailers with primarily services focus with little or no goods offered. The Singapore retail industry Singapore's retail sector is under serious competitive pressures. Except for a handful of retailers, most of them are facing difficulty coping with low customer demand, intensive competition, high rents, a relatively strong Singapore dollar, labor shortage and high staff turnover. Furthermore, the number of tourist arrivals has drastically declined recently due to the regional economic crisis. Singaporeans are also increasingly shopping abroad in regional countries as well as in Europe and USA, where branded goods cost substantially less. To overcome the current retail slump, service quality has invariably been mentioned by experts as well as local retailers as a critical aspect to achieve differential advantage (Berry, 1986; Hummel and Savitt, 1988; Reichheld and Sasser, 1990; Dotson and Patton, 1992; Dabholkar et al., 1996). Even as early as 1992, Frank Small & Associates in a consumer survey revealed that service is nearly as important as price to Singaporean 62

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

consumers. In the choice of a shopping destination, about 27 per cent considered price to be the most important determinant while 25 per cent chose staff courtesy. Service seemed of greater concern to shoppers than other factors like merchandise assortment and shopping environment. For those who encountered poor service, 70 per cent would not repatronize the shop while 24 per cent would also tell their friends not to do so. If service quality is to be a cornerstone of a retailer's strategy, the retailer must have the means to measure it. Service quality does not improve unless it is measured (Reichheld and Sasser, 1990). Measures of service quality A popular measure of service quality is SERVQUAL, developed by Parasuraman et al. (1988, 1991). The scale consists of 22 items covering five dimensions of tangibles, reliability, responsiveness, assurance and empathy. The SERVQUAL instrument has been tested and/or adapted in various settings like the quality of service offered by a hospital (Babakus and Mangold, 1989), a CPA firm (Bojanic, 1991), a dental school patient clinic, business school placement center, tire store, and acute care hospital (Carman, 1990), pest control, dry cleaning, and fast food (Cronin and Taylor, 1992), banking (Spreng and Singh, 1993; Cronin and Taylor, 1992) and discount and departmental stores (Finn and Lamb, 1991; Teas, 1993; Dabholkar et al., 1996). In general, these studies do not support the factor structure posited by Parasuraman et al. (1988). Parasuraman et al. (1988) too expressed one of its serious limitations in its development. ``F F Fthe procedure used to refine the instrument was guided by the goal of obtaining a concise scale whose items would be meaningful to a variety of service firms. By design, it only retained those items that are common and relevant to all service firms included in the study (Bank, Credit Card Company, Repair and Maintenance Company and Telephone Company)F F Fthis may have deleted certain ``good'' items relevant to some but not all firms''. Moreover, although SERVQUAL has been empirically tested in a number of studies involving ``pure'' service settings, its use in retail store environments has been limited. In addition, SERVPERF (Cronin and Taylor, 1992), the unweighted perceptions component of SERVQUAL, has been shown empirically to outperform SERVQUAL in predicting behavioral intentions. 63

Further, improvements and measurements of quality in retailing cannot be approached in the same way as that of the services perspective. The uniqueness of the services offered by a retailer makes the use of scales developed for other service categories somewhat questionable. In this respect, care must be taken when applying the SERVQUAL instrument to retail sectors, which have little elements in common with those already investigated (Finn and Lamb, 1991; Vandamme and Leunis, 1992). There is therefore a need to look at quality from the perspective of services as well as goods and derive a set of items that accurately measure this construct. In order to answer this basic question, a scale was developed and empirically validated by Dabholkar et al. (1996) (henceforth DTR scale) to measure specifically the service quality within the retail environment. Dabholkar et al. (1996) conducted qualitative research using three different methodologies phenomenological interviews, exploratory depth interviews, and tracking the customer through the store. Combining these qualitative findings with the existing literature and SERVQUAL, Dabholkar et al. proposed that retail service quality had a hierarchical factor structure comprising five basic dimensions, with three of the five basic dimensions having two sub-dimensions each and overall service quality as a second orderfactor. The five basic dimensions proposed were ``physical aspects'', ``reliability'', ``personal interaction'', ``problem solving'' and ``policy''. ``Physical aspects'' referred to the appearance of the physical facilities (i.e. the general appearance of the store and the cleanliness of its public facilities etc.) and the convenience offered to the customer by the layout of the physical facilities. ``Reliability'' was viewed as a combination of keeping promises and ``doing it right''. ``Personal interaction'' also involved two sub-dimensions service personnel inspiring confidence and being courteous/helpful. Helpfulness/courteousness referred to the friendliness of the store personnel and the ability to be of help when needed. ``Problem solving'' addressed the handling of returns and exchanges as well as complaints. ``Policy'' referred to aspects of service quality that were directly influenced by store policy, e.g. convenient operating hours, credit and charge policies, quality of merchandise etc. DTR's proposed measure of retail service quality was a 28-item scale, consisting of 17 items from SERVQUAL and 11 items

