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Journal of Management
(IJM), ISSN 0976
6502(Print), ISSN 0976(IJM)
- 6510(Online),
INTERNATIONAL
JOURNAL
OF MANAGEMENT
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
IJM
IAEME
ABSTRACT
Retailing store plays an important role in fulfilling the daily needs of customers/consumers.
Retailing business has grown up in multi fold in last decade because of the fruitful changes
incorporated in the business model. The significant features like easiness and comfort in shopping
under one roof has really played a great role in success of retailing store in western countries,
however the same success has not been accrued in Asian countries wherein cost cutting mind set still
plays a vital role in shopping. This moderate success of the retailing business is owing to the wide
spectrum of selection criteria that customer/consumer is looking for which are meaningfully met by
retail managers in a retail stores.
The aims of the present study is to provide comprehensive criteria that have been used by
customer in making retail selection and to prioritize them using Analytic Hierarchy Process (AHP).
The prioritized criteria will help both customers and retail managers to decide their buying and
selling strategy respectively. A case problem of retail store selection using the prioritized criteria in
Aseer region of Kingdom of Saudi Arabia (KSA) has been illustrated.
Keywords: Analytic hierarchy process (AHP), Customer preference, Organized retailing, Retailing,
Kingdom of Saudi Arabia
INTRODUCTION
On the verge of globalization, traditional retailing has been changed tremendously. More and
more malls, supermarket and retailing chains are seen in major cities across the globe. The changes
in the shopping mode has been possible because of the 247365 hour worldwide shopping and
billing ease enabled by the complex software, revolution in digital technology and development of
fast electronic gadgets that are making the buying and selling process without any hustle and bustle
in the least time possible.
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International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
People like hassle free shopping and prefer to spend more on quality buying. However there
is a large section of people who still prefers to wait for the right opportunity to maximize their saving
by opting for discounts and offers. More and more offers from supermarkets lure them to shop at the
malls. Consumers now days prefer their routine requirement through shopping malls thus encourages
mall owners to expand their business in various sections. However, on the other hand, due to
changing taste of the customer, it has become very difficult for the mall owners to keep pace with
them.
Even after offering discount and offers, retail managers are always keeping their fingers
crossed for the turn-over because of the changing preference and habits of their customers. However
they try to consolidate their turn-over positions by offering super duper offers clubbed with customer
loyalty. Retail managers try strategic moves from time to time. Their attempt to keep their customers
happy pays back in maintaining the steady pace of business. Retail managers always look for long
term buyer-seller relationship to avert any business uncertainty arising due to ever changing attitude
of customers.
Looking to the above premises, it has become indispensable for the retail managers to keep
their customers happy by offering right quality of goods, at right cost and right time in right quantity.
Whereas on the other hand, customers need to select right malls in order to optimize their shopping
by getting maximum quality at minimum cost. Thus the present research is aimed for the following
multi-objectives:
1.
To provide comprehensive survey of various criteria influencing the selection of retail store.
2.
To identify and rank the significant criteria influencing the selection of retail store.
3.
To provide AHP based modeling for the selection of retail store.
The present paper provides the decision making model using AHP for the selection of retail
store which has been organized as follows: section 1 deals with the introduction to the present
research. In-depth literature review is presented in section 2, which is followed by the framework for
criteria selection for retail store in section 3. Section 4 deals with the AHP methodology whereas
section 5 illustrates AHP modeling for retail store selection. Section 6 presents the results of the
present research followed by a brief discussion in section 7 and finally the paper ends with
conclusion in section 8.
2. LITERATURE REVIEW
Retailing remains the most important business model for decades. Large business groups
divert their business to retailing because of the huge profit potential. Many researchers have carried
out the research in the area of retailing store site selection to exploit the available business
opportunity in the nearby proximity. Various researchers also employed the AHP methodology in
site selection for retail store for instance; Craig et al. (1984) presented models of the retail location
process. Kuo et al. (2002) employed a decision support system (DSS) for selecting convenience store
location through integration of fuzzy AHP and artificial neural network. Singh and Agarwal (2011)
studied the consumer preference shifting from unorganized retailing to organized retailing in India.
Turhan et al. (2013) carried out literature review on the selection criteria of store location based on
performance measures. Akalin et al. (2013) used the AHP Approach for evaluating location selection
elements for retail store using a case of clothing store. Ko and Burhan(2015) used AHP in a real
world problem of store location selection.
Many researchers studied the process of selecting retailing store by carrying out extensive
study of customer/consumer preferences, store attributes, cost, convenience of shopping etc (Brand
and Leonard, 2001; Ergn, 2013). Liisa (1990) studied the consumer preferences for environmental
quality and other social goals. Mitchell and Kiral (1998) studied the primary and secondary store
loyal customer perceptions of grocery retailers. Arora and Greg (1999) measured the influence of
9
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
individual preference structures in group decision making. Philippi is and Hubbard (2003) modeled
hierarchical consumer preferences for the global food markets selection and later on Bianchi (2009)
investigated consumer expectations of convenience store attributes in emerging markets a presented
the case of Chile. Finally, Kim et al. (2012), studied the usefulness of analytic hierarchy process
(AHP) to determinants win-win growth factor for retailing industry in Korea.
