Retail is Indias largest industry, accounting for over 10 % of the countrys GDP and around 8% of the employment.

Retail industry in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. But because of the heavy initial investments required, break even is difficult to achieve and many of these players have not tasted success so far. However, the future is promising; the market is growing, government policies are becoming more favorable and emerging technologies are facilitating operations. Retailing in India is gradually inching its way toward becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping in India. Modern retail has entered India as seen in sprawling shopping centers, multi-storied malls and huge complexes offer shopping, entertainment and food all under one roof. The Indian retailing sector is at an inflexion point where the growth of organized retailing and growth in the consumption by the Indian population is going to take a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organized retail sector in India. Retailing is one of the pillars of the economy in India and accounts for 35% of GDP. The retail industry is divided into organized and unorganized sectors. Over 12 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m) in size. The Indian retail industry though predominantly fragmented through the owner -run " Mom and Pop outlets" has been witnessing the emergence of a few medium sized Indian Retail chains, namely Pantaloon Retail, RPG Retail, Shoppers Stop, Westside (Tata Group) and Lifestyle International. Given the attractiveness of the Indian retail sector, foreign retailers like Wal-Mart, Carrefour SA, Europe's largest retailer and Tesco Plc, the UK's largest retailer, were keen to enter this growing market, despite the Indian retail sector being closed to foreign direct investment (FDI). In the last few years, Indians have gone through a dramatic transformation in lifestyle by moving from traditional spending on food, groceries and clothing to lifestyle categories that deliver better quality and taste. Modern retailing satisfies rising demand for such goods and services with many players entering the bandwagon in an attempt to tap greater opportunities. Growth of retail in India: An increasing number of people in India are turning to the services sector for employment due to the relative low compensation offered by the traditional agriculture and manufacturing sectors. The organized retail market is growing at 35 % annually while growth of unorganized retail sector is pegged at 6 %. The Retail Business in India is currently at the point of inflection. Rapid change with investments to the tune of US $ 25 billion is being planned by several Indian and multinational companies in the next 5 years. It is a huge industry in terms of size and according to management consulting firm Technopak Advisors Pvt. Ltd., it is valued at about US $ 350 billion. Organized retail is expected to garner about 16-18 percent of the total retail market (US $ 65-75 billion) in the next 5 years. India has topped the A.T. Kearneys annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most

attractive market for retail investment. The Indian economy has registered a growth of 8%. The enormous growth of the retail industry has created a huge demand for real estate. Property developers are creating retail real estate at an aggressive pace and by 2010, 300 malls are estimated to be operational in the country. With over 1,000 hypermarkets and 3,000 supermarkets projected to come up by 2011, India will need additional retail space of 700,000,000 sq ft (65,000,000 m) as compared to today. Current projections on construction point to a supply of just 200,000,000 sq ft (19,000,000 m), leaving a gap of 500,000,000 sq ft (46,000,000 m) that needs to be filled, at a cost of US$15-18 billion. Indian market has high complexities in terms of a wide geographic spread and distinct consumer preferences varying by each region necessitating a need for localization even within the geographic zones. India has highest number of outlets per person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m)/ person is lowest in the world. Indian retail density of 6 percent is highest in the world. 1.8 million Households in India have an annual income of over 45 lakh. Looking further into consumer buying habits, purchase decisions can be separated into two categories: 1. Status-oriented 2. Indulgence-oriented. CTVs/LCDs, refrigerators, washing machines, dishwashers, microwave ovens and DVD players fall in the status category. Indulgence-oriented products include plasma TVs, state-of the-art home theatre systems, and iPods, high-end digital cameras, camcorders, and gaming consoles. Consumers in the status category buy because they need to maintain a position in their social group. Indulgence-oriented buying happens with those who want to enjoy life better with products that meet their requirements. When it comes to the festival shopping season, it is primarily the status oriented segment that contributes largely to the retailers cash register. The break-up of organized retailing sales into various product categories: Books, Music & Gifts: 3% Mobile Handsets: 3% Clothing & Textile: 39% Food & Grocery: 11% Consumer Durables: 9% Footwear: 9% Furniture & Furnishings: 8% Catering Services: 7% Jewellery & Watches: 7% Others: 4%

The Growth Drivers The Indian Retail growth can be attributed to the several factors including Demography Dynamics: Approximately 60 per cent of Indian population below 30 years of age. Double Incomes: Increasing instances of Double Incomes in most families coupled with the rise in spending power. Plastic Revolution: Increasing use of credit cards for categories relating to Apparel, Consumer Durable Goods, Food and Grocery etc. Urbanization: Increased urbanization has led to higher customer density areas thus enabling retailers to use lesser number of stores to target the same number of customers. Aggregation of demand that occurs due to urbanization helps a retailer in reaping the economies of scale. Covering distances has become easier: With increased automobile penetration and an overall improvement in the transportation infrastructure, covering distances has become easier than before. Now a customer can travel miles to reach a particular shop, if he or she sees value in shopping from a particular location. Technology in Retail : Over the years as the consumer demand increased and the retailers geared up to meet this increase, technology evolved rapidly to support this growth. The hardware and software tools that have now become almost essential for retailing can be divided into 3 broad categories. Customer Interfacing Systems Bar Coding and Scanners Point of sale systems use scanners and bar coding to identify an item, use pre-stored data to calculate the cost and generate the total bill for a client. Tunnel Scanning is a new concept where the consumer pushes the full shopping cart through an electronic gate to the point of sale. In a matter of seconds, the items in the cart are hit with laser beams and scanned. All that the consumer has to do is to pay for the goods. Payment Payment through credit cards has become quite widespread and this enables a fast and easy payment process. Electronic cheque conversion, a recent development in this area, processes a cheque electronically by transmitting transaction information to the retailer and consumer's bank. Rather than manually process a cheque, the retailer voids it and hands it back to the consumer along with a receipt, having digitally captured and stored the image of the cheque, which makes the process very fast. Internet Internet is also rapidly evolving as a customer interface, removing the need of a consumer physically visiting the store. Operation Support Systems

ERP System Various ERP vendors have developed retail-specific systems which help in integrating all the functions from warehousing to distribution, front and back office store systems and merchandising. An integrated supply chain helps the retailer in maintaining his stocks, getting his supplies on time, preventing stock-outs and thus reducing his costs, while servicing the customer better. CRM Systems The rise of loyalty programs, mail order and the Internet has provided retailers with real access to consumer data. Data warehousing & mining technologies offers retailers the tools they need to make sense of their consumer data and apply it to business. This, along with the various available CRM (Customer Relationship Management) Systems, allows the retailers to study the purchase behavior of consumers in detail and grow the value of individual consumers to their businesses. Advanced Planning and Scheduling Systems APS systems can provide improved control across the supply chain, all the way from raw material suppliers right through to the retail shelf. These APS packages complement existing (but often limited) ERP packages. They enable consolidation of activities such as long term budgeting, monthly forecasting, weekly factory scheduling and daily distribution scheduling into one overall planning process using a single set of data. Strategic Decision Support Systems Store Site Location Demographics and buying patterns of residents of an area can be used to compare various possible sites for opening new stores. Today, software packages are helping retailers not only in their location decisions but in decisions regarding store sizing and floor-spaces as well. Visual Merchandising The decision on how to place & stack items in a store is no more taken on the gut feel of the store manager. A larger number of visual merchandising tools are available to him to evaluate the impact of his stacking options. The SPACEMAN Store Suit from AC Nielsen and ModaCAD are example of products helping in modeling a retail store design. Investment Opportunities Potential for Investment: The total estimated Investment Opportunity in the retail sector is around US$ 5-6 Billion in the Next five years. Location: With modern retail formats having made their foray into the top cities namely Hyderabad, Coimbatore, Ahmedabad, Mumbai, Pune, Chennai, Bangalore, Delhi, Nagpur there exists tremendous potential in two tier towns over the next 5 years. Sectors with High Growth Potential: Certain segments that promise a high growth are Food and Grocery Clothing Furniture and Fixtures Pharmacy

Durables, Footwear & Leather, Watch & Jewellery Fastest Growing Formats: Some of the formats that offer good growth potential are: Specialty and Super Market Hyper Market Discount stores Department Stores Convenience Stores and E-Retailing Supply Chain Infrastructure: Supply chain infrastructure in terms of cold chain and Logistics. Rural Retail: Retail sector offers opportunities for exploration and investment in rural areas, with Corporates and Entrepreneurs having made a foray in the past. India's largely rural population has caught the eye of retailers looking for new areas of growth. ITC launched the country's first rural mall 'Chaupal Saagar', offering a diverse product range from FMCG to electronics appliance to automobiles, attempting to provide farmers a one-stop destination for all of their needs. There has been yet another initiative by the DCM Sriram Group called the ' Hariyali Bazaar',that has initially started off by providing farm related inputs and services but plans to introduce the complete shopping basket in due course. Wholesale Trading: Wholesale trading also holds huge potential for growth. German giant Metro AG and South African Shoprite Holdings have already made headway in this segment by setting up stores selling merchandise on a wholesale basis in Bangalore and Mumbai respectively. These new-format cash-and-carry stores attract large volumes from a sizeable number of retailers who do not have to maintain relationships with multiple suppliers for all their needs.

Service Quality It is know that, in the case of services, the criteria that customers use to evaluate service quality is complex and difficult to determine precisely due to the fact that services are intangibles, heterogeneous, cannot be placed in time, and production and consumption are simultaneous (Athanassopoulos, 2001). The identification of service quality dimensions was of primary interest to researchers (Parasuraman et al, 1985, 1991a). The development of measurement instruments of service quality was the focus of subsequent research efforts (Parasuraman et al, 1988, 1991b, 1993; Cronin and Taylor, 1992, 1994; Buttle, 1996; Athanassopoulos 1998, 1999). The first big operational debate has been focused on whether service quality should be measured as perceptions or as disconfirmation (Cronin and Taylor, 1992, 1994; Parasuraman, Zeithaml, and Berry, 1994; Teas, 1993, 1994). Those who favour the former approach (Cronin and Taylor, 1992) suggest that perceptions of service quality more closely match customer evaluations of the service provided. Those who favour disconfirmation paradigm, such of Parasuraman et al., (1994) counter that measuring service quality, as disconfirmation is valid and further, it allows service providers to identify gaps in the service provided. In the disconfirmation model, Service Quality is conceptualised as the comparison of service expectations with actual performance perceptions (Zeithaml et al., 1996). The operationalization of it is the SERVQUAL instrument. The main idea is that service quality is a function of the difference scores or gaps between expectations and perceptions. Thus, Service quality is a multidimensional concept. They find five dimensions of service quality: reliability (ability to deliver the promised service dependably and accurately); responsiveness (willingness to help customers and provide prompt service); assurance (ability to inspire trust and confidence); empathy (customers are individuals); and tangibles (elements that represent the service physically. But this construct is criticized for theoretical and operational issues. It seems that this construct is industry specific and country specific. The validity and the reliability (Brown etal., 1993) of the difference between expectations and performance have questioned and several authors have suggested that perceptions scores alone offer a better indication of service quality (Cronin and Taylor, 1992; Teas, 1993), and application of SERVQUAL is not possible in new services, but only for existing ones. However, SERVQUAL seems to be a