Retail Experience in Consumer Motivation in China - Dissertation Example

1 Beijing Economic Overview China’s growth in the past thirty years has been one of the most spectacular economic marvels that have transformed the entire country. Economic reforms coupled with urbanization and the state’s commitment to development has placed China as the second highest in terms of GDP, second only to the United States (Thomas White, 2011). As incomes have grown so has the capacity to spend; consumer purchasing power in China has grown. China is now expected to become the world’s largest economy by 2016 while living standards will continue to improve provided reforms are implemented (OECD, 2013). Per capita consumption in China was 13,400 renminbi in 2008 which is expected to rise to 17,000 renminbi by 2015. The urban consumption is likely to exceed 13.3 trillion renminbi ($1.96 trillion) making the country the third largest consumer market after the US and Japan (Thomas White, 2011). This is based on an Annual Chinese Consumer Study by McKinsey in 2009. With the expanding market economy the purchasing power of urban residents has risen with a five-fold increase of real income in the past two decades (Wong & Dean, 2009). Wang (2011) endorses that rapid economic growth and improvement in people’s income in China stimulated a huge and expanding demand for services. ‘Consumer revolution’ was created in China as a result of the country’s burgeoning consumerism, new consumption patterns and increasing levels of consumer choices. The changes in consumption patterns led to structural changes in the retail sector. China is not a single homogenous market and hence the needs vary based on the socio-economic and cultural differences across markets within China (Wong & Dean, 2009). The retail sector has received a thrust which thrives on the progressive Chinese consumer. Not only have the domestic retailers, the global retailers also captured market share in the retail boom. Urbanization in China is driving the retail boom as is seen from the chart below. Chart: Urbanization driving the retail boom Source: Thomas White (2011) The study by Thomas White (2011) further finds that the middle-class consumers have now become the face of the aspiring and contemporary consumers. This segment will boast of 340 million people by 2016. Chart: Strength of the Middle-Class Consumers Source: Thomas White (2011) 1.2 Beijing Beijing is China’s second largest city in terms of population. Beijing has also experienced growth in GDP as a result of growth in the fields of investments, imports and exports and growth in the housing and automobile sector. Beijing is expected to experience continued urbanization and globalization. There has been a 402 percent increase in GDP per capita between 2001 and 2011 as the economy of Beijing has grown faster than its population (Starmass, 2013). Beijing has six high-end industrial districts that played a key role in its development and growth. In addition, taxation system reforms have also contributed to the rapid development of the city. Investments in infrastructure development and real estate development have led to rapid urbanization. 1.3 Retail formats, concepts and theories The concept of retail format is ‘murky’ according to Wang (2011) as there is no single accepted definition. Wang, however, cites different authors and their views of different retail formats. For instance, retail formats comprise of offering and know-how. Offering pertains to the external elements such as merchandise assortments, store atmosphere, location, service and price. Know-how includes the internal part which means the retail technology (procedures, methods and systems and techniques of retailing), and the retail culture (the retail concepts, norms, rules and procedures). Goldman (2001) elaborates on format transfer options from developed to developing nations. This could be on as is basis or adaptation. The first is a special case limited to large retailers catering to global segments. All other format transfer options can be grouped under adaptation. Adaptation is required to a large degree in developing nations. Changing a format may require costs to be calculated. At times, adhering to the same format may reap benefits. The difference in transfer formats in the retail sector could be influenced by the economic conditions in China and the home country of the foreign retailer, in addition to the market segments targeted in China. Armani did not change its retail format and kept it as is because it targeted a niche segment that would come to his stores for the brand equity it offered (Zargani, 2012). Classification of Retail Format of China defines retail format as ‘type of management formed by retail firms in order to satisfy different consumption needs which can be classified based on location, size, target customer, merchandise assortment, store layout, operations management, and service functions, etc’ (cited in Wang, 2011). Thereafter, Wang (2011), based on retailing theory, states that a new retail format usually enters the market as low-status, low-margin, and low-price operators. Over time, this matures into high-cost and high-margin establishments thereby establishing that retail change is a cyclical pattern. The cyclical pattern states that general stores give way to shops specializing in a narrower range of goods and then again the general merchandisers take over. In this change process, the greatest chances of success lies with the institutions that are best able to adapt to changes in technology, customer needs and preferences, competition