CHAPTER 1 INTRODUCTION 1.1 Background The
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CHAPTER 1 INTRODUCTION 1.1 Background The author conducted a research in Jakarta and Surroundings, Indonesia with a title of “Consumer Decision Making Style: Inter-Relationships among Store Image, Satisfaction, and Loyalty of Hypermarkets in Jakarta and Surroundings: Carrefour, Hypermart, and Giant”. This study was adapted from a research done by Dong-Mo Koo in year 2003 to investigate the relationship among store image, store satisfaction and store loyalty on Korean discounted retail stores. By conducting the research, the author intended to find out the relationship among store image, store satisfaction and loyalty in Discounted Retail Store in Jakarta and Surroundings. Additionally, the author wanted to understand the Jakarta and Surroundings consumer decision-making style in choosing which discount retail store to shop. 1.1.2 Discount Retail Store in Korea The study done by Dong-Mo Koo observed how globalization affected the discount retail store business in Korea by increasing liberalization of trade policies, stabilization of monetary, smooth supply goods, advances in transportation, communication and information technology. With those transformations, business discount retail store in Korea had dramatically changed as multinational companies entered the market with E- 1 2 Mart as the pioneer in year 1993 followed by Homeplus, Carrefour, Lotte-Mart, Wall- Mart, etc. This study indicated that, people in Korea believed that, they need to build up experiences on various stores to state their satisfaction clearly. Therefore people in Korea visited target stores 4 times a month and would spend 78 minutes per visited to shop around with 57,750 WON ($50). Most of these customers were female with age around twenties. With today’s technology, cars were the preferred transportation mode. With the new era of education, most of them were at least graduated from university education. According to the Dong-Mo Koo’s research, various store images were important impact on attitude such as store atmosphere, employee service quality, merchandising, and after sales. Other attributes such as leaving location, facilities and value did not have any impact on customer’s attitude. Overall attitude had strong influence on loyalty rather than on satisfaction. Store satisfaction appeared through store atmosphere and value. Store loyalty was more affected by location, merchandising, and after sales service. Considering the other results, attitude and satisfaction could be affected by different factors. Attitude was more related to non-physical attributes, employee service, store atmosphere, or after sales service. However satisfaction was more affected by factor of ambience and value such as location, after sales service, and merchandising. 3 1.1.3 Indonesian’s Market Referring to the Discounted Retail Store in Korea that consisted of E-Mart, Homeplus, Carrefour, Lotte-Mart, Wall-Mart, Discount Retail Store in Indonesia is categorized as “Hypermarkets”. Almost all big cities in Indonesia have hypermarkets such as Jakarta, Medan, Bandung, Surabaya, and other big cities in the country. Various types of hypermarkets are found in Jakarta and Surroundings and a lot of those markets are located close to each other. In 1998, Carrefour started their first step into Indonesian’s market as Hypermarket, which is in “Cempaka Putih”, East Jakarta. Jakarta and Surroundings which has Jakarta as the biggest city in Indonesia has many variety of choice of market, starting from the neighborhood gathering vegetable sellers (grocery cart), to the traditional markets, wet market, minimarts, supermarkets, and of course the hypermarkets which have been opened both from local and foreign investment from foreign grocery store chains (The growth of Indonesian retail sales grocery in 2006 reaches 14.3%, 2007). 4 Below is the retail structure in Indonesia based on AC Nielsen’s publication in 2006: Sector 2004 2005 Remarks Traditional market 1,745,589 1,787,897 Traditional and wet market Convenience Store 145 115 Circle K, 7-Eleven Supermarket 6,560 7,606 - Sub-Supermarket 956 1,141 Hero supermarket - Minimarket 5,604 6,456 Alfamart, Indomart Large Format Store 90 107 - Hypermarket 68 83 Carrefour - Warehouse Club 22 24 Makro Total Store 1,751,393 1,795,725 Drugstore Traditional Drugstore 17,699 16,663 Chain Drugstore 218 245 Total Drugstore 17,917 16,908 According to ACNielsen statistics on 2006, Indonesian shoppers go to 4 or 5 channels every month, starting from hypermarket with twice a month, supermarket three times a month, minimarket five times in a month (weekly), traditional market for daily shopping, wet market every two days (12 times) and grocery cart if it still not enough (The growth of Indonesian retail sales grocery in 2006 reaches 14.3%, 2007). Today, shoppers