Unit 3:

The Management of Service and Quality in Retailing

Service Components in Retailing
Retailing combines both tangible elements (products, physical
facilities) and intangible elements (service experience, staff
behavior, and ambience).
A retail store’s service offering is therefore a blend of goods
and services.

Tangible–Intangible Continuum
Products can be categorized along a continuum that ranges
from pure services to pure goods, with most products falling
somewhere in between. While pure services, such as
consultancy entirely intangible, pure goods are tangible items
like cans of beans or bottles of lemonade. However, very few
products are completely intangible or entirely tangible. For
instance, services like retailing are more intangible compared to
manufactured goods. Some products have a higher proportion
of service content than others, and if they are positioned to the
left of the center of the continuum, they can be referred to as
service products. Retailing, despite being associated with the
sale of goods, is placed towards the service end of this
continuum. This is primarily because retail transactions involve
interpersonal skills and interactions with service providers,
making the added service element a fundamental part of the
overall transaction. Services, such as retailing, can be
characterized as having the following attributes.
Cyclical Theory
 Intangibility
 Perishability
 Inseparability

Intangibility:
This means that some products cannot be easily stored,
evaluated or demonstrated in advance of their purchase. For
example, a travel agent cannot allow for the testing or sampling
of the tourism product; a bank cannot easily demonstrate its
service.
On the other hand, a car or a computer game can be tested
prior to purchase and clothing may be tried on but this occurs
in a retail environment and not in the home.
Perishability:
This means the unlike goods; the service product cannot be
stored for sale on a future occasion. For example, if customers
do not enter the store when it is fully staffed, sales may not
occur, for which the revenue can never be recouped. This
perishes ability factor leads to the high risk mature of the retail
industry. Marketers in the retail industry have to devise
complex pricing and promotion policies in an attempt to create
demand in 'off season' periods and create greater
synchronization of staffing levels and supply with demand
patterns. Weak demand is not the only problem; the industry is
also characterized by seasonal demand, such as during the
Christmas period, when shoppers are more selective where
they shop due to overcrowding and related problems that
occur.
Inseparability:
This means retailing delivers a service which is utilized and
produced simultaneously for each customer. Because there is
less opportunity to pre-check each sales activity, it may vary in
the standard of its service delivery. Variance occurs due to the
inseparable nature of the retailing product's delivery where the
customer is part of the sales process. The simultaneous process
of production and consumption may lead to situations where it
is difficult to assure the overall satisfaction of consumers. For
example, peak loads of demand cannot always be forecast and
may create dissatisfaction and secondary problems.
Service Quality Management in Retailing
Service quality management in retailing refers to the systematic
process of planning, delivering, controlling, and improving the
quality of services offered by a retail business to meet or
exceed customer expectations.
It is how retailers ensure customers get consistent, satisfactory,
and high-quality service every time they visit the store.
Key Features of Service Quality Management in Retailing
1. Understanding Customer Expectations
Retailers study what customers want in terms of service —
speed, friendliness, product availability, cleanliness, accuracy,
etc.
2. Setting Service Standards
 Clear guidelines are created for:
 Greeting customers
 Checkout process
 Handling complaints
 Staff behavior
 Store cleanliness
3. Training Employees
Employees are trained to interact politely, provide product
information, solve customer problems, and deliver a consistent
experience.
4. Monitoring Service Performance
Retailers continuously evaluate service quality through:
 Customer feedback
 Mystery shopping
 Audits
 Technology (POS data, CCTV)
5. Improving and Correcting Issues
When service failures occur, retailers use service recovery
techniques like apology, refund, replacement, or compensation.
Model of Perceived Serviced Quality
Gronroos (1982) developed a model, which is a form of gap
analysis, to explain what he calls the 'missing service quality
concept'. The model (see Figure 3.2) focuses mainly on the
construct of an image which represents the point at which a
gap may occur between expected service and perceived
service.
Grönroos proposed that customers evaluate service quality on
two major dimensions:
Technical Quality (Outcome Quality)
“What the customer receives.”
Examples:
 Accuracy of billing
 Correct product delivery
 Problem resolution
Functional Quality (Process Quality)
“How the service is delivered.”
Examples:
 Staff friendliness
 Waiting time
 Communication quality
 Store environment
Parasuraman, Zeithaml and Berry Model
The gap model of service quality was first introduced by
Parasuraman [Link]. in 1985. The model provides an integrated
framework for managing service quality and customer-driven
service innovation.
GAP MODEL OF SERVICE QUALITY
GAP 1: Gap between Management Perception and Customer
Expectation
This gap arises when the management or service provider does
not correctly analyze what the customer wants or needs. It also
arises due to insufficient communication between contact
employees and managers. There is a lack of market
segmentation. This Gap occurs due to insufficient market
research. For Instance- A café owner may think that the
consumer wants a better ambience in the café, but the
consumer is more concerned about the coffee and food they
serve.