and legal environments. Wang (2011) cites of another perspective of Levy et al (2005) according to which the larger retailers originate as innovators where low-price strategy could be one their strategies and they focus on a niche but then they too feel the need to migrate to a larger marketspace in search of greater revenues and profits. All these tend to suggest that the change in the retail format is a self-innovative process driven only by internal forces of retailing. Wang (2011) asserts that to understand the rapid restructuring of retail formats in China and particularly in Beijing, factors such as political/regulatory, economic and socio-cultural environment have to be considered as well. Consumption was seen by economic planners as a means to sustain economic growth. Retail reform in China has been characterized by pricing and dismantling the state monopoly but more importantly, the retail formats have undergone change. Active regulations and re-regulations by the local government have been a major contributor of reforms. The retail format was a new concept for the regulators and was used by the government only in 1998 for classification. This step by the government help guide China’s retail business towards a standardized, scientific management system. This helped the retailers choose a specific format based on their target segment. This strategy helped in development of the retail sector. From mid-1990s onwards the government showed greater eagerness for new retail formats. The Beijing city government as well as the central government formulated policies to promote new retail formats aimed at regulating the spatial distribution of retail development. Sustained economic growth in Beijing has enabled the entry of foreign retailers, intensified competition and inspired retail innovations in a market that was open to creativity and innovation. On the socio-culture front, consumerism and materialism became irresistible for the Chinese consumers. This was accompanied by status seeking behaviours, seeking fashion and style. Retail technologies such as barcode scanning, RFID, point-of-sales information systems led to spur of new retail formats. In the pre-reform era, Wang (2011) contends that department stores formed the backbone of the retail industry. The retail market in Beijing was dominated by some large state-owned department stores that were located in the central areas of the city. From the mid-1980s, as purchasing power in Beijing increased it stimulated the growth of the large department stores to meet the changing needs and demand for better shopping environment and wider variety of goods. Between 1993 and 1999, 83 large retail stores, mostly department stores were opened in Beijing each occupying a space of over 10000 sq. meters. This was followed by a period of recession but the situation turned in 2005. Annex A provides a table of retail formats in Beijing operated by retail chains. 1.4 Change of Fashion retail format in Beijing from traditional retail format Traditionally the retail format in Beijing included department stores, general stores and various specialty stores (Zhuang, 2013). Department stores had different departments for displaying merchandise, carried wide variety of stocks to suit different mindsets (Zhuang, 2013). They are now struggling to survive as they face intense competition (Thomas White, 2011). The department store was popular in cities while the smaller towns and villages had general stores. Subsequently supermarkets and convenience stores were introduced which revolutionized the retail industry towards international norms. General stores carried limited stocks but a variety of goods ranging from food stuffs to manufactured goods (Zhuang, 2013). Specialty stores concentrated on selling limited product range including grain and oil store, book store, clothing store and jeweler. After mid-1990s these stores accounted for more than one-fifth of total outlets (Wang, 2011). These stores started selling television and other electronic goods. Specialty stores were also operated by chains. Hypermarkets too gained in popularity and these formats combine the features of a supermarket, department store, discount store, and specialty store in one location. Discount Stores/Factory Outlets format is still evolving and this format remains concentrated in Tier I cities (Thomas White, 2011). Discount stores could be of any size and format and specialty stores could also be counted as discount stores. Factory outlets also emerged in Beijing in 2004. The two formats – discount stores and factory outlets advertised themselves as both formats. Discount stores generally carried style and sports clothing while the factory outlets in Beijing represented an imported but transformed retail concept from the West. Shopping Malls The first shopping malls in Beijing were established through the redevelopment of existing commercial structures in the city centre. They had to incorporate recreational centres, catering services, and other functional services to be called shopping malls. Home Improvement Stores in Beijing exist in three formats. The traditional format was one large market with many stalls under the same roof. The second format was hypermarket-like format that was adopted by businesses from outside Beijing. Many of them such as Swedish giant IKEA and Home Depot have opened multiple hyper-market like stores (Wang, 2011). The third format includes small, independent home improvement shops. Hybrid Formats – In Beijing various urban markets still exist that sell apparel and other miscellaneous goods. They traditionally