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

developed from their literature review and qualitative research. Five items from SERQVUAL were deemed inappropriate and dropped. Data were collected from seven department stores in southeastern USA and the proposed scale was validated using confirmatory factor analysis. To avoid psychometric problems with difference scores, only the perceptions data were analyzed by DTR. Results of the data analysis showed an excellent fit with the factorial structure proposed by DTR. To validate their findings, DTR conducted a second study with the same instrument at two store units of one of the department stores involved in the first study. Again, the model showed an excellent fit. Since the instrument is only recent, to our knowledge no other study has yet deployed this scale in measuring the service quality of a retail institution after the authors' research.

(3) To investigate the relationships between the service components of retailing, customers' evaluations of service quality on different components and overall evaluation of the retailer. (4) To investigate the relative efficiency of the DTR and SERVPERF scales in the two contexts and to develop a modified scale to measure the service quality in a services oriented retail context.

Methodology
Data were collected by means of a structured questionnaire. The questionnaire consisted of three sections A, B and C. Sections A and B required respondents to evaluate the service components of their regular supermarket and electronic goods retailer respectively. To avoid any positioning bias, half of the questionnaires given out required respondents to evaluate the service quality of their regular supermarket in section A while the other half evaluated their regular electronic goods retailer first. Section C contained questions pertaining to respondent profile. For both SERVPERF and the DTR scales, only the perceptions data were collected and analyzed. This was to avoid psychometric problems with difference scores (Brown et al., 1993) as well as to avoid confusion among respondents. Respondents were asked to rate the 22 perception statements of the SERVPERF scale for both their regular supermarket and electronic goods retailer. Besides minor rewording of items to fit the retail setting, the casting of the 22 statements also took into account the various refinements recommended by Parasuraman et al. (1991). The perception statements were measured on a five-point Likert type scale with ``1'' being ``strongly disagree'' and ``5'' being ``strongly agree''. The 22 perception statements, adapted to the attributes of a retailer, were randomly arranged and together made up the five dimensions of service quality. As for the DTR scale, while care was taken to preserve the original scale, two modifications were necessary. The item ``____ accepts most bank credit cards'' (policy) was deemed inappropriate under the local context of supermarkets, which normally do not accept credit cards, and was hence changed to ``____ accepts cheques without hassle''. Although this item would have been admissible under the context of an electronic goods retailer, this 64

Context of study
This study extends Dabholkar et al.'s (1996) research by making a comparison between the service quality of a goods retailer that involves only a few services in the sales process and another where service is more important. Supermarkets and electronic goods retailers respectively, were chosen as the two appropriate contexts. The service quality of these two types of retailers will be used to compare the effectiveness of the DTR scale (Dabholkar et al., 1996) and SERVPERF (Cronin and Taylor, 1992).

Research objectives
This study examined the issue of service quality and its measurement in different retail contexts with varying importance of service in the selling of goods. Specifically, the research objectives were: (1) To compare the relative effectiveness of the DTR and SERVPERF scales as a measure of service quality of a goods retailer where services have a limited scope in the sales process, e.g. a supermarket. (2) To compare the relative effectiveness of the DTR and SERVPERF scales as a measure of the service quality of a retailer where service plays a key part in the sales process, e.g. an electronic goods retailer.