GAP 2: Gap between Service Quality Specification and

Management Perception
This gap arises when the management or service provider
might correctly comprehend what the customer requires, but
may not set a performance standard. It can be due to poor
service design, Inappropriate Physical evidence, and
Unsystematic new service Development process.
An example would be restaurant Managers who may tell the
waiters to provide the order of the consumer quick, but do not
specify “How Quick”.
GAP 3: Gap between Service Quality Specification and Service
Delivery
This gap may arise in situations existing to the service
personnel. It may occur due to improper training, incapability
or unwillingness to meet the set service standards. It can be
due to inappropriate evaluation and compensation systems.
Ineffective Recruitment is the main cause of this gap.
The failure to match the supply and demand can create this
gap. There is also a lack of empowerment, Perceived Control,
and framework.
An example would be a restaurant having very specific
standards of the food communicated but the restaurant staff
may not be given proper instruction as to how to follow these
standards.
GAP 4: Gap between External Communication and Service
Delivery
Consumer Expectations are highly influenced by the statements
made by the company representatives and advertisements.
This gap arises when these assumed expectations are not
fulfilled at the time of Delivery of Service.
An example would be a restaurant that has printed on its menu
that it serves 100% Vegetarian Food but in reality, it serves
Non-Vegetarian Food as well. In this situation, consumer
expectations are not met.
GAP 5: Gap between Experienced Service and Expected
Service
This gap arises when the consumer misunderstands the service
quality. For Instance, A Restaurant Manager may keep visiting
their consumer to ensure quality check and consumer
satisfaction, but the consumer may interpret this as an
indication that something is fishy or there is something wrong
in the service provided by the restaurant staff.
Implementation of Service Management in Retailing
Implementation of service management are as follows:
1. Leadership and Commitment:
Leadership and commitment by senior management, with clear
goals and a policy on quality being set and communicated to
others. There is also the need to release the appropriate
resources to create changes and achieve the required results.
Sam Walton, founder of Wal-Mart, adopted the following
philosophy to direct his retail staff and gain pre-eminence in
the retail marketplace:
 Realize that customer service is key;
 Design for comfort and convenience;
 Provide one-stop shopping;
 Customize;
 Invert the organizational chart so that the customer is on
top and company management is on the bottom;
 Provide servant leadership - Wal-Mart's managers are
servants to the needs of their employees and customers;
 Recognize that the customer is always right.
2. Customer Focus:
The focus of all changes and objectives should be defined by
the customer. All the definitions of quality delivery and
standards have to be delineated in all of the dimensions of the
service delivery with reference to customers' needs. These
should be incorporated into the training policy and induction
programs.
3. Process and Systems Approach:
The orientation of the organization needs to adopt a process
and systems approach to match or exceed customer
expectations. This relies on a workable quality audit system
which applies measurement and inspection to ensure defects
are corrected and the system delivers optimum quality results.
4. Human Resource Management:
Human resource management is required to motivate, reward,
train and educate staff to understand and deliver the concepts
of quality. Teamwork values with champions of quality product
delivery are a prerequisite for competitive advantage.
5. Continuous Improvement:
Assessment needs to be made of the added value and benefit
of any change rather than there being an emphasis on costs
and profit implications. That is, the long-term benefits of any
change need to be the focus of decision-making.
6. Quality Audits and Control:
A need for quality audits and control to ensure the service
meets or exceeds customer expectations must be recognized.
Growing Emphasis on Quality Control
Quality has emerged as a major competitive component of
company's strategy. There are four main reasons which may
account for the increasing relevance of quality management:
1. Companies need to find new ways of creating differential
advantage by providing better service levels than their
competitors. Retail competition has increased because services
and goods are available from a wide range of channels and
manufactures are creating technically satisfactory goods which
require little after-sales service.
2. The increased level of consumerism and the greater media
attention on quality have meant that companies have to be
more responsive to quality issues. Consumers are far more
aware of their rights and are less likely to suffer quietly from
the results of poor quality.
3. There has been a growing sophistication of consumer
markets, with the non-price factors of image, retail offer
positioning and service delivery processes becoming more
important.
4. Technology is one of the new applications to quality
enhancement. It can aid service by providing higher levels of
convenience; for example, automatic vending or ticketing
machines, bar code checkout systems to improve accuracy and
speed of transactions.
Characteristics of Retail Quality
Retail quality reference refers to the set of standards and
guidelines that retailers use to define, measure, and manage
the quality of their products and services. There are two sets of
quality characteristics which are important to retailer. These
are the characteristics related to either merchandise or service
categories.
Merchandise (Products)
Merchandise categories include the following elements:
 Performance based upon their inherent operating
characteristics, such as the sound and clarity of a hi-fi
system;
 Features which add to the basic function of the product;
 Reliability of the product not to break down in normal use;
 Conformance to standards of safety or operating
performance needs;
 Durability based upon the length of time a product will
last;
 Serviceability-relating to the after-sales service and ability
to be repaired;
 Aesthetics of the look, feel, design, sound and smell of the
product;
 Image of the brand association, reputation and personality
of the product.
Services
Services categories include the following elements.
1. Tangibles: what can be experienced from personnel,
company literature and signs, and the physical environment of
the retail encounters? These include aspects of the store or
material the customer can see, touch, use, etc., such as:
 Physical facilities;
 Appearance of personnel;
 Tools or equipment used to provide the service;
 Physical representation of the service, e.g., store credit
card, fascia design;
 Other customers in the service facility.

