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CHAPTER 1
INTRODUCTION
1.1 Background
For the last ten years, the international marketing of services has been one of the
fastest growing sectors of the world economy, vital to both developed and developing
nations (Javalgi and White, 2002). In Asian developing economies, countries like China,
Indonesia and Thailand employ almost 40 percent of the workforce in the service sector
with significant potential for even
further
growth and opportunity (Wirtz, 2000). After
all,
the bottom line
of
the
marketing
concept is that
identification
and
satisfaction
of
customer needs leads to improved customer retention.
Nowadays, there are a lot of business within service industry compete to expand
their market such as beauty saloon, groceries store, fitness centre , department store, and
etc. They are trying to fulfill the customer wants and needs by creating a good image in
their customer’s minds. This is especially true of the department store sector which finds
its customer base being eaten up by both specialty and discount stores (International
Journal of Physical Distribution and Logistics Management, 1996). Consumers in Jakarta
are becoming more aware of many different department store services such as Matahari,
Metro, Sogo, Debenhams and the newest one Seibu). Thus, there is a shift of decision-
making power
from the
department
store company
towards
the consumers
in
order
to
understand and fulfill customer needs. As the result, to retain and acquire new consumers,
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most of department store services have been trying to come up with different approaches
to offer their products.
As the market becomes more saturated, department store services competition
becomes fiercer. All of the companies launched price cuts—consist of “discounts, price-
bundling, gift voucher, etc”—and more aggressive advertising to stay ahead. However, a
consumer decision-making study needs to be conducted to recognize their characteristics
and whether these approaches still have effects on consumer’s loyalty in the future.
1.1.2 History of Department Store
The oldest department store
in the world
is 'Austin's'
in Derry, Northern Ireland, which
has maintained its original position on The 'Diamond' in Derry's city centre since 1830.
Indonesia's largest department store chain is Ramayana with over ninety branches across
the
country.
The
same
group
also operated
under
Robinsons and Cayaha
(acquired
in
1990s), all targeting the lower income sectors. The middle up segment is mainly occupied
by Metro Department Store (originated from Singapore) and Sogo. In early 2007,
Debenhams
department store was opened, poised to be the largest and second most
upscale department store in Indonesia after Seibu, which will be opened in 2008 at Grand
Indonesia.
•
SOGO
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Targeting the upper-class market, Sogo department store in Indonesia was opened in
1990 operates under PT. Mitra Adiperkasa Tbk. and it is currently the largest Sogo
franchisee
with a total of
nine department stores.
All stores are
located at
high-end
shopping malls in Plaza Senayan, Pondok Indah Mall 2 and Mal Kelapa Gading 3 in
Jakarta; Plaza Tunjungan and Mall
Galaxy
Extension in Surabaya; Bali Collection
and Discovery
Shopping Mall in
Bali;
Sun
Plaza in Medan; and Paris van Java in
Bandung.
All stores feature an international market targeted Sogo Supermarket except in Bali
Collection and Discovery Shopping Centre.
The
company
introduced
a
new
supermarket
concept
store
named
Sogo
The Foodhall. The new concept store first
opened in conjunction with the opening of Pondok Indah Mall 2 store in 2005.
Currently, Sogo the Foodhall are also located in Senayan City (as part of Debenhams
department store), Plaza Senayan (as part of Sogo department store), Grand Indonesia
(as part of Seibu department store) and Plaza Indonesia.
• METRO
Has opened 3 stores
in Jakarta, 1 store in Bandung.
The first store was opened
in
1991 at Pondok Indah Mall, with the purpose of fulfilling the customer needs around
the
exclusive
area
around
Pondok
Indah.
To
recur
the
success
of
Metro
Pondok
Indah, the second store was opened in 1995 at Plaza Senayan, in order to capture the
needs of working business people around South Jakarta especially Sudirman.
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Afterward on October 2001, the third store was opened in Bandung, came as the
newest and biggest department stores, Bandung Supermal with the aim to increase the
shopping quality for customer over there. Later on February 2002, Metro has opened
new
branched
in
Mal
Taman
Anggrek,
to
make
it
easier
for
customer
who
lives
around West Jakarta.
Nowadays, Metro department store has served with several choices of products from
international and local brand who already well-known in the market. Then, they have
committed
to
always provide
best
retail
product
for
Indonesian
people.
• Debenhams
Debenhams at Senayan City was opened on 23rd of June, 2006 .
Designed by ZEBRA, one of UK’s best-known architectural firms, this new flagship
store
of
Debenhams
is a
massive
20,000
sqm in
size.
Spread
over 5
floors
in the
magnificent Senayan City, it showcases the very best names in fashion, cosmetics,
home
ware
and
accessories.
And
to
satisfy
the taste
buds of
shoppers,
there
is
a
stunning Foodhall -
complete with a modern supermarket and 5 dining stations,
including Starbucks, Chatterbox and Pizza Marzano.
These
include a
unique mix of international and
local brands to meet all customers’
requirements.
Among
them are
Debenhams’
exclusive
own
brands
as
well
as
the
immensely popular
“Designers at Debenhams” range.
“These exciting
merchandise
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differentiate
Debenhams
from
its
competitors
and
offer
our
customers
unrivalled
choices.
1.2 Scope
This research is based on “An Examination of The Relationship between Service
Quality, Customer Satisfaction, and Store Loyalty” that was done by Eugene Sivadas and
Jamie L. Baker-Prewitt (2002) in USA. The participant came from a National Probability
sample of 542 heads of household who had shopped at a department store within the past
three months, and who were able to provide the name of the department store where they
last shopped. Approximately 60 percent of participants were female , the average age of
participants was about 42 years. This research is adapteda from the research mentioned at
the
beginning
of
the paragraph.
The
survey was distributed
to
240
university
students
parents
from universities
around Jakarta
(Binus
International,
University
of
Indonesia,
Pelita
Harapan
University).
The
purpose
of
using
several
selected
different
areas
of
sample is to compare the result from other area rather than only focus in one area.
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1.3 Aims and Benefits
The purpose of this study is to examine the relationship between service quality,
customer satisfaction, and store loyalty within the retail department store context in
Jakarta.
And
also
to tests
two complementary
models
that
examine
this
interrelationship and the relative attitude construct put forth by Dick
and Basu.
According
to
cf.
(Bolton
and
Drew, 1994), the relationship between customer
satisfaction and service quality has received a good deal of attention in the literature.
By understanding the relationship of service quality, customer satisfaction, and store
loyalty, Department stores managers in Jakarta can analyze the potential customer in
order to maintain the performance of the department stores it self in the future.
1.4 Structure
Chapter 1 Introduction
This
chapter provides
the
general
information
of
the
related
topic
and an
overview of previous researches, background history and related
environment that will lead to understand this thesis.
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Chapter 2 Theoretical Foundation
This chapter discusses the theoretical foundation of the research in addition
to other findings that addressed the study.
Chapter 3 Methodology
This chapter aims to analyze problem and issue regarding this thesis. Also, it
includes the methodologies used in original studies, extra references as
additional resources
Chapter 4 Result
This chapter consists of the findings of the survey that were analyzed using
five methods of analysis (frequency analysis, cross tab analysis, mean value
analysis, ANOVA, and regression analysis) which determine the result from
the survey in order to figure out the solution.
Chapter 5 Conclusion
This
chapter provides the
research
conclusion
and
recommendations
based
on the findings.
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