The Influence of Service Quality on Customer Loyalty Intentions: A Study in the Vietnam Retail Sector

There is a paucity of knowledge relating to retail service quality and customer loyalty intentions in emerging markets, and especially in Vietnam. The purpose of this study is to investigate the relationship between these two variables in the Vietnam retail sector. Survey data are collected from 502 respondents who are current customers of eight retail stores in the city of Hanoi. The results support five dimensions of retail service quality, namely personal interaction, store policy, physical aspects, reliability and problem solving. Out of these, three dimensions of reliability, personal interaction and problem solving are significantly associated with customer loyalty intentions. This study contributes to the evolving literature and suggests that local and foreign retailers should particularly invest time and effort to increase stores’ reliability, quality of customer interaction and effectiveness in solving customer problems.


Introduction
Market liberalization and economic reforms have bolstered the development of Vietnam retail industry in the last two decades.According to Euromonitor International (2014), the retail sector recorded a growth of 140 per cent during the five-year period from 2008 to 2013, and it has a positive outlook in the next ten years.Notably, retail modernization has been identified as the main driver of such development (Maruyama & Trung, 2012).Modern retailers such as supermarkets, hypermarkets, shopping centers and convenient stores are expanding rapidly in the whole country, especially in major cities.Specifically, there are 724 supermarkets and 132 shopping centers being operational throughout Vietnam by March 2015 (Viettrade, 2015).These modern distribution channels are expected to continue growing gradually and account for 45 per cent of the total retailing sales nationwide by 2020 (ATKearney, 2014).
High growth rate, favorable demographics and supportive policies from the Vietnam Government (e.g.tax reduction, inflation rate control) altogether have attracted increasing investment from foreign retailers such as Big C, E-mart, Parkson, Metro, Lotte and most recently AEON.Consequently, the competition among retailers is very intensive in Vietnam.Both domestic and international retailers have invested a great deal of effort to enhance their market positioning and customer loyalty.In this regard, scholars substantially identify service quality as an effective tool for facilitating customers' loyalty intentions and future behaviors (Fullerton, 2005;To, Tam, & Cheung, 2013;Wong & Sohal, 2003;Zeithaml, Berry, & Parasuraman, 1996).Specifically, retail service quality significantly influences customers' repurchase intention, likelihood of recommending and willing to pay more (Cronin, Brady, & Hult, 2000;González, Comesaña, & Brea, 2007;Martinelli & Balboni, 2012;Sivadas & Baker-Prewitt, 2000).An empirical research strikingly reveals that service quality provided by retailers has largest effect on store loyalty intentions, among other determinants of price, perceived value and merchandise quality (Sirohi, McLaughlin, & Wittink, 1998).Hence understanding customers' perceptions of service quality and how they affect loyalty intentions is of utmost importance for retailers.However, although extant literature has recently started shifting the focus toward the settings of emerging markets, there is still a paucity of knowledge relating to retail service quality and its outcomes in Vietnam (Nguyen, Cao, & Phan, 2015).Furthermore, the operationalization and measurement of retail service quality vary across studies in different settings of cultures and retail stores (Dabholkar, Thorpe, & Rentz, 1996;Siu & Tak-Hing Cheung, 2001).
Inspired by the aforementioned discussion, this present study attempts to examine the relationship between service quality and customer loyalty intentions in the retail sector in Vietnam.The research objectives are twofold: (1) to understand dimensions retail service quality, and (2) to investigate the impact of retail service quality dimensions on customers' loyalty intentions in Vietnam.Hence this study's findings would contribute to the stock of knowledge in the area of service quality and customer loyalty in emerging countries, and be beneficial to local and foreign retailers for retaining customers and increasing market share.
The rest of this paper is organized as follows.The next section presents a review of relevant literature.Subsequently, methodology for this current study is detailed.This is followed by a discussion of research findings.Finally, conclusion and future research directions are provided.