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

change was necessitated to enable an effective comparison of the two contexts. Second, the item ``____ offers its own credit card'' (policy) was deemed inappropriate under the two chosen contexts and was hence changed to ``____ offers a wide variety of merchandise''. Very few retail stores in Singapore offer their own store cards. Data collection Although the convenience sampling method was used, care was taken to randomize the data collection as far as place and time of data collection was concerned. In order to achieve this objective, data were collected from many places in Singapore. In addition, attempts were made to collect data at different times of the day, i.e. morning, afternoon and evening. A completely random sample was difficult to obtain as some control had to be exercised due to the requirement that respondents should have visited their regular electronic goods retailer and supermarket at least twice in the last month. Sample subjects were first asked if they had visited both type of retailers and how many times within a month. Respondents with two or more visits per month to each retailer qualified for inclusion in the sample unit. A total of 300 questionnaires were distributed at different shopping locations and were to be returned by mail on completion. Of these, 161 were returned and five discarded due to incomplete responses, thus leading to a response rate of 53.7 per cent. The Sample The ratio of male to female respondents was about 56:44 Respondents from the ``up to 24'' age group accounted for the majority (35.9 per cent) of the respondents. The mean age of the sample was 31.7 years and this was lower than the national (1996) average age of 36.5 years (Report on the Labor Force, Survey of Singapore, 1996; Ministry of Labor Research and Statistics Department, Singapore). Further, 31.4 per cent of the respondents were aged between 25-34, 18.6 per cent between 35-44 and 14.1 per cent were aged above 45. About 37 per cent of the respondents had an average monthly household income of more than S$5,001, while the remaining 63 per cent were more or less evenly distributed among the other four income categories of up to S$2,000, S$2,001-S$3,000, S$3,001-S$4,000 and S$4,001-S$5,000. The mean monthly household income of the sample was S$3,897, which was higher than 65

the mean national household income of S$3,076 (Singapore Census of Population, 1990, Statistical Release II, Households and Housing; Department of Statistics, Singapore, p. 186). Most of the respondents were tertiary educated (72.4 per cent). The tertiary category encompassed pre-university, ``A'' levels (higher secondary) and polytechnic graduates. Of the respondents, 10.9 per cent had been educated up to primary level, while 16.7 per cent had been educated up to secondary level.

Findings
When the overall evaluation of the service quality of the respondents' regular supermarket was considered, more than half (57.7 per cent) evaluated the service quality of supermarkets as ``good'' or ``very good'' while about 37 per cent rated it as ``neither poor nor good''. Only eight (5.1 per cent) respondents rated the service as ``poor'' and none gave a rating of ``very poor''. The mean rating of service quality for supermarkets was 3.58. Respondents' rating of the service quality of electronic goods retailers was somewhat similar to that of supermarkets. More than half (62.1 per cent) of the respondents rated the service quality of their regular electronic goods retailer as ``good'' or ``very good'', while 32 per cent rated it as ``neither poor nor good''. About 6 per cent of the respondents gave a rating of ``poor'' while none gave the rating ``very poor''. The mean rating of service quality for the electronic goods retailers was 3.63. The ratings were expected to be on the high side for both the contexts as respondents were asked to evaluate the service quality of their regular supermarket and electronic retailer. Regularly patronized stores are more likely to be rated favorably. A comparison of the means shows that the service quality of electronic retailers here was perceived to be significantly better than that of supermarkets ( = 0.05). However, this could also be attributed to the ``mostly goods and few services'' nature of a supermarket's business.

Context 1: Supermarket
Reliability analysis For a new scale, there was relatively good internal consistency in the DTR dimensions as shown in Table I. The Cronbach range for

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

Table I Reliability of DTR and SERVPERF scales in supermarket context DTR dimensions Personal interaction Physical aspects Problem solving Policy Reliability Cronbach 0.86 0.73 0.68 0.54 0.52 Cronbach SERVPERF dimensions Responsiveness Assurance Empathy Tangible Reliability 0.82 0.79 0.70 0.58 0.56

Note: A summary measure of the dimensions of the two scales was computed from mean scores of items under each dimension

the five dimensions was 0.52 to 0.86. This was comparable to SERVPERF's range of 0.56 to 0.82, which is consistent with previous replication studies (Babakus and Boller, 1991; Carmen, 1990; Finn and Lamb, 1991) which had alphas ranging from 0.59 to 0.93. Intercorrelations There was evidence of strong intercorrelation's within the DTR Scale. ``Problem solving'' showed strong correlation with ``Personal interaction'' (0.64), ``Physical aspects'' with ``Policy'' (0.58) and ``Policy'' with ``Personal interaction'' (0.54). Besides the dimensions ``Physical aspects'' and ``Personal interaction'', the other three dimensions' individual Pearson's correlation with the overall ratings were not very strong (Table II). This may imply that ``Policy'', ``Problem solving'' and ``Reliability'' were not as important in the evaluation of service quality within supermarkets as initially predicted. The overall service quality calculated from the means of the five DTR dimensions also showed strong correlation (0.65) with respondents' overall ratings. The condition of multicollinearity was quite severe in the five dimensions of SERVPERF. Applying 0.50 as a criterion (Nunally, 1978), ``Responsiveness'' was seen to be strongly