used to be uncovered open space but have now become indoor markets. Many large apparel markets have become tall buildings with many separate stalls and vendors selling their wares. Another Japanese format – GMS – hybrid department store with a supermarket - was introduced in Beijing in 1998. In fact many large department stores became GMS in Beijing. Some even included food court on the top floor. The growth of new retail formats reflect the growing consumerism, the growing aspirations of the consumers in Beijing and their demand for better quality of products, and a better shopping environment. After mid 1990s, the central government in China had started backing out from supporting the conventional formats such as the state-owned department stores. Instead, it started supporting the retail chains and the new format stores such as the supermarkets grew at a very fast rate. Wang and Jones (2001) clarify that the fact that the state-owned department stores were challenged by the new format stores and were losing their monopoly was not a new phenomenon in China. It had become the global trend in most western countries. The acceptance of the western retail formats was likened to a revolution that totally altered the retail structure in China, contend Wang and Jones. 1.5 Choice of Retail formats by Chinese consumers The popularity of retail formats can be evaluated from the sales figures in the table below. Only those retail formats having annual retail sales above 50 million RMB (known as Above Designated Size – ADS) with more than sixty employees have been evaluated in this study conducted by State Statistical Bureau of China (cited in Zhuang, 2013). Table 2.1 Retail Sales of ADS Retail Chains by Format Source: Zhuang (2013) The above data reveals that several new retail formats such as specialty stores, franchised stores, hypermarkets and discount stores have been successful in China. Lifestyle store is another format that offers high quality products targeting the burgeoning middle class (Wong & Dean, 2009). Of the different retail formats the “supermarkets are racing to make apparel an even smarter cash generator” (Bruce & Daly, 2006). Supermarkets have redefined how customers shop for clothing. The larger retail formats such as hypermarkets and discount stores have already diffused some major metropolitan centers such as Shanghai and Beijing to several other Chinese cities. At the same time the small boutique formats continue to thrive in small towns and rural areas, in metropolitan Chinese cities, provincial capitals and major hinterland cities (Chew, 2008). The new retailing formats and new retailing spatial forms have served to transform the shopping attitudes and shopping activities of the urban residents. The new formats have gradually evolved as the main consumption channel and also become the new space for their daily recreation (Yanwei, Jie & Tao, 2007). As purchasing power has increased consumer tastes too have changed. The Chinese consumer has started accepting the western retail formats – the international supermarket chains, department stores and mass retailers are now replaced by luxury retailers (KPMG, 2007). This study of KPMG finds that for branded apparel, jewelry, watches and bags and footwear, the Chinese consumers prefer branded stores and the next choice for shopping are the shopping malls. For cosmetics and perfume, however, the consumers prefer department stores. Online purchases in all fashion categories are yet limited in China. All the major luxury brands such as Armani, Prada, Louis Vuitton and Gucci, to name a few, are available in China. The western retailers did not adapt to local business environment in terms of changing their formats as they feared dilution of the brand image and global positioning (KPMG, 2007). It has worked in China as the international retail concepts have been embraced. Mega-store formats have become the most popular formats as they carry a large range of products and are known to educate the consumers, thereby fuelling their appetite to spend. Earlier these brands had small standalone outlets or occupied a store space in hotels but the concept has changed as they now introduce large store formats. For instance, Dior Cosmetic opened a landmark boutique in 2003 in the West Gate Mall Shanghai, expecting a quantum jump in sales. Similarly, Louis Vuitton set up a three-storey China World Store covering an area of 18,000 square feet with a sales area of 8,470 square feet. Armani had started with a signature boutique in 1998 in Beijing. To attract the Beijing consumers, Armani appears to have understood their attitude towards fashion. This has prompted him to conduct high-profile events in Beijing to attract them. He has great insights into the average Chinese consumer and his shopping habits. He recognizes that the Chinese customer does not see fashion as “striking” or made to impress (Zargani, 2012). They seek clothes that are wearable and more connected to the real world. Armani does not adapt to local trends or depending upon the end customer as he believes that people who come to Armani would love the genre. In his clothes the Chinese customers feel like themselves. The above analysis suggests that as economic growth and development in China has taken place as a result of the economic reforms, consumer lifestyles, attitudes and desire to spend in consumer goods has also changed. This gave rise to the introduction and acceptance of different retail formats in Beijing and China. The new channels are unique as the shopping experience is entirely different. Consumers would like to be seen at the best of retail formats as it provides hedonic pleasure. These changes have occurred as the Chinese consumer has transformed and matured in the evolving retail environment. In the next section, the fashion market in China as well as influences on consumer attitude and purchase motivation has been discussed. 