An empirical investigation into the extent of customer satisfaction and customer loyalty at big retail stores in King William ’ s Town , South Africa

The study investigates customer satisfaction and customer loyalty in four big retail stores in King William’s Town, South Africa. Customer satisfaction and loyalty are factors impacting on the performance of firms. Data was collected through self administered questionnaires. Mall intercept was used as the survey method. Data analysis included descriptive statistics, T-test, ANOVA and chi square goodness of fit test. The results indicate that holistically, customers are satisfied and loyal to the retail stores. However, the study identified one significant area of customer dissatisfaction which is the queuing time. In addition, the study identified that courtesy is an area of concern for customer satisfaction. Recommendations to improve customer satisfaction are suggested.


INTRODUCTION
In this new global environment where competition is intense and trade has been liberalised, business enterprises can no longer focus on profit maximisation only but also on customer satisfaction.Customer satisfaction has become the major success factor for business enterprises to gain increased market share and to successfully compete in the 'new economy'.The 'new economy' refers to the changes in business or market activities that have occurred in the 21 st century.The major distinction in the new global economy is the business enterprise's ability to change from the traditional product oriented concept where business enterprises expect customers to purchase what they produce to being more customer oriented, where the focus is on customer need satisfaction (Cant et al., 2003).
According to Kotler and Armstrong (2006), for business enterprises to deliver customer need satisfying goods and services profitably, they need to meet or exceed the customers' expectations of value.Where a business enterprise's value proposition meets or exceeds consumer *Corresponding author.E-mail: OFatoki@ufh.ac.za.expectations, customer satisfaction is high and this impacts positively on the performance of the business.Orth and Green (2009) add that higher customer satisfaction relates to higher customer loyalty.
The purpose of this study is to investigate if customers are satisfied with the services they receive at big retail stores in King William's Town (Eastern Cape Province, South Africa).The study will investigate if there is a significant difference between the expectation of satisfaction and the perception of satisfaction.In addition, the study will investigate the extent of customer loyalty.Customer satisfaction is a major step towards customer relationship management and is defined as a consumer's feeling of pleasure or disappointment resulting from comparing a good or service's perceived performance to the consumer's own expectations (Kotler and Keller, 2006).Customer loyalty, on the other hand, is the relationship the customer maintains with the business enterprise after the first transaction (Hallowell, 1996).A satisfied customer is likely to be a loyal customer who make repeat purchases and provide positive word of mouth publicity (Kotler and Armstrong, 2006).
This research was fuelled by the realisation that customer satisfaction and customer loyalty are essential for operating a profitable business in this global era.All business enterprises strive to deliver superior value to customers in order to be competitive in the market place.The study focused on the following objectives: 1.To investigate if customers are satisfied with the services they receive at big retail stores.2. To investigate if customers are loyal to the big retail stores.