correlated with ``Empathy'' (0.75), ``Assurance'' (0.72) and ``Reliability'' (0.66). In addition, fairly strong correlation's were observed between ``Empathy'' and ``Assurance'' (0.70) and between ``Reliability'' and ``Assurance'' (0.59). Besides the dimensions ``Assurance'', ``Responsiveness'' and ``Tangible'', the other two dimensions' individual Pearson's correlation with the overall ratings were not very strong (Table III). The overall ratings showed positive correlation (0.63) with overall service quality computed from the five SERVPERF dimensions. Stepwise regression results The five dimensions of the DTR scale had an adjusted R2 of 0.43 when regressed stepwise on the overall ratings measure. The resultant output yielded only two variables; ``Physical aspects'' and ``Personal interaction''. This implied that the dimensions ``Policy'', ``Problem solving'' and ``Reliability'' did not contribute significantly towards the explanation of the variance in the overall ratings and were not important determinants in respondents' evaluation of the service quality of a supermarket. Physical aspects explained 81.3 per cent of the variance, while Personal interaction explained 18.7 per cent of the variance in the overall service quality. A step-wise regression on the overall rating measure indicated that the 22-item SERVPERF scale had an adjusted R2 of 0.41. The resultant output yielded three variables``Assurance'', ``Responsiveness'' and ``Tangible'', which explained 4.7 per cent, 22.1 per cent and 73.2 per cent of the variance in the overall service quality respectively. In addition, it was seen that ``Empathy'' and ``Reliability'' did not

Table II Correlation coefficients of DTR dimensions in the supermarket context Dimension Physical aspects Personal interaction Policy Problem solving Reliability Overall quality ratingb
a

Physical aspects 1.00 0.51 0.58 0.36 0.47 0.78

Personal interaction 0.51 1.00 0.54 0.64 0.51 0.85

Policy 0.58 0.54 1.00 0.29 0.48 0.73

Problem solving 0.36 0.64 0.29 1.00 0.31 0.72

Reliability 0.47 0.51 0.48 0.31 1.00 0.70

Overall evaluationa 0.59 0.55 0.42 0.41 0.40 0.65

Notes: Overall evaluation of electronics goods retailer's service quality (single statement score) b Overall service quality as computed from the mean of the five DTR dimensions

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Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

Table III Correlation coefficients of SERVPERF dimensions in the supermarket context Dimension Tangible Responsiveness Empathy Assurance Reliability Overall quality ratingb
a

Overall Tangible Responsiveness Empathy Assurance Reliability evaluationa 1.00 0.50 0.49 0.44 0.51 0.73 0.50 1.00 0.75 0.72 0.66 0.89 0.49 0.75 1.00 0.70 0.53 0.85 0.44 0.72 0.70 1.00 0.58 0.85 0.51 0.66 0.53 0.58 1.00 0.78 0.54 0.55 0.49 0.53 0.46 0.63

Notes: Overall evaluation of electronics goods retailer's service quality (single statement score) b Overall service quality as computed from the mean of the five SERVPERF dimensions

contribute significantly towards explaining the variance in the overall rating. Comparison of the two scales (for supermarkets) While the Cronbach and R2 of the DTR scale (with R2 =0.42) were comparable to that of SERVPERF (R2 =0.41), and although the overall service quality computed from the dimensions of both scales showed similar correlation with respondents' overall rating, there was a higher degree of multicollinearity within SERVPERF. This condition could have artificially inflated the adjusted R2 of SERVPERF.

