Customer service in retailing: the case of downtown department stores in Singapore

Abstract

Eating and shopping are Singaporeans' favourite past-times. However, in recent years, the retail sector performed poorly. Department stores, the dinosaurs of Singapore's retail scene because of their large size and long establishment, faced difficulty in adapting promptly to the environmental changes. Unless these retailers know how to capitalise on their large size with the right merchandise and service staff, being big can be a barrier. The focus of this thesis is twofold: Firstly, it assesses the potential of excellent customer service as a viable strategy to help these department stores in a fiercely competitive retail market. Another area of interest is to track the current service level of department stores for areas of improvement. Secondly, it is an academic exercise to contribute to the understanding of retailing by examining the impact of customer service in improving sales in a non-western context - Singapore. The earlier chapters outline the forces of change in the retail climate that promote strategic planning in retailing. Literature survey shows that various retail strategies are used to address the different business trading conditions over the years. With the intensification of competition and a saturated market in the 1990s, the effectiveness of using customer service as a functional strategy in increasing sales is examined. Because the scope of study is on downtown department stores, a study on the characteristics and peculiarities of these stores is conducted to better understand the working mechanism of this retail concept. Concepts on customer service are examined to assess how department stores can use this service tool. The later chapters deal with the selection and modification of an appropriate service measurement tool to track the current service level and to propose areas for improvement. Adopting the Servqual model of service quality, an external survey is conducted to examine the shoppers' views on the importance of customer service in their shopping decision and to track the current service performance of downtown department stores in Singapore. Internal audits comprising of a managements' and a front-line staffs' surveys are conducted to seek areas for service improvement. The findings are analysed using the SPSS software and recommendations are proposed. The external survey reveals that 12% of the respondents rated service as their top consideration in affecting their decision on where to shop. Besides, a department store may stand to lose as much as 39% of its customers in the event of poor services rendered. The external survey indicates a service gap for the Singapore's department stores industry. Shoppers rank responsiveness as the most important attribute. However, responsiveness receives the poorest ratings for its performance. Tangibles is ranked as the least important but it receives satisfactory performance rating. CK Tang emerges as the best department store based on its good service performance. Further investigations on the service gap show that managements need to improve on their efforts to solicit feedback from their shoppers in order to respond to their changing lifestyles and preferences. Front-line staffs' survey reveals that a fairer compensation package, more role congruence, more empowerment and a better reward system can minimise Gap 3. Limitations for the surveys are also highlighted and areas for future research work are proposed. Service has become a key factor in this fiercely competitive environment cluttered with many similar retail offerings. These surveys confirm that there is much room for improvement in this service element. This sentiment towards offering excellent service is also shared by Mr. Kazuhide Kimoto, Managing Director of Takashimaya Singapore Limited who feels that good location, varied and quality merchandise and excellent service will ensure a good future for department stores (SRA The Retailer, 1996,7). With the sophistication of today's shoppers who are widely travelled and the easy accessibility of goods through technological advancement, the service element win become increasingly important as they learn more about the western world of retailing. The author feels that giving excellent external customer service is only possible when there is excellent internal customer service. Internal customer service refers to the well-being and positive group dynamics of staff who can work together to help the shoppers. Service stems from service providers. If staff are truly happy, they will be motivated and committed to share the same joy with their external shoppers. Therefore, treating internal staff well promotes external customer service excellence. Given that one happy customer would share his/her experience with five more people whereas one unhappy customer would share with nine others in a TARP study, it pays to solve an external service problem before it surfaces. Therefore, a proactive approach to giving service may mean delighting one's employees first. A service culture which promotes excellent service delivery with a system of service awards and a constant service tracking system are critical for any retailers who want to give good service. Currently, most department stores professed to provide customer service. In reality, the customer service concept in Singapore is not clearly understood and hence, its potential undermined. Most department stores perceive customer service as a list of services to be offered to their shoppers Finally, this thesis contributes to the academic understanding of retailing in Singapore by documenting the retail scene in Singapore from the 1960s to 1990s with emphasis on the downtown department stores and testing the applicability of Servqual model as a tool to track service level in a non-westem region i.e. Singapore. The findings from the 3 surveys conducted on downtown department stores revealed the local shoppers' behavioural preferences, sentiments and the most important service dimension in retail using the Servqual Model, a first report in retail customer service.