Customer satisfaction
Central to the customer satisfaction theory, is the expectations or predictions made by customers as compared to the actual delivered value (Parasuraman, 1993).This implies that a measurement is required for customer satisfaction.The SERVQUAL model introduced by Parasuraman et al. (1985Parasuraman et al. ( , 1988) ) provides one of the most important basis in the theory of customer satisfaction.The SERVQUAL model provides the basis for the measurement of customer satisfaction with a product or service by assessing and comparing both perceptions and expectations across a range of different service characteristics.As observed by Terblanche (2002), superior service quality leads to customer satisfaction.Therefore, service quality, as measured by the SERVQUAL model cannot be separated from customer satisfaction analysis.
Further development of the customer satisfaction theory was conducted by Oliver (1977Oliver ( , 1980)), who introduced the expectancy disconfirmation theory (Nevo, 2005).The disconfirmation theory suggests that customer satisfaction with a product or service is related to the size of the disconfirmation experience; where disconfirmation is related to the customer's initial expectations as compared to the actual performance delivered (Thijs and Staes, 2008: 15).The "gaps" between the actual delivered value and customer expectations, consequently, influence the level of satisfaction or dissatisfaction of the customer.Therefore, where performance matches or exceeds customer expectations there will be positive disconfirmation and customer satisfaction.However, negative disconfirmation will occur where performance is below customer expectations and there is customer dissatisfaction (Wirtz and Bateson, 1995).The gap between customer evaluation or perceptions of performance and customer satisfaction provide a solid measure of service quality and determines the level of performance (Thijs and Staes, 2008: 15).
Another relevant theory in customer satisfaction is the queuing theory.The queuing theory was introduced by Erlang in the early 1900s (Cooper, 2000).The queuing theory utilises mathematical models and performance measures to assess and improve the flow of customers through a queuing system (Nosek and Wilson, 2001).The importance of the queuing theory as a tool in customer satisfaction theory can be viewed through Adan and Ressing (2002) observation that "customers do not like to wait".Therefore, the queuing theory is essential in improving the customer's perception about waiting in line and the associated level of satisfaction.Similar to the queuing theory, the crowding theory provides substantial insights to customer satisfaction.Perceived crowding is a result of physical, social, and personal factors that sensitize the individual to actual or potential problems arising from limited space (Machleit et al., 2000).When a customer perceives the environment as dense, he or she will perceive the environment as confining and constraining, which leads to the state of crowding.This can lead to customer dissatisfaction (Eroglu et al., 2005).
Customer satisfaction plays a key role in a successful business operation and strategy formulation by a customer-centric business enterprise (Gomez et al., 2004).Customer satisfaction is the mediator in the relationship between relational benefits, customer loyalty and word-of-mouth publicity (Molina et al., 2007).Retail stores operate in a competitive environment facing changes in customer needs, demographics, technology improvement and retail ownership through mergers and acquisitions.In such an environment, the understanding and prediction of customer satisfaction is fast becoming a competitive advantage factor (Theoridis and Chatzipanagiotou, 2008).
The efficient satisfaction of customer needs is the ultimate test of a business enterprise's success and focus of business activity should be to serve customer needs and wants more efficiently than competitors (Jain, 2000).The long term survival of a business enterprise depends not only on the sales volume and the variety of business enterprise's products but also on the former's ability to satisfy the needs of customers efficiently.A business enterprise's ability to deliver superior value is thus the starting point in efficient customer need satisfaction (Jain, 2000).A satisfied customer is the only true asset of the business enterprise and represents the sole justification of the business enterprise's existence (Cant et al., 2006).
The notion of service quality is very important in customer satisfaction (Gee et al., 2008).There is a direct positive link between service quality and customer behavioural intentions and strong customer service leads to customer satisfaction, which will in turn, lead to loyal behaviour.The perceived value of products relative to price, staff friendliness and willingness to assist as well as the quality and freshness of products, store appearance, and the degree of customer service are some of the factors affecting customer satisfaction (Gomez et al., 2004).According to Clottey et al. (2008), the benefits of customer satisfaction to a business include lower acquisition costs of attracting new customers.Increased customer satisfaction may also reduce the overall costs of a business while increasing the base profit of the business.However, the most important benefit of customer satisfaction is customer loyalty which leads to positive word of mouth publicity and referrals by satisfied customers.

Customer loyalty
The fundamental starting point of the theory of customer loyalty can be traced to the behavioural theories which analysed customer loyalty through brand loyalty (Kuusik, 2007).Behavioural theorists such as Cunningham (1956( ), Farley (1964) ) and Tucker (1964) as cited in Boora and Singh (2011), identified customer loyalty through repeat purchase behaviour.The attitudinal theory introduced by Day (1969) suggests that a customer's willingness to recommend a service provider is often presumed to be a surrogate indicator of customer loyalty.Day's (1969) theory argues that for true loyalty to be in effect the customer must have a favourable attitude towards a product and purchase it repeatedly.Consequently, there is more to brand loyalty than just consistent buying of same brand.The attitudinal approach infers customer loyalty from psychological involvement, favouritism, and a sense of goodwill towards particular products or service (Boora and Singh, 2011).The attitude component thus distinguishes between true loyalty and spurious loyalty (Wallace et al., 2004).
The leaky bucket theory, introduced by Ehrenberg (1988Ehrenberg ( , 1990) is another theory that has its roots in customer loyalty.The leaky bucket theory analyses customer loyalty through a related concept of customer retention.According to Raines (2005) the leaky bucket theory refers to the rate at which businesses are losing customers each year and an enterprise with a low customer retention rate will lose customers from a very leaky bucket.Thus, the leaky bucket theory suggests that when an enterprise expects most of its customers to be highly loyal, marketing strategies seem to be designed to replace "disloyal" customers who leak away with new customers to keep the sales level constant.
According to Hollensen (2003), the success of a business is based on loyal customers who have a bond with the business enterprise and this bond links the customer to the enterprise to such an extent that the customer develops a preference for the business enterprise.When true loyalty exists, customers will regularly conduct repeat purchase transactions with the business enterprise for the sole reason that customers have a strong preference for that business enterprise.Customer loyalty is not merely based on quality, price, physical facilities or satisfaction but is based more on customer feelings and perceptions about the business enterprise (Krell, 2005).The marketing maxim on customer loyalty is that it costs five times more to acquire a new customer than to retain an existing one (Gee et al., 2008).It makes Machirori and Fatoki 7667 commercial sense to develop relation-ships with the business enterprise's current customers before acquiring new customers.Keeping existing customers satisfied is much more cost effective than acquiring new customers (Parker et al., 2009).Customer loyalty results from committed customers who display repeat purchase tendencies or behaviour towards the business enterprise will be committed to purchasing the goods offered by that particular enterprise (Brink and Berndt, 2004).