Context 2: electronic goods retailer

Similar to the evaluation of their regular supermarket, respondents were asked to rate the features of their regular electronic goods retailer on a Likert scale of ``1'' ``strongly disagree'' to ``5'' ``strongly agree''. It was observed that, only two items, i.e. ``offers a wide variety of merchandise'' and ``operating hours are convenient to most customers'' were on an average, rated above ``4''. This implied that these were features that respondents generally agreed that electronic goods retailers in Singapore possess. In addition, for all 33 items, respondents did not disagree that electronic goods retailers here had the features mentioned. Reliability analysis The Cronbach range for the five DTR dimensions was 0.75 to 0.92. This showed that the scale was statistically reliable. The reliability coefficients of the five SERVPERF dimensions ranged from 0.77 to 0.87 (Table IX), implying that this scale, too, was statistically reliable in explaining overall service quality. 67

Intercorrelations For the DTR scale, ``Problem solving'' was highly correlated with ``Personal interaction'' (0.83) and ``Reliability'' with ``Problem solving'' (0.69), ``Personal interaction'' (0.68) and ``Policy'' (0.58). Besides ``Personal interaction'' (0.75) and ``Problem solving'' (0.63), the other three factors' individual Pearson's correlation with overall rating were not very strong. This may imply that only two dimensions; ``Personal interaction'' and ``Problem solving'', are important in the evaluation of service quality within the context of an electronic goods retailer. In addition, a positive correlation of 0.64 was evident between the overall service quality score computed from the means of the five DTR dimensions and respondents' overall rating measure (Table IV). As in the case of the five SERVPERF dimensions for supermarkets, the condition of multicollinearity was quite severe in the five dimensions of SERVPERF for electronic goods. Applying 0.50 as a criterion (Nunally, 1978), ``Responsiveness'' was strongly correlated with ``Empathy'' (0.77) and ``Assurance'' (0.88). Strong correlations were also evident between ``Reliability'' with ``Responsiveness'' (0.75), ``Assurance'' (0.75) and ``Empathy'' (0.57). In addition, ``Empathy'' also showed strong correlation with ``Assurance'' (0.79). Except for the dimension ``Tangible'' (0.35), ``Assurance'' (0.72), ``Responsiveness'' (0.77), ``Empathy'' (0.70) and ``Reliability'' (0.55) exhibited strong positive correlation with overall rating. SERVPERF's overall service quality measure also showed strong correlation (0.75) with respondents' overall rating (Table V). Stepwise regression results Respondents' evaluations of the five dimensions of DTR scale were regressed on the overall rating score as the dependent variable.

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

Table IV Correlation coefficients of DTR dimensions in the electronics store context Dimension Physical aspects Personal interaction Policy Problem solving Reliability Overall quality ratingb
a

Physical Personal aspects interaction Policy 1.00 0.37 0.50 0.37 0.44 0.68 0.37 1.00 0.46 0.83 0.68 0.85 0.50 0.46 1.00 0.48 0.58 0.73

Problem Overall solving Reliability evaluationa 0.37 0.83 0.48 1.00 0.69 0.87 0.44 0.68 0.58 0.69 1.00 0.84 0.32 0.75 0.33 0.63 0.45 0.64

Notes: Overall evaluation of electronics goods retailer's service quality (single statement score). b Overall service quality as computed from the mean of the five DTR dimensions

The resultant output had an adjusted R2 of 0.57 and yielded only one significant dimension, i.e. ``Personal interaction''. This implied that the dimensions ``Physical aspects'', ``Policy'', ``Reliability'' and ``Problem solving'' did not contribute significantly towards explaining the variance in the overall rating. The adjusted R2 of the 22-item SERVPERF scale when regressed stepwise by dimensions was 0.61. Out of the five SERVPERF dimensions, only two, i.e. ``Responsiveness'' and ``Empathy'' were retained in the regression. These explained 96.1 per cent and 3.9 per cent of the variation in the overall rating of service quality respectively. Thus, ``Assurance'', ``Tangible'' and ``Reliability'' did not contribute significantly towards explaining the variance in the overall rating measure of the electronic retailer. Comparison of the two scales Contrary to the findings within the supermarket context, in the electronics context, SERVPERF had a better model fit as compared to the DTR scale. The adjusted R2 of SERVPERF was 0.61, which was higher than that of DTR (0.57). Also, the overall service quality value computed from the SERVPERF scale showed a

higher correlation (0.75) with respondents' overall rating as compared to that of DTR (0.64). Moreover, the Cronbach's alpha of SERVPERF dimensions were higher than that of DTR dimensions (Table IX) indicating better reliability.

A modified scale
A comparison of the DTR and SERVPERF scales across the two contexts revealed that both the scales had a better fit with the data for electronic goods retailers as compared to their performance within the supermarket context. Intuitively, it seemed that the data collected for electronic retailers would provide a more meaningful factor analysis. Statistically, the range of the Cronbach's alpha of both scales' five dimensions was 0.75 to 0.92, which indicated that the combined items of both scales were meaningful and reliable (Nunnally, 1978). As a result, all 33 items were included in the factor analysis. This was also reasonable given that all 33 items were the result of extensive qualitative research and empirical validation by researchers.