Retail Service Quality
Quality in service industries has been in the central interest of numerous studies.The most popular approach to conceptualizing and measuring service quality perhaps traces back to the SERVQUAL scale (Parasuraman, Berry, & Zeithaml, 1993;Parasuraman, Zeithaml, & Berry, 1988, 1994;Zeithaml, Berry, & Parasuraman, 1993).This scale is applicable to retailers in several studies (e.g., de Ruyter & Wetzels, 1997;Wong & Sohal, 2003).Nevertheless, Dabholkar et al. (1996) argue that the SERVQUAL is more appropriate to pure service sector rather than retail stores, which offer the combination of goods and services (see also Sweeney, Soutar, & Johnson, 1997).Hence, based on previous literature and their qualitative studies, they developed the Retail Service Quality Scale (RSQS) consisting of five major dimensions, namely physical aspects, reliability, personal interaction, problem solving and policy.Physical aspects, which is an extension of tangibles factor in the SERVQUAL, includes physical facilities (store appearance) and convenience offered by store layout.Reliability is similar to the SERVQUAL, and it encompasses keeping promises and doing it right.Personal interaction denotes service employees' courtesy and helpfulness, and how they encourage customers' confidence.Problem solving refers to managing customer problems such as complaints, returns and exchanges.Policy addresses store policy on matching their customers' needs, such as convenient opening hours, parking and payment.These five dimensions help service providers diagnose and improve service areas which are in need of attention (Dabholkar et al., 1996).
The RSQS sheds light on various studies.For example, an examination of Malaysian supermarket customers supports five factors of the scale (Ibrahim et al., 2013).Other studies have adapted and extended the RSQS in different contexts.Kim andJin (2001, 2002), in their exploratory study of retail service quality in the US and Korean, eliminate the policy factor due to its low reliability, and combine two factors of problem solving and personal interaction into a new construct named personal attention.Interestingly, an empirical study in Hong Kong modifies the RSQS scale and suggests a new factor of service quality namely promises which relates to the trustworthiness of retail stores (Siu & Cheung, 2001).More recently, To et al. (2013) present a modified version, i.e.ReServQual, to investigate Chinese shoppers' perceptions of service quality provided by chain stores in Macao.More specifically, the ReServQual consists of four factors namely interaction and trustworthiness which combines two sub-dimensions of reliability and interaction, store environment, understanding the customers and policy.

Retail Service Quality and Loyalty Intentions
Loyalty intentions refer to current customers' willingness or likelihood to perform favorable behaviors toward retailers or stores, such as repurchase, purchasing more, say positive things about stores and make recommendation to others.Various studies have demonstrated that retail service quality has a significant influence on store loyalty intentions of supermarket customers.As mentioned earlier, Sirohi et al. (1998) find that service quality has strongest effect on such intention.Authors such as Dabholkar et al. (1996), Sivadas and Baker-Prewitt (2000) point out that service quality is positively related to likelihood of recommending retail service.Likewise, Fullerton (2005) suggests that service quality strongly influence customers' advocacy operationalized as their intentions to say something good about store, recommend store to advice seekers, and encourage friends to shop at store.Kim and Jin (2001) highlight the impact of different dimensions of service quality and find that, while personal attention and convenience successfully predict loyalty intention in the U.S., two dimensions of tangibles and responsiveness are positively related to Korean customers' intention to be loyal to retail store.More recently, an Italian study (Martinelli & Balboni, 2012) reveals a positive relationship between four dimensions of the RSQS (i.e.physical aspects, reliability, personal interaction and store policy) and conative and action loyalty intention.In relation to the aforementioned discussion, the following hypothesis has been formulated: H1: Retail service quality (personal interaction, store policy, physical aspects, reliability and problem solving) has a positive influence on loyalty intentions.

Sample and Data Collection
Participants in this study are Vietnamese citizens who shopped at eight stores of two apparel and footwear specialist retailers in the city of Hanoi.Selection of the category of retailer is justified by three explanations.Firstly, apparel and footwear specialist retailers are among major distribution channels in Vietnam which have around 10,328 stores throughout the nation (Euromonitor International, 2014).Secondly, as the stores offer a wide range of products, it is possible to investigate customers from different segments.Thirdly, given that customers have various store choices when shopping, they tend to critically evaluate different dimensions of service quality provided by the retail stores.
Interviewer-completed questionnaires were administered to potential participants prior to their shopping's experience.This helps to understand customers' evaluations of their last shopping experiences at the stores (Siu & Tak-Hing Cheung, 2001).More specifically, one in every three customers entered the stores was presented with the information statement and asked to provide responses.Completion of the survey was taken as participants' informed consent.The duration of the data collection was six weeks, and the final effective sample was 502 participants.Fifty-four percent of the sample was female and forty-six percent were male.The median age group was 20-30 (ranged: 15-65), representing 42.8 percent of the participants.The income analysis showed that most of the participants had monthly household income in the group of VND10,000,000-15,000,000, accounting for 41.2 percent of the sample.Furthermore, while forty-nine percent of the respondents worked for Government organizations, eighteen percent were full-time students.The majority of the sample (71.3 percent) lived in central districts of Hanoi.

Development of Survey Instrument
A survey instrument was designed based on previously validated scales.To measure dimensions of retail service quality, twenty-eight items were adapted from Dabholkar et al. (1996).These items were intended to seek respondents' perception of service quality provided by the stores in their last shopping experience.Loyalty intentions were measured by five items adapted from Zeithaml et al. (1996) and Kim and Jin (2001).Each item was analyzed by a Likert-type scale anchored at 1 for strongly disagree and 5 for strongly agree.The measures were presented in Appendix 1.
A two-step pretest was performed to diagnose potential problems associated with the survey.Firstly, three marketing professors were requested to provide their thoughts on scales efficacy.Secondly, eight in-depth interviews were conducted with current customers of the stores in order to understand their thoughts on critical issues such as time of completion, question wording and order (Bell, 2010).These two steps helped to ensure the survey's content validity and face validity.Based on the results of the pre-test, minor amendments were made to ensure that the survey was appropriate to the respondents, and that it would help to collect meaningful data.The final survey instrument included a screening question and three sections as follows.Section 1 consisted of 28 items measuring retail service quality dimensions.Section 2 contained five items measuring store loyalty intentions.Section 3 sought to collect participants' demographic information.

