۱- Introduction

۲- Literature review

۳- Research Model and methods

۴- Results

۵- Conclusions

References

Abstract

In Korea, traditional retail districts face a serious situation whereby businesses in downtown areas face collapsing as local population declines: resulting in a decrease in self-employed sales and a declining local economy. Traditional retailers use ambiguous accounting and are reluctant to use credit cards, and thus, the overall reliability of their customer data is low. This paper solves this problem by applying the concept of customer equity (CE). We conducted an empirical analysis through questionnaires to identify differences in CE between traditional and new retail formats. The questionnaire consisted of questions related to CE (value equity, brand equity, relation equity), satisfaction, loyalty, and demographic characteristics. CE and satisfaction were measured on a 5-point Likert scale. A total of 400 surveys were completed, resulting in 391 usable returns for analysis in this study. In the regression analysis between CE and customer satisfaction, both old and new retail firms showed statistically significant effects. In the traditional retail industry, value equity and brand equity were statistically significant, while relation equity were not.

Introduction

Over the last 50 years smaller formats have been put under pressure both by large format, sometimes multinational, retailers and by the internet. In many countries (Murcott et al., 2013) loss of traditional local shops has created under-served markets or, worse, Food Deserts where essential provision cannot be sustained. There is a clear social welfare agenda if members of the public cannot easily access food (Hallsworth and Coca-Stefaniak, 2018) and a loss of past investment when businesses fail. So a second key agenda concerns the retailers themselves: there are benefits if the self-employed continue to be independent, and achieve sustainable growth by satisfying customers. As much as anything, such innovations safeguard past sunk costs in traditional locations. However, this sector is under-researched not least because there is no reliable way to know how much the self-employed who work in the traditional retail sector sell, or how much profit they make. Unfortunately, some of the self-employed never report their sales or net profit numbers publicly. This is because not only do they prefer to transact in cash, but they may also report figures lower than their actual sales whenever they have been investigated by the government. This paper addresses this challenge by applying the concept of customer equity (CE). As customer-oriented marketing strategies that took hold in the 1960s were emphasized in the literature, related marketing theories and practices also received constant attention (Vavra, 1997). Recently, a customer-centered viewpoint, such as customer satisfaction and customer value, was implemented as a concept in marketing management (Bolton and Drew, 1991). That said, the concept of customer lifetime value (CLV) has attracted more attention in recent years. CLV has been discussed in many academic research articles over the past decade, and has been used as a practical tool to measure business success (Gupta et al., 2006). As an extension of the CLV concept, CE is defined as the discounted lifetime values from all customers (Rust et al., 2000). (see Figs. 1 and 2) CE usually consists of value equity, brand equity, and relationship equity (Rust et al., 2001; Vogel et al., 2008). CE is perceived as a strategic framework that links customers and businesses and creates new sources of revenue (Lemon et al., 2001).