Table V Correlation coefficients of SERVPERF dimensions in the electronics store context Dimension Tangible Responsiveness Empathy Assurance Reliability Overall quality ratingb Overall Tangible Responsiveness Empathy Assurance Reliability evaluationa 1.00 0.35 0.32 0.39 0.51 0.61 0.35 1.00 0.77 0.88 0.75 0.91 0.32 0.77 1.00 0.79 0.57 0.84 0.39 0.88 0.79 1.00 0.75 0.92 0.51 0.75 0.57 0.75 1.00 0.86 0.35 0.77 0.70 0.72 0.55 0.75

Notes: 1 Overall evaluation of electronics goods retailer's service quality (single statement score). 2 Overall service quality as computed from the mean of the five SERVPERF dimensions

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Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

Using the general rule of thumb of extracting factors with eigenvalues greater than 1.0, the factor analysis following varimax rotation extracted eight factors. However, Kaiser's rule is inadequate in identifying among factors that have little differences in eigenvalues. Cattell's scree test was therefore used in addition to Kaiser's rule. From the scree plot, five factors were extracted. The inclusion of items in the factor was determined by their factor loadings, using 0.5 as a cut off. A total of 21 items (Table VI) were included in the five factors, which explained 62.9 per cent of the total variance (Table VII). The first factor was relatively easy to interpret as it consisted of 12 items that were all related to the store's employees (Table VI). This factor was termed the ``Service personnel'' dimension. The second factor grouped four items, mostly dealing with the tangible aspects of an electronic goods retailer and hence was termed the ``Physical aspects'' dimension. Two items comprising statements on the merchandise
Table VI Factors derived from modified scale Factor FT1 Dimensions and respective items Factor loading 0.85 0.85 0.84 0.79 0.76 0.74 0.74 0.73 0.73 0.72 0.70 0.65 0.82 0.80 0.79 0.61 0.73 0.72 0.76 0.75 0.81

Table VII Percentage of variance explained by factors in the modified scale Percentage of Cumulative variance percentage of Eigenvalue explained variance explained 12.35 3.75 1.88 1.64 1.12 37.5 11.4 5.7 5.0 3.4 37.5 48.4 54.5 59.5 62.9

Factor FT1 FT2 FT3 FT4 FT5 Service personnel Physical aspects Merchandise Confidence Parking

made up the third factor and this dimension was labeled ``Merchandise''. The fourth factor, also comprising two items, seemed to deal with respondents' risk perception of the store and was termed the ``Confidence'' dimension. Comprising only one item, the fifth factor dealt with the ease of parking and was thus named the ``Parking'' dimension. Caution is suggested for this factor as it is a Singapore-specific dimension and may not be applicable in other electronic goods retailer settings. Reliability analysis: modified scale In the modified scale, excluding parking which had only one item, the Cronbach for the four dimensions of Service personnel, Physical aspects, Merchandise and Confidence were 0.95, 0.85, 0.71 and 0.71 respectively (Table IX). These were all statistically reliable, according to Nunally's (1978) minimum criteria of 0.70. Intercorrelations: modified scale Multicollinearity did not seem to be severe in the modified scale (Table VIII). The highest correlation coefficient was only 0.52, between the factors ``Physical aspects'' and ``Merchandise''. The individual Pearson's correlation coefficient for the five factors with overall rating were not very strong except for ``Service personnel''. Stepwise regression results: modified scale The adjusted R2 of the 21-item modified scale when regressed stepwise was 0.62. Out of the five factors, only ``Service personnel'' was retained in the regression. Thus, ``Physical aspects'', ``Merchandise'', ``Confidence'' and ``Parking'' did not contribute significantly towards explaining the overall variance in the overall evaluation. Comparison of the three scales The modified instrument with 21 items to measure the service quality of an electronic