RESEARCH METHODOLOGY
The study used the quantitative research methodology approach.
The target population was identified as customers that purchase goods from four big retail stores in King William's Town.The target population was difficult to ascertain.Mall intercept survey, where shoppers at a mall are intercepted and given self-administered questionnaires to complete, was used to collect data.Convenience sampling was used in order to ensure a high response rate given the nature of the study.The respondents were selected randomly as they exited the retail stores.The questionnaire included closeended questions and Likert-scale questions.Close ended questions were limited to demographic factors.
To measure customer satisfaction, a modified version of the SERVQUAL model introduced by Parasuraman et al. (1985) was used.According to the SERVQUAL model, an effective measure of customer satisfaction requires measuring the differences between customer expectations and the customer perceptions.Seven dimensions of customer satisfaction were focused upon.These include tangibility, responsiveness, courtesy, customer handling, competence, accessibility and security.These dimensions were presented both in terms of expectations and perceptions.T-tests were performed on the mean scores of expectations and perception items and dimensions to identify the existence of significant differences in the mean scores.
To measure customer loyalty, the Harvard Business Review Apostle model was used.Customers were asked to rate their overall satisfaction on a scale of 1 to 10 and their likelihood to continue to do business with the retail stores on a scale of "definitely will" to "definitely will not" (on a scale of 1 to 10).According to the Apostle model, loyalists report both high satisfaction and high loyalty.Hostages report high loyalty despite low satisfaction.Mercenaries report high satisfaction, but low loyalty.Defectors report both low satisfaction and low loyalty.Furthermore, a five point Likert scale detailing whether the customer would recommend the retail stores to family and friends and whether the customer would switch to competitors was also used to effectively measure customer loyalty.
Data analysis included descriptive statistics, chi square goodness of fit, T-test and ANOVA.To ensure validity, the study used constructs such as the SERVQUAL model and the Apostle model that have been empirically validated.The research instrument was also pre-tested in a pilot study.The Cronbach's alpha was used as the measure of reliability.

RESULTS AND DISCUSSIONS
Three hundred and ten questionnaires were completed by the respondents as they exited the retail stores.The gender composition consisted of 53% males and 47% females.Respondents below the age of 21 years constituted 16% while 46% represented respondents between the ages of 21 and 30 years.Respondents between the ages of 31 and 40 years represented 26% of the respondents while respondents between the ages of 41 and 50 years constituted 9% of the respondents.The remaining 3% consisted of respondents over the age of 50 years.

Customer satisfaction
To determine the existence of customer satisfaction, the difference between expectation and perception must not be significant.Twenty five items were grouped under seven dimensions.The scale means for customer expectations and actual perceived were compared to determine the level to which customers were satisfied.
The seven dimensions of customer expectations (Table 1), tangibility, reliability, courtesy, competence, accessibility, security and customer handling had means of 4. 77, 4.76, 4.74, 4.28, 4.49, 4.92 and 4.41 respectively.The overall scale mean was 4.58.This indicates that customer expectations are very high.The significance was tested through the non-parametric chisquare goodness of fit test.The chi-square goodness of fit is the sum of the difference between the observed outcome and the expected outcome.Using five point Likert scale, the expected outcome is 20% for each scale.The observed outcomes however significantly reflect strongly agree as depicted by the p-values The seven dimensions of customer perceptions (Table 2), tangibility, reliability, courtesy, competence, accessibility, security and customer handling had scale means of 4. 16, 4.23, 3.26, 3.63, 4.06, 4.77 and 3.57 respectively.The overall scale mean for customer perceptions was 3.96.This indicates that customers were moderately satisfied.However, in examining the individual items of the seven dimensions, the results indicate that queuing time with a mean score of 2.94 has the lowest mean of all the items.The results indicate that customers are not satisfied with the queuing time.In addition, the dimension of courtesy has the lowest mean of all the dimensions which indicates an area of concern.
Table 3 compared the mean values and p-values for customer expectations and customer perceptions to measure if there was a significant gap between the individual items and the grouped dimensions of expectations and perceptions.Holistically, customers were satisfied with the retail stores.Dimensions such as tangibility, reliability, customer handling, accessibility and security indicated that there was no real significant gaps between expectations and perceptions.However, when viewed individually, queuing time shows a significant difference between customer expectation and customer perception.In addition, courtesy though insignificant is an area of concern with relatively low p value compared to other dimensions.Holistically, there is no significant difference between customer expectation and perception.This indicates a high level of customer satisfaction.