2.1 Fashion Market in China Fashion goods include apparel, accessories, handbags, shoes, watches, jewelry and perfume. Zhang and Kim discuss of Adam Smith’s categorization of consumption into four segments – necessities, basic (for normal growth and prosperity, affluence (not necessary for normal growth and prosperity) and luxury (expensive and difficult to obtain) (Zhang & Kim, 2013). Changes have occurred in consumer lifestyles thereby impacting fashion consumption in China. China is considered the world’s largest consumer with 100-150 million middle-class oriented population (Zhang, & Kim, 2013). It is now the most fashion conscious and the largest luxury market in the world. According to World Luxury Association as cited by He, Zou and Jin (2010), Chinese consumers spend over US$ 6 billion per year of fashion apparel, accessories, bags and cosmetics. 2.2 Consumer Attitude and Purchase Motivation Several authors have studied consumer attitude and purchase motivation from different perspectives. A few perspectives and outcome of a few studies are being synthesized here. This is important for marketers because the consumers come from different economic and cultural backgrounds even within China. They have different mindsets which influences their attitude and motivation for purchase of particular goods. The business environment is turbulent and competitive and it is no more sufficient to evaluate the needs and wants of consumers. Marketers have to evaluate the purchase motivations and the attitudes of consumers that influence their purchase intentions. 2.3 Acquisition and Transaction Utility Liu and Wang (2008) discuss of two types of purchase attitude among consumers. They claim that attitude towards money can give rise to positive as well as negative (feelings of distrust) from people. Some people use money as a tool to impress people and consider money as a symbol of success. With money they seek prestige and image through consumption. Consumer purchases can give rise to two types of utilities – acquisition utility and transaction utility. Acquisition utility is the transaction gain or loss from a purchase and the transaction utility represents the pleasure or displeasure associated with financial terms of the deal. Consumers develop a positive attitude towards promoted brands which have the characteristics of a positive store image, self-perception, need for affiliation and money attitude regarding power and prestige. Those with feelings of distrust show low confidence in their purchase decisions. Such consumers tend to be price conscious and focus on obtaining goods at low prices. However, they tend to be attracted to private labels only because of a positive store image, and money attitude regarding retention and distrust. In fact, as far as private labels are concerned store image is the strongest predictor of a private label attitude. Okada (2005) finds that people want to have fun and they are more likely to have fun if the situation so justifies. Depending upon the purchase situation, the preference for hedonic and utilitarian pleasure can reverse. For instance, when hedonic or utilitarian pleasure is sought singly, hedonic alternative if preferred over utilitarian alternative. However, when the consumer is confronted with a choice when both are presented together, the consumer would tend to opt for utilitarian alternative. As far as spending time and money is concerned, consumers are willing to spend more time for hedonic goods and more of money for utilitarian goods. Zhang and Kim (2013) highlight that symbolic interactionism creates novel appearances and new ways to see, understand and interpret these appearances. Social interaction affects how an individual obtains identity in different social, physical and biological situations. Hence, fashion products convey the identity of the wearer and also convey the social status to the self and others. Zhand and Kim also found that brand consciousness, social comparison and fashion innovativeness have significant influence over the purchase intentions and the attitude towards buying fashion goods. Phaw and Leng (2008) also find that purchase of foreign goods signal status and if the fashion apparel is expensive it signals higher status. 2.4 Self-image and consumer attitude Kruger, Galak and Burrus (2007) believe that consumers are not dispassionate actors that pick up things at random. They are dynamic motivated agents that evaluate the world around them and also their own selves based on a set of “sacrosanct beliefs” and self-motives. Positive beliefs about the self can impact the purchase decisions (Dunning, 2007). They ensure that their beliefs are in harmony with their self-image although the self-image has no relevance to the purchase decisions. 2.5 Planned buying attitude Planned buying would involve the intention to search for information but at this stage the decision on the brand and the store has not been made (Dittmar & Drury, 2000). Planned buying is mostly for goods needed and it has a definite intention and a budget in mind. Planned purchase motivation can be influenced by marketing communication. Credit facilities also influence purchasing motivation (Dittmar & Drury, 2000). However, consumers may at times find planned purchasing ‘boring’ and to give themselves a treat, they may engage in impulsive buying. This is purely aimed at giving sudden pleasure to the mind. This is exhilarating and can give a sudden rise to the adrenaline levels. 