in Indonesia, both expatriate and local, have a good choice of pleasant, hygienic surroundings in which to shop for food. The largest national supermarket chain in Indonesia is Hero (PT HERO SUPERMARKET Tbk, 2001). In addition, Indonesia also has Kemchicks and Sogo Supermarket as high-end class cupermarket Nowadays, Jakarta and Surroundings has provide many variety of modern supermarket and hypermarket, describe before as 1,795,725 stores in 2006, Hero supermarket is one 5 of the largest national supermarket chain in Indonesia with particular store in Kemang, Pondok Indah, and Terogong. There are several hypermarkets in Jakarta and Surroundings such as Carrefour, Hypermarts, and Giant. Those market supply a selection of local and imported goods, fruits, vegetables, household and cleaning items, and daily stuff such as fresh milk and meat. Below are the year of establishment of hypermarkets and suprmarkets in Jakarta and Surroundings: Hypermarkets and Supermarkets Year Companies Remark 1971 Hero Supermarket Local Company Joint Venture between PT. Panen Lestari 1990 Sogo Supermarket Internusa and Sogo Japan 1991 Makro Indonesia Local Company 1995 Matahari Supermarket Local Company 1997 Walmart Foreign Company, closed down in 1998 Continent Acquired by Carrefour in 1999 1998 Carrefour Indonesia Foreign Company 1999 Alfa Mart 2008 70% share bought by Carrefour Franchise from Malaysia owned by Hero 1999 Giant Group 2005 Hypermart Local Company Despite all classification, these markets provide several store features such as optic scanners for quick check out services, plastic bags, and in certain stores, customers can ask the employee to take the shopping bags to the customer’s cars. Regardless of those similarities, those store also have some differences in terms of completeness of items sold and other facilities that operate within the store such as: play ground or food court. 6 1.2 Scope The research was conducted in Jakarta and Surroundings (Jakarta, depok, Tangerang, Bekasi) since the area are the major city of Indonesia and as a central of business in Indonesia. This research focused on consumer satisfaction towards the discounted retail store environment, especially three main stores that are: Carrefour, Hypermart, and Giant. This research used 300 samples from three different Hypermarkets in Jakarta and surroundings. Data were gathered from active workers to head of household that have to have some experiences in purchasing at Hypermarkets within the last six months with age were around 18-50 year old. This range is the productive people who already know what their needs are and can go shop by themselves. The respondents were asked to complete the questionnaire and were asked to visualize the particular store and answer the questionnaire with this store in mind. 7 1.3 Purpose of Study This study is an adaptation from the previous study done by Dong-Mo Koo and to combine previous research on retail images with the cognitive structure theory in order to further strengthens store image theories. This thesis will provide advantages to the company through a market research about consumer decision-making that will relate to customer satisfaction, loyalty and image such as: • Provide a study and direct inquiry about what factors does a customer choose a particular store • Provide information about the company customer’s perception about the store concept and environment. • Provide recommendations to the hypermarkets to enhance their strategies to maintain their customers. • Provide more information for the Hypermarkets manager to be more customers oriented through a research in customer satisfaction of retail store environment. 8 1.4 Structures This thesis is divided into five chapters, which consist of the following: • Chapter one: Introduction This chapter provides the background information related to the study, which is the description of Discounted Retail store in the Korea and also Indonesian market, the scope of the thesis, which are active workers and householders, the aims and the benefit that can be derived from this thesis. • Chapter two: Theoretical Foundation This chapter discusses on the theoretical foundation about hypermarkets and the relation to store environment and the research questions that will be used in chapter three in designing the questionnaire. • Chapter Three: Research Methodology The third chapter discusses on research methodology, the study, questionnaire and the sampling method. • Chapter four: Findings This chapter presents the research result based on the research that has been done along with the analysis and the result of the research • Chapter five: Conclusion This chapter covers about the discussion toward the result, whether it is in line with the previous research or has different point of view. It also consists of conclusion and recommendations for further improvement. .