Missing in Action, a Clear Value Proposition: The Dilution of the Department Store Concept and its Impact on Customer Loyalty

Abstract

This research is examining the customer loyalty towards department stores today when the major European upscale department stores are adapting a new store-within-a-store concept arrangement. Different features of a retail store have been studied in details, such as the store atmosphere, customer service, merchandise quality and store locations. Nonetheless, the existence of a smaller shop inside the premises of a larger retailer has seldom been considered. The issue in question is that to whom are the customers now actually loyal to, the department store or the brands represented in a real estate, and what are the factors that create value to the customers then? The store-within-a-store business model has become recently popular among the upscale department store concepts during the last decade and is gradually displacing the traditional concept of manufacturer-retailer arrangement.

This study is conducted by using relevant literature to the research question and analysing statistical data of customer satisfaction to loyalty programs and store experiences. This study is a qualitative inductive research as the key element of this type of research is to perceive the phenomenon as a whole, and to be able to make the final concluding observations, a larger amount of literature and data has been processed and analysed. The results of this research, gathered based on the literature review, indicates the current situation of customer loyalty towards department stores today and the explanatory reasons behind that phenomenon, followed by the discussion of factors that add value to maintain and to enhance the customer commitment in the changing department store concept.