Service personnel Employees readily respond to requests Employees give personal attention Gives individual attention Employees understand my specific needs Employees are always willing to help Employees show sincere interest in solving problems Employees handle complaints satisfactorily Employees have the knowledge to answer questions Employees tell exactly when a service can be provided Employees are consistently courteous Behavior of employees instills confidence Employees give prompt service Physical aspects Physical facilities are visually appealing Materials associated with the store are visually appealing Modern looking equipment and fixtures Layout makes it easy to move around the store Merchandise Has the merchandise available when I need it Offers a wide variety of merchandise Confidence Feel safe in transactions Insists on error-free sales transactions and records Parking Plenty of convenient parking

FT2

FT3

FT4

FT5

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Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

Table VIII Correlation coefficients: modified scale Dimension Service personnel Physical aspects Merchandise Confidence Parking Overall quality ratingb
a

Service personnel 1.00 0.31 0.35 0.46 0.02 0.60

Physical aspects 0.31 1.00 0.52 0.37 0.26 0.74

Merchandise Confidence 0.35 0.52 1.00 0.35 0.19 0.72 0.46 0.37 0.35 1.00 0.07 0.65

Parking 0.02 0.26 0.19 0.07 1.00 0.55

Overall ratinga 0.79 0.30 0.27 0.38 0.01 0.50

Notes: Overall evaluation of electronics goods retailer's service quality (single statement score). b Overall service quality as computed from the mean of the five DTR dimensions

goods retailer was reliable as measured by Cronbach a. The Cronbach (Table IX) and the adjusted R2 (= 0.62) were slightly better than that of both the DTR scale (adj. R2 = 0.57) and SERVPERF (adj. R2 = 0.61). Furthermore, the presence of high multicollinearity might have rendered the adjusted R2 of the DTR scale and SERVPERF artificially high. Besides the slightly better quantitative results shown above, the modified scale also had the advantage of being more specific in areas that are important to customers' evaluation of the service quality of an electronic goods retailer. Nearly all aspects of an electronic goods retailer were covered by the five factors and this made insights to improve its service quality more meaningful and actionable. Although the DTR scale was developed as a generic scale to measure retail service quality, it did not provide a superior perspective for a highly service oriented retail setting such as electronics. Conclusions Results of this study revealed that more than half the respondents percieved the service quality of their regular supermarket (62.1 per cent) and electronic goods (57.7 per cent) retailer to be ``good'' or ``very good''. Hence, it appears that Singaporean retailers in these two sectors are quite concerned about the service provided. They should continue to

provide the same service and strive to further improve it, as service quality can be used as a strategy to gain competitive edge. The main objective of this study was to compare two different scales the DTR and SERVPERF scales for measuring the service quality of supermarkets and electronic goods retailers. The performance of the two scales within the two contexts were mixed. Within the supermarket environment, the DTR scale proved to be slightly better than SERVPERF, while the reverse was true in the context of electronic goods retailers. For supermarkets, only ``Physical aspects'' and ``Personal interaction'' were significant in explaining the variance of the DTR scale under stepwise regression. In the case of SERVPERF, the dimensions ``Tangible'', ``Responsiveness'' and ``Assurance'' were significant. From both scales, it can be concluded that the service quality within the supermarket environment is mainly based on two factors, one pertaining generally to employees ``Personal interaction'', ``Responsiveness'' and ``Assurance'' and another to the ``Tangible'' or ``Physical aspects''. For a supermarket, the nature of its business lies mainly in the offering of goods and involves relatively few services and limited interaction between customers and employees. Hence, a very high percentage of the contribution to the overall variance in the service quality of

Table IX Reliability analysis: DTR and SERVPERF scales in the context of electronic goods DTR dimensions Personal interaction Physical aspects Problem solving Policy Reliability Cronbach 0.92 0.84 0.81 0.76 0.75 SERVPERF dimensions Responsiveness Empathy Assurance Tangible Reliability Cronbach 0.87 0.84 0.81 0.80 0.77 Modified scale dimensions Service personnel Physical aspects Merchandise Confidence Parking Cronbach 0.95 0.85 0.71 0.71 a

