Service quality and customer loyalty among supermarkets in Nairobi county

Abstract

In Kenya, supermarket sector has experienced a phenomenal growth in the last decade due to changing tastes and preferences of consumers. This poses tight competition among the supermarkets as well as from the traditional standalone retail shops. Consequently supermarkets have appreciated the importance of attracting and creating a loyal customer base through provision of superior shopping experience with emphasis on excellent customer service and relationship retailing driven by strategy. This research attempts to examine the relationship between service quality dimensions and customer loyalty as well as establish the significance of each dimension in predicting customer loyalty among the supermarkets in Nairobi County. Operationalization of service quality was done using the SERVQUAL model while customer loyalty was operationalized using Dick and Basu (1994) model. The study adopted a descriptive survey design with an aim of obtaining state of affairs as they existed then and establish relationships among variables. The population of the study was made of 47 supermarket stores from the four leading supermarkets in turnover and branch presence in Nairobi County. The study utilized primary data from the field as well secondary data from financial records and industry publications. Primary data was collected through questionnaires with closed and open ended questions administered to customers exiting the store and had shopped at least thrice in that store over the last 12 months. Data analysis was done using statistical package for social sciences (SPSS) .Analysis was done using descriptive and inferential statistics presented in tables. Study findings revealed that tangibility, reliability, empathy, responsiveness and assurance are positively associated with customer loyalty. Reliability was found to be the most significant predictor of customer loyalty and responsiveness was found to have the least prediction power when the dimensions are analyzed independently. However, Tangibility was found to have the highest significance in predicting customer loyalty when all the dimensions are analyzed together while Responsivess was the least significant. Qualitative information indicated that other factors that influence customer loyalty but not included in the model like affordable prices, home deliveries, extended opening hours, loyalty programmes, quality and variety of products in stock, spacious parking and financing plans for expensive items also need to be explored by management.