This study tested the relationships between store and customer characteristics with perceived value and customer loyalty in retailing in China. Survey data were collected from shoppers in department stores (n=200) and supermarkets (n=200) in the tier 2 coastal city of Tianjin. Data for each type of store were analysed separately using structural models. In supermarkets, value was predicted by quality and price, but for department stores, only the customer orientation of the store was significant, suggesting that customers seek different shopping experiences in each context. In each case, value mediated the links to loyalty and, for supermarkets, choice of merchandise and consumer time pressure demonstrated direct links to loyalty. The paper discusses the implications of the findings, and concludes with possible future research.
The past two decades have seen enormous growth in retail activity in China, facilitated by the transition to a market economy, deregulation and direct foreign investment. In 1992, the central government opened China's retail market to foreign investors, providing the impetus for retail development and access to more than a billion consumers (Wong and Yu, 2002). Since then, international retail giants such as Carrefour, Metro and Wal-Mart have established and expanded their presence in the more developed areas along the east coast (Liu, 2007). The retail sector continues to grow, with projections of a 34% increase between 2008 and 2012, to reach a total value of over RMB7.54 trillion (Business Wire, 2008). This growth has involved a shift of focus for supermarkets and department stores from overseas visitors to the local community and a resultant increase in the importance of these stores to the retail industry (Chain Store Age, 2008; Lo et al., 2001).
In tandem with the expanding market economy in China, the spending power of urban residents has risen dramatically with a fivefold increase of real income over the past two decades (Chan et al., 2007; Veeck and Burns, 2005). Correspondingly, the standard of living of the population has increased markedly (Wong and Yu, 2002), providing the opportunity for a ‘shopping lifestyle’. For example, in 2005, China Resources Enterprise Limited, which operates more than 1700 supermarkets and hypermarkets in China, opened four ‘lifestyle’ stores offering higher-quality products targeting the growing middle class, with plans for an additional 20 such stores within 3 years (Roberts et al., 2005), while in 2007, Solana, China's first lifestyle centre opened in Beijing, representing a new direction in China's burgeoning retail development scene (Hazlett, 2006). The growth in retail activity and consumer income in China has stimulated research but most studies have centred on foreign retailers’ international activities and the development of coastal regions (Liu, 2007). We respond to the call for consumer studies. As Wong and Yu (2002, p. 371) stated
With the largest consumer market in the world in terms of population, understanding the consumption and shopping patterns of China's huge population is crucial to the success of existing retailers and potential investors.
Scholars note that China is not a single homogeneous market (Au-Yeung and Henley, 2003; Zhang et al., 2008). For instance, there exists income disparity between the coastal cities and those located in central and western China, and between large cities and towns (Au-Yeung and Henley, 2003). Zhang et al. (2008, p. 378) state that most studies use the “coastal-inland dichotomy based on industrialization” and they emphasise the need to take account of the personal values of Chinese shoppers. The influence of exposure to a shopping lifestyle has been acknowledged for many years, with studies showing that consumers in the south, who are more exposed to foreign mass media, especially from Hong Kong, demonstrate different buying behaviours to northern and central China (Tsang et al., 2003; Yip, 1995). Additionally, consumer needs vary considerably with the socio-economic and cultural differences among markets, and they modify over time as the personal situation and market experiences of the consumer changes (Kim et al., 2002; Tai, 2005; Zhang et al., 2008). Thus, the Chinese retail market presents a dynamic and complex challenge for researchers.
Some recent consumer studies have been reported (e.g., Chaney and Gamble, 2008; Tai, 2005; Zhang et al., 2008; Zhou and Wong, 2003) but, in general, China is a rapidly expanding and relatively untested retail market, where “most [research and studies] have centred on foreign retailers’ international activities and the development of coastal regions” (Liu, 2007, p. 410). This focus provides much scope for research into the major preferences, priorities, and future shopping intentions of Chinese consumers. Consequently, the aim of this study is to investigate the emerging consumption patterns in one region of China by testing the relative effects of store and customer characteristics on perceived value and customer loyalty. Specifically, hypotheses relating to the relationships between store characteristics (i.e., quality and choice of merchandise, service orientation, and customer orientation) and customer characteristics (i.e., price consciousness, time pressure, and consumer relationship proneness) and their relative effects on perceived value and customer loyalty are examined.
The paper is organised as follows. First, we present a review of the literature and emergent gaps; we then develop a conceptual model and hypotheses, to address the gaps and guide the study. Next, we outline the methodology of the project, and provide details of the validity and reliability of the scales. The results section includes the testing of the structural models and hypotheses, followed by discussion and managerial implications. The paper concludes with limitations and suggestions for future research.