Notes: a Cronbach alpha dictates at least two items per factor for computation

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Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

supermarkets is explained by ``Physical aspects'' (81.3 per cent) in the DTR scale and ``Tangibles'' (73.2 per cent) in SERVPERF. Supermarket retailers should therefore take note of this finding and place special emphasis on the above mentioned aspect of service quality. In particular, they are recommended to keep their physical facilities clean and good looking. The layout of physical facilities should make it convienient for the customer to look for goods. Hence, expenditures in improving the overall appearance of the store should not be seen as unnecessary but should be viewed as investments. For an electronic retailer, the nature of its business involves greater value added from services. From stepwise regression, only ``Personal interaction'' appeared to be significant in the contribution to the overall variance for the DTR scale while ``Responsiveness'' (explaining 96.1 per cent of the variance in the model) and ``Empathy'' (explaining 3.9 per cent of the variance) were significant in SERVPERF. Not surprisingly, the regression output indicated that the employees and service aspects of an electronic retailer are the dominant factors in explaining the variance in this particular retail environment (this is also confirmed in the modified scale, see Table VII). Hence, electronic goods retailers should place more emphasis on their employees, who should be given adequate training in the area of personal selling and relationship management. They should also be encouraged to be caring, and provide individualised attention to their customers. In addition, a reward scheme could be devised to encourage employees to go out of their way to help customers and provide prompt service. In sum, managers in the above two sectors should therefore concentrate their efforts on the dimensions perceived to be important (``tangibles'' for supermarket and employees for electronic goods retailers) rather than focussing their energies on a number of different attributes or attributes which they feel are important determinants of service quality. The modified scale Factor analysis was conducted to identify relevant factors that determined the service quality of an electronic retailer in Singapore. From the 33 items that made up both the DTR scale and SERVPERF, five new factors comprising 21 items were identified. They were ``Service personnel'', ``Physical aspects'', ``Merchandise'', ``Confidence'' and 71

``Parking''. Hence it appears that these factors are important determinants of service quality in the local context, and managers should gear up in these areas. The factor analysis revealed many items within the two scales that were not relevant when taken in the local electronic retailer context and subsequently eliminated from the five new factors. For example, under the factor ``Merchandise'', availability and variety of merchandise were admitted while quality of merchandise was dropped. The quality of electronic goods is not an important factor, as a relatively good inference of quality can be made from its brand name. In addition, Singapore being a small market, there are very few exclusive electronic retailers and most carry an assortment of well-known brands. This is in contrast to a big market like the USA, where there is a proliferation of brands and hence more exclusive retailers. What is more important to the customer in Singapore, therefore, is the availability of the particular model when needed and the variety of models from which to choose. Also, under the factor ``Physical aspects'', the ease of locating merchandise was excluded. In Singapore, electronic retail outlets usually take up only one floor due to the high rentals and are nowhere near the multistory, mega-outlets that can be found in the USA. Hence, the location of merchandise is not a discriminating factor here. Similarly, items relating to clean, attractive and convenient public areas, neat appearing employees, accepting cheques without hassle, having operating hours that are convenient to most customers are more the rule here rather the exception. Interestingly, the last factor, ``Parking'', showed almost no correlation (0.01) with overall service quality rating although it accounted for 3.4 per cent of the variance in the modified scale. This implied that the availability of parking is a required feature in the minds of local consumers and is not a discriminating variable. Hence retailers with no parking facility in the vicinity would be at a disadvantage.

Limitations and suggestions

One key limitation of this study is the testing of two scales, developed and validated in the USA. While most of the items were generic to any retail institution, some may not be fully relevant for Singapore retailers. Other Singapore-specific items could also have

Service quality in retailing

Subhash C. Mehta, Ashok K. Lalwani and Soon Li Han

International Journal of Retail & Distribution Management Volume 28 . Number 2 . 2000 . 6272

inadvertently been omitted. This was confirmed by the factor analysis, which reduced the 33-item combined scale into a 21item one. The model fit of the data collected may not be as good if the same study were conducted in the USA where the two scales were originally developed. Another key limitation of the modified scale is the methodology adopted for developing it. Usually, scale development requires rigorous data collection including phenomenological interviews, depth interviews and interviewing the customers in the store to enable the maximum number of items to come under preview. Although to start with, the modified scale included all the 33 items which were the result of extensive qualitative research and empirical validation by researchers, the scale might have missed items, which are peculiar to Singapore and the electronic goods industry. It is recommended that future researchers develop a scale for measuring the service quality of electronics goods retailers in accordance with the scale development guidelines and procedures. By focusing on retail institutions from two extreme retail environments, the findings from this study may therefore not be generalized to other retailers that lie in the middle of the ``goods-services'' continuum, e.g. department stores. In addition, expectations in the assessment of service quality were not included in this study due to possible questionnaire complexity. The main objective of this study, which was to compare two instruments across two retail contexts, made the length of the questionnaire and the number of aspects covered fairly overwhelming.

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