Customer loyalty
The results in Table 4 indicate that customers are loyal to the big stores.The mean score for recommendation to friends is 4.75 and repeat purchase is 4.90.The mean score for switching to another retailer is 1.01The pvalues of the chi square goodness of fit test tested at 5% significance level were also significant confirming the fact that customers are loyal to these retail outlets (Table 5).
Furthermore, based on the Harvard Business Review Model, the scale mean is 8.6, indicating that customers were satisfied with the retail outlets and would continue doing business with the retail outlets.Customer loyalty thus exists at the four big retail stores.These customers are termed "loyalists".Loyalists, in line with literature, can also be termed apostles in the "Zone of customer loyalty model" (Table 6).
The t-test was used to determine whether there are significant differences in the mean scores of gender in relation to customer satisfaction and customer loyalty.The results are insignificant in terms of customer satisfaction and customer loyalty.This indicates that there is no significant difference in the mean scores of males and females with respect to customer satisfaction and customer loyalty (Table 7).
The ANOVA test was used to determine the differences in the mean scores of the age groups in relation to customer satisfaction and customer loyalty.The results indicate that there are no significant differences in the mean scores of the different age groups in relation to customer satisfaction and customer loyalty.

RECOMMENDATIONS
The results suggest that holistically, customer satisfaction and customer loyalty exist at the retail stores.However, queuing time is the one significant area of customer dissatisfaction.In addition, the courtesy dimension has the lowest scale mean and depicts an area of concern.Therefore, the recommendations of this study focus on improving queuing time and staff courtesy Communication with customers should be improved at peak hours in the retail stores.Video communication can be used to inform customers that due to the high volume of shoppers, there can be delays in processing at checkout points.The introduction of home delivery system and online purchase may also improve customer satisfaction and customer loyalty.Home delivery system enables customers to make orders and have delivery to their doorsteps within a specified geographical area for a small additional fee.Removing the negativities of queuing

AREAS FOR FURTHER STUDY
The research can be extended to a wide geographical area in order to increase the representativeness of the sample to the population.A larger sample is required in order to improve the validity of the results obtained.Further research can investigate the drivers of customer loyalty in retail stores.

Table 1 .
Customer expectations on satisfaction ratings -descriptive statistics and chi-square goodness of fitness test.

Table 2 .
Customer perceptions on satisfaction ratings -descriptive statistics and Chi-square goodness of fitness test.

Table 3 .
Results of t-test to measure significant differences in the mean scores of expectations and perceptions.

Table 4 .
Customer loyalty -descriptive statistics and chi-square of fitness of goodness test.

Table 5 .
Customer loyalty based on the Harvard Business Review model -Descriptive statistics.

Table 6 .
T-test results on gender, customer satisfaction and customer loyalty.

Table 7 .
ANOVA results on age, customer satisfaction and customer loyalty.travelling may lead to satisfaction and improve customer loyalty and retention.Employing more seasonal employees to help deal with seasonal bursts of demand would improve customer satisfaction.Furthermore, investing in more till points will reduce queuing time and lead to customer satisfaction and loyalty.Investment in new technology, especially contactless payment systems can help reduce customer queuing time.Training of staff on customer relationship can help improve staff courtesy and customer satisfaction.In addition, courtesy should be built into performance measures for staff.Courteous staff members should be rewarded and discourteous staff members punished.Senior management must demonstrate by example, the organisation's commitment to courtesy for junior staff members to follow.This will ensure that the organisation's cultural climate reflects a commitment to courtesy.Courtesy must be practiced by all the staff in the organisation.Screening techniques must be used to hire employees with good skills in courtesy. and