2. Reliability: Reliability of staff to deliver the expected or

promised service dependably and accurately. This involves
consistency of performance and dependability. It means the
company should perform the service right the first time, and
honor its promise. This factor also demands that the company
is able to trust employees with the responsibility to deliver
service which, consistently and accurately, meets policy
standards, including.
 Accuracy in charging;
 Keeping the correct records;
  Performing the service at the designated time-for
example, accurate to opening hour promise.
3. Responsiveness: Responsiveness of staff to help customers
and provide timely service. This concerns the willingness or
readiness of employees to provide service to help customers
and give timely service, such as:
 Mailing a transaction slip immediately;
 Calling a customer back quickly after a query;
 Giving prompt service (e. g, arranging an appointment).

4. Competence: an assurance of employees' ability to convey

trust and confidence through company and product knowledge,
as well as by the courtesy of their interpersonal skills:
 Knowledge and skill of the contact personnel;
 Listening to customer needs and explaining the desired
product or service;
 Reinforcing the company's reputation;
 Personal characteristics of the contact personnel;
 Ability to respect confidentiality, and display financial and
personal security.
5. Empathy: having an understanding of what customers as
individual humans require in relation to psychological as well as
physical needs. This concerns individualized attention to
customer-a caring, individual concern and attention for others
and their emotions:
 Recognizing regular customers;
 Learning the customer specific requirements and
anticipating their needs;
 Being attentive and providing individualized (customized)
service;
 Ensuring that if there is a problem it is acknowledged,
responsibility is taken, and some action is carried out to
ensure the service fault is compensated for.

Quality Auditing System

There are various methods that may be used to measure and
monitor quality. Summary of some methods of internal
inspection and auditing.
Buttle (1994) indicated that following research of loyal Jaeger
customers a list of 180 service variables was reduced to 26 key
attributes which shoppers could asses a store's service
performance. It is important to note that the final list was
based upon customer preferences and did not correlate with
what Jaeger's own employees had identified as being
important. The key items identified by customers were:
 External appearance of the branch;
 Merchandise pricing in window display;
 Greeting upon entry;
 Staff approachability;
 Staff availability to help;
 Manager availability
 Whether the manager is recognizable;
 The number of customers served simultaneously by one
staff member;
 Efficiency/promptness of enquiry handling
 Branch stock levels;
 Speed of stock location;
 Staff awareness of advertised lines;
 Helpfulness of staff advice;
 Honesty of staff advice;
 Standard of fitting rooms;
 Availability of advertised stock;
 Color/size availability;
 Selection within size;
 Availability of alterations advice;
 Availability of garment reservation;
 Eye-catching quality of window displays;
 Eye-catching quality of interior displays;
 Speed of till transaction;
 Comparability of service in other Jaeger branches.
Service Recovery in Retail context
Given the estimated cost of finding a new customer is five times
that of retaining an existing one, there is growing emphasis on
customer retention and relationship marketing. Long-term
revenue can be enhanced by service recovery strategies. Good
service recovery procedures allow a customer to refocus on the
satisfactions received from the service delivery process rather
than to question why corrective action was not taken. A
problem tests the system and if a customer complaint is dealt
with appropriately the customer is likely to become more loyal.
Individual service recovery strategies are discussed below.
1. Watching for Sign Language: Consideration needs to be
given to those customers who are reticent or mute when it
comes to complaints to be able to break their silence.
Companies need the opportunity to prove their commitment to
the customer through service quality measures. However, the
silent customer who is not satisfied will escape company notice
but may tell many of their acquaintances of the problem. Some
companies have free phone numbers for complainants to make
a call to complain, or adopt employee training to enable staff to
test for weak signals of a customer's dissatisfaction. Many
companies empower staff to provide immediate remedial
action if they suspect poor service
2. Preplanning: There is a need to analyze the service delivery
process so as to anticipate those aspects of service which may
exceed the tolerance level of customers. Times of peak demand
or low levels of staffing may affect the judgment of the
customer in relation to the overall level of service quality
delivery.
3. Training: As service is an interpersonal performance activity,
the provision of communication and customer relation skills
training will enhance the ability of staff to deal with the most
difficult of situations. Perhaps more important, training will
allow staff to feel confident in the service encounter
transaction and allow them to deal professionally with all
situations. Training has to be allied to labor retention
strategies; overall service recovery may suffer if there is too
high a proportion of untrained staff or seasonal employees.