Academic journal article Journal of Business and Entrepreneurship

Customer Response to Retail Environments

Academic journal article Journal of Business and Entrepreneurship

Customer Response to Retail Environments

Article excerpt


A case relating the effects of changes to a retail environment for customer satisfaction is described. Unexpectedly, satisfaction was found to decrease after changes were implemented, although the modifications were made in response to customer complaints. Analysis of this case identifies reduced crowding as the most probable rationale for diminished customer satisfaction. Crowding is seen to have advantages in some situations, and can facilitate positive customer-customer and customer-employee interactions. A discussion of the effects of crowding and how to manage crowding as a beneficial environmental attribute is relevant to retailers.


The level of satisfaction claimed by a firm's customers is related to its profitability and ability to retain customers (LaBarbera & Mazursky, 1983; Anderson & Sullivan, 1993; Anderson, Fornell, & Lehmann, 1994; Rust, Zahorik, & Keiningham, 1995). These relationships provide a rationale for the marketing concept, which councils that satisfying customer needs and wants is a desirable strategy that should guide a firm's actions. Firms exhibiting a marketing orientation, or propensity to apply the marketing concept, have been shown empirically to perform better than those that do not (Kohli & Jaworski, 1990; Narver & Slater, 1990; Kohli, Jaworski, & Kumar, 1993). The benefits of satisfying customer needs and wants are therefore apparent, and managers should aim to achieve this objective.

Unfortunately, it is not always easy to understand what customers need or want. Direct communication with customers is an obvious solution, and is one of the primary benefits of market research. However, customers may not know what they want, or customers may not really want what they think they want. Reading between the lines or attempting to understand customers better than they understand themselves is one of the goals of marketing research that is not always realized.

The business literature is replete with examples of firms or individuals that-as a consequence of market research-make changes to the business or product, only to obtain a poor outcome. Probably the best known examples come from new product development studies, such as Coca-Cola's "New" Coke formula that, despite extensive market research, proved to be unpopular in most markets. Similarly, the Ford Edsel failed dismally despite a tremendous amount of marketing research that predicted success. Examples come from other areas, such as university classrooms. Brunner (1997) recounts her experiences with modifying course syllabi in response to comments on students' evaluation forms and complains that her teaching ratings fell after making the alterations. A further case of the problem of failed reactions to customer input is the focus of this article.

After listening to its customers and making several significant changes, a retail firm was surprised to find that its customers were less satisfied with the firm than before the changes were made. In attempting to understand the rationale for the decreased customer satisfaction, the authors searched the marketing literature for explanations. Specifically, literature related to the retail environment was studied, and it became obvious that no comprehensive theory or model exists that could explain the customers' response to the changes implemented by the firm.

This article presents what is effectively a case study, yet the analysis is interwoven with a degree of theoretical development. The firm introduced above is described both before and after modifications to its physical environment were made, and the measurement of customer satisfaction prior to and subsequent to the changes is also explained. Measurement results were surprising both to the firm and the researchers, and attempts at explanation led to the search for a general model of retail environments. The most valuable model found comes from the services literature. …

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