Dimensions of Retail Service Quality
Principal Component Analysis using Varimax rotation was conducted to reduce irrelevant items and identify underlying factors of retail service quality.Appendix 2 displays results of the analysis (small factor loadings below 0.4 were suppressed).As expected, twenty-eight items loaded on five factors (eigenvalues > 1.0, all cross-loadings < 0.3), namely personal interactions (9 items), store policy (5 items), physical aspects (6 items), reliability (5 items) and problem solving (3 items).This structure perfectly matches the five dimensions of the RSQS, which is developed by Dabholkar et al. (1996) and tested in a study of Ibrahim et al. (2013).
Cronbach's Alpha coefficients were calculated to assess the reliability of measurement scales.Table 1 shows that the coefficients for six measures ranged from 0.819 to 0.947, indicating high internal consistency of reliability (Allen & Bennett, 2012).The means of scales showed that Vietnamese customers perceived physical aspects (3.73) most favorably, followed by problem solving (3.35), reliability (3.16), and personal interaction (3.11), respectively.The highest mean score of physical aspects is in line with the result from the U.S. sample in a previous survey (Kim & Jin, 2002).Notably, participants rated store policy relatively low (2.92).More specifically, stores failed to provide convenience in making payment (2.45) and parking (2.83).This contradicts earlier findings of an empirical study in Hong Kong, demonstrating that store policy scored the highest average scores (Siu & Tak-Hing Cheung, 2001).

The Influence of Retail Service Quality on Loyalty Intentions
A multiple regression analysis was performed to examine the integral influence of retail service quality dimensions (i.e.personal interactions, store policy, physical aspects, reliability and problem solving) on store loyalty intentions.To guarantee that the data were appropriate to the analysis, key regression assumptions were checked.Given that the maximum Mahalanobis distance (18.8) did not exceed the critical χ 2 (20.5), the multivariate outliers were not of concern.Potential problems of multicollinearity were eliminated as each independent variable had a variance inflation factor (VIF) less than three, and a tolerance value of more than 0.4 (Hair, Black, Babin, Anderson, & Tatham, 2006).Table 2 exhibits selected results of linear multiple regression analysis.In combination, five dimensions of retail service quality explained a significant 75.4% of the variation in store loyalty intention, R 2 = 0.754, F(5,496) = 304.594,p < 0.01.While three dimensions of reliability, personal interaction and problem solving had a significant influence on customers' loyalty intentions (p < 0.01), the impact of two dimensions of store policy and physical aspect was non-significant.Hence, the hypothesis is partly supported.In addition, the standardized regression coefficients revealed that reliability (β = 0.440) was the strongest predictor, followed by personal interaction (β = 0.305) and problem solving (β = 0.260), respectively.
These are partly opposite to Kim and Jin's (2001) findings that the factor of tangibles (i.e.physical aspects) is significantly correlated with loyalty intentions in Korea, and that convenience, which is similar to store policy in this current study, is a critical determinant of American customers' intentions to be loyal to current stores.Possible explanation for the difference is that their research was conducted in different settings of cultures (the U.S. and Korea), respondents (university students) and type of retailers (discount stores).In general, this present study's results are in line with key results from the study of Martinelli and Balboni (2012) that reliability and personal interaction are significantly positively associated with conative loyalty and action loyalty of customers in Italy.

Conclusion and Future Research
This study successfully investigates various dimensions of retail service quality and their influence on customers' loyalty intentions in the context of Vietnam.The results have several important implications.Given that reliability is the most influential predictor of loyalty intentions, retailers should keep promises to provide product and service on time, maintain merchandise availability and reduce errors in sales transactions and records.Retail stores should also pay close attention to recruitment and management of employees to enhance the quality of customer interaction.Furthermore, resolving customers' complains and handling returns and exchanges effectively would increase customer loyalty intentions.Although store policy and physical aspects do not exert significant effect on loyalty intentions, it is suggested that improving these factors would facilitate customers' repurchasing and recommending of stores.Hence retailers should create a clean, appealing and convenient shopping environment for customers.
Future research can extend this study in three ways.Firstly, data could be collected from current customers of various categories of retailers (e.g.department stores, supermarkets, electrical and appliance specialist stores) in different regions (e.g.Da Nang, Ho Chi Minh City).Secondly, examining moderating effects of personal factors (i.e.demographics and psychographics) on the relationship between service quality and store loyalty intentions could be beneficial to the literature and retailers in Vietnam.Thirdly, a longitudinal study could be done to understand the actual loyalty behavior.

Table 1 .
Summary of measures

Table 2 .
Summary of regression model