2.6 Impulsive and Compulsive buying motivations Impulsive buying is a common consumer attitude which denotes sudden and unplanned purchase motivation. Impulsive buying is a strong urge initiated on the spot to experience pleasure and excitement (Billieux, 2008; Ghani, Imran & Jan, 2011). Impulsive buying is a self-regulatory mechanism with the aim to reduce negative emotions (Silvera, Lavack & Kropp, 2008). At the same time it is also associated with a subjective bias that favors immediate possession (Kacen & Lee, 2002). Compulsive buying is induced by an internal trigger and shopping is an excuse to be relieved from this trigger (DeSarbo & Edwards, 1996). This involves excessive and repeated purchase of consumer goods and could possibly lead to psychological distress. The underlying purchase motivation in impulsive and compulsive buying therefore differs. Impulsive buying is not based on practical considerations (Silvera, Lavack & Kropp, 2008) but can be associated with feelings and psychological motivations (Sharma, Sivakumaran & Marshall, 2010). Compulsive buying is used as a means to combat stress or make up for a structural deficit or frustration (Neuner, Raab & Reisch, 2005). 2.7 Variety-seeking attitude among consumers Actual purchase decisions of the retail shoppers show consumer impulsiveness which has been associated with variety-seeking attitude by Sharma, Sivakumaran & Marshall (2010). When people experience lack of judgment in purchasing, it can result in excessive buying behavior. Variety-seeking behavior has been defined as the degree of change or diversity in what a person purchases or consumes and this may differ across individuals (Chowdhury, Ratneshwar & Desai, 2009). Variety-seeking can be an outcome of hunger or other motivation such as discounts or price promotions. However, variety seeking at the individual-difference level is motivated by a desire to explore and this is known as exploratory buying behavior tendencies (EBBT). The purchasing motivation for such individuals is the need for increased sensory and cognitive stimulation. This need creates a variety-seeking attitude. 2.7 Attitude towards Counterfeit products Counterfeiting of branded products is a fast growing segment in China (KPMG, 2007). Counterfeit operations in China are secretive, resilient and geographically dispersed. However, the value-seeking and status-seeking consumers would not purchase counterfeit products. According to He, Zou and Jin (2010) intrinsic value is derived when consumers appreciate the experience as self-justifying. Such consumption reflects their implicitly intrinsic value because of the lifestyle they pursue. This is normative sensibility and hence when confronted with counterfeit products, it gives rise to negative attitude towards such products. Since they are concerned with intrinsic satisfaction, they do not seek confirmation from others. They reject counterfeit products because it does not provide them intrinsic value and satisfaction from using such products. At the same time, Perez, Castan?o and Quintanilla (2010) find that there is a consumer segment that prefers counterfeit products as it helps in optimization of resources, and in deriving fun by fooling others. This leads to excitement and through the accomplishment of such goals the consumers construct an identity and feel that their self-image is enhanced as they perceive themselves as “savvy individuals”. Phau, Sequeira and Dix (2009) find that consumers are willing to purchase counterfeit products because of the short life of products. All these occur as consumerism has grown and there is a desire for products linked to fashion and status (Phau & Teah, 2009). Others that are unable to buy the original fashion goods, prefer the counterfeit products as it provides the functional benefits, provides prestige and image. 2.8 Influence of Relationship Marketing on purchase motivation Small fashion boutiques are also popular both in smaller towns and larger cities such as Shanghai and Beijing. These boutiques cannot afford have neither the budget nor conscious plans for store branding. While these boutiques have not heard of the concept of relationship marketing, they unconsciously apply relational tactics to build and retail their customer base (Chew, 2008). The customers are lured by the friendly approach of the store owners and this demonstrates that customer relations can be cultivated. They build a core customer base and practically sell themselves and not the fashion apparel. Recognizing that customers are attracted by store interiors, small boutiques, in addition to relationship marketing, engage in building store brand equity through the character of the store owner and they also engage in communicating store identity through store interior design and visual merchandizing. They also show strengths in visual merchandising. 2.9 Changes in Chinese Consumer Preferences Following the reforms in China the life of urban residents and particularly in Beijing has undergone a sea change. This has changed the motion and manner of shopping activities, their attitude towards retailing and shopping. Time has become a scare resources and hence accessibility and convenience are the factors that consumer seek. This is the reason that hypermarkets located in suburban areas are preferred by those consumers who derive satisfaction with “one-stop-shopping” (Yanwei, Jie & Tao, 2007). Consumers also look towards shopping as a leisure activity and it is soon becoming a family activity to derive leisure experiences. Consumers seek favourable and spacious shopping environment where they can encounter diversified shopping choice and enjoying the shopping space. Consumer attitude has also been influenced by the availability of cars which has transformed the retailing geography. The Chinese consumers can be regarded as entirely different from those in the western world where consumption is a matter of routine. For the Chinese, however, consumption is a novel, pleasurable and important part of day-to-day life. To experience pleasure in consumption, the Chinese consumers are willing to spend as much as 80% of their earnings in purchase of consumer goods (Kwan, Yeung & Au, 2003). Profound changes in the attitude of Chinese consumers have contributed to the long-term bullishness of the Chinese consumer market. The Chinese may desire foreign brand for mianzi (prestige) but nationalistic beliefs also motivate Chinese consumers to buy home-grown products. Chinese consumers have conflicting reactions towards foreign brands. Chinese consumers may react differently to the same foreign brand which uses a non-Chinese name or a Chinese name. In 2003 the Chinese consumers preferred local brand due to increasing consumer ethnocentrism and improving local products (Liu, Murphy, Li & Liu, 2006). Things have since changed in China. The Chinese consumers demonstrate conflicting reactions, which has its root in consumer ethnocentrism, which is a tendency to view one’s group as the centre of everything (Liu, Murphy, Li & Liu, 2006). Consumers also tend to evaluate a product or a brand based on the country-of-origin (COO). COO can impact consumer attitudes and purchase intentions towards foreign brands and products. COO influences consumer evaluation of foreign products on two perceptions – quality and purchase value. The Chinese consumers have a more positive attitude towards products from a highly industrialized nation such as the USA, than for products made in newly industrialized nations such as Korea. Ethnocentric consumers have been found to less favourable attitudes and purchase intentions towards store signs that have an English name and a western COO. Therefore, consumer ethnocentrism has a negative relationship with attitudes and intentions towards foreign goods. The Chinese consumers started deriving comfort through material wealth and the main aim in life was to “work hard and get rich” (Kwan, Yeung & Au, 2003). The Chinese consumer has become sophisticated and demanding. While their standards have increased in apparel choice as they have become personalized. Consumers in Beijing tend to choose clothing that reflects their personality. They now prefer imported foreign apparel rather than domestic brands. Beijing consumers are emotional and are also repective to advertising messages. Another major change observed in the fourth generation of consumers is that instead of paying a premium price for branded apparel, they tend to prefer value for money products and are no more lured by brands and labels (Kwan, Yeung & Au, 2003). They are willing to spend more time and money to select apparel and in the casual wear market they represent one of the most important market segments. However, with time tastes and preferences have changed. The Chinese consumers have become brand conscious and this implies that the marketers must devise marketing strategies to enhance the attributes to the status-seeking and non-status-seeking consumers (Li, Li and Kambele, 2011). According to Zhang and Kim (2013) consumers yearn for luxury fashion goods which they see as a symbol of success, wealth and status. Socio-political economic changes in China resulted in Chinese consumers responding to the principles of globalized consumption principles. Based on the symbolic interaction theory, Zhang and Kim explain that the Chinese consumers focus more on external social needs than on internal individual needs. They would like to conform to in-groups and their image in the group matters to them. This has also been endorsed by Gao, Norton, Zhang and To (2009) that Chinese consumers, despite the focus on deriving hedonic and utilitarian benefits, may purchase fashion good to conform to and be accepted by their community. Chinese consumers purchase luxury brands for the same reason as consumers in other countries. However, status and self-reward are two strong motivators for purchase of luxury brands in China (KPMG, 2007). Purchasing a renowned brand is a way to demonstrate their success and status and over 70 percent of the respondents to a study accepted this. A little over 60 percent reward themselves for their hard work and success by purchasing luxury brands. Managers need to understand how the Chinese consumer interprets value – the customer’s assessment of the utility of a product based on the exchange that takes place – the consumer cost/sacrifice in exchange of a good or service (Wong & Dean, 2009). Store characteristics have influence over purchase attitude and decisions. In supermarkets values is evaluated based on quality and price but for department stores only customer orientation of the store is significant. This suggests that customers seek different shopping experience in each context. For supermarkets the choice of merchandise and consumer time pressure demonstrates links to loyalty. This implies that managers should pursue practical time-saving offering and bring out creative solutions for customers. 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