3. FRAMEWORK FOR RETAIL STORE CRITERIA SELECTION
Selecting a retail store is an important strategic decision now becoming complex issue because
more and more retail stores are coming up in same or nearby proximity. Selecting a retail store thus
becomes difficult for the customer/consumer. Customer preferring a particular retail store depends
upon a wide choice spectrum. Many criteria like fast checkout, importance of store cleanliness,
convenience of parking, closeness to residence, courteous and friendly employees, availability of
generic products, reputation or brand of retail store, transparency in product related information,
wide selection of national brands, wide selection of ethnic foods, wide selection of store private
labels, low priced advertised specials (discounts),desserts and pastries section, quality of meat cuts,
high quality of fruits and vegetables, quality bakery under single roof, service deli, availability of
health and personal care products, large selection of fruits and vegetables, fresh seafood on display,
electrical equipment availability, availability of household equipments etc.; are considered to be
playing an important role in retail store selection.
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
For assigning the weights to each of the technical criteria as well as to the suppliers
alternatives in order to construct the decision matrix and pair wise comparison matrices, phrases such
as much more important are used to extract the decision makers preferences. Saaty (1988)
produced an intensity scale of importance as shown in Table 1.
Table 1.Nine-point scale of pair-wise comparison
Intensity of relative importance
Definition
1
3
5
7
9
2, 4, 6, 8
Equally preferred
Moderately preferred
Essentially preferred
Very strongly preferred
Extremely preferred
Intermediate importance between two adjacent judgments
4.1 Traditional AHP models (Saaty, 1988; Winston, 1994) use the following steps:
Step 1: A technical requirement factor comparison matrix D is constructed. This is known as a
decision matrix. Each element of the D matrix is based on Saatys nine-point scale. The element of
the D matrix, , compares the level of importance of the technical requirement with that of
the .
d11 d12
d
d 22
D = 21
M
M
d k1 d k 2
K d1k
K d 2k
O M
K d kk
(1)
Step 2: The geometric means (GM) of each of the rows for both the decision matrix and pairwise
comparison matrices are calculated. The priority vector (PV) values follow the normalization of each
GM value.
Step 3: An overall summation of the product of sum of each vector column for both the decision
matrix and pairwise comparison matrices with the PV values of each row is carried out to obtain the
principal eigenvalue
, i.e.
= , ,
(2)
(3)
Where I.I. is the Inconsistency Index, and N is the number of elements in each matrix.
11
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
Step 5: Random Inconsistency Index (R.I.) is then determined for each of the square matrix using
Equation (4):
!. . =
."# $
(4)
Step 6: The Inconsistency Ratios (I.R.) for each of the square matrices are obtained dividing I.I
values by R.I. values. Further revision in the elements of the matrices is necessary if I.R.>10%.
Step 7: Pairwise comparison matrices ( Ai , i = 1, 2,K , n) for each suppliers alternatives are
constructed. Table 1 is used to assign weight to these matrices. The principal eigen values (PI) I.I.
and I.R. are then computed using the same logic as in steps 26.
5 ANALYTIC HIERARCH PROCESS MODELING A RETAIL STORE SELECTION
A case study was undertaken for the selection of retailing store in Aseer region, Kingdom of
Saudi Arabia (KSA). Questionnaire using Saatys scale was administered to 350
customers/consumer preferring retail shopping to identify the most preferred criteria of their choice.
Later on these most preferred criteria were used in another questionnaire to identify the best malls
amongst the A1, A2 and A3 (Disguised malls).
M1
M2
M3
M4
Sr. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Criteria
Fast checkout
Cleanliness of store is important for me.
Convenience of parking
Close to where you live
Courteous, friendly employees
Offers generic products
The reputation of retail store
Provides nutritional information about products
Wide selection of national brands
Wide selection of ethnic foods
Wide selection of store private labels
Low priced advertised specials (Discounts)
Quality of meat cuts
High quality fruits and vegetables
Has quality bakery in the store
Desserts and pastries section
A service deli
A variety of health and personal care products
Large selection of fruits and vegetables
Sells fresh seafood
Offers electrical equipment
Offers household equipment
12
Final
Weightage
0.053075
0.054922
0.052604
0.04325
0.05056
0.044861
0.043211
0.043604
0.042661
0.033504
0.035822
0.049695
0.045844
0.05449
0.049931
0.04215
0.046944
0.045805
0.050914
0.039242
0.037552
0.039359
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
Legend: M1: Shopping comforts, M2: Friendly environment shopping, M3: Cost & quality
parameters and M4: Facilities under single roof
International Journal of Management (IJM), ISSN 0976 6502(Print), ISSN 0976 - 6510(Online),
Volume 6, Issue 3, March (2015), pp. 08-15 IAEME
7 DISCUSSION
The results obtained in the present research indicates that criteria of Cleanliness of store is
important for customer/consumer. This criteria is preferred over the other criteria like High quality
fruits and vegetables, Fast checkout, Low priced advertised specials (Discounts), Convenience
of parking, Large selection of fruits and vegetables, Has quality bakery in the store, Courteous,
friendly employees and A service deli. The ranking of criteria would help customers/consumers to
decide the best retail store suiting to their requirement. On the other hand it will also help retail
managers to know which criteria their customers/consumers prefer in selecting a retail store. Thus
retail managers can deploy the available resources more meaningfully and optimizes the profit.
8 CONCLUSION
The present research provides AHP based decision making model for the selection of retail
store. Selection of retail store is a significant issue influences the survival and growth of a retail store
in particular and retail business as a whole. This model provide win-win situation for the
customers/consumers and retail managers. Customers/consumers may fulfill their need with great
customer satisfaction whereas retail managers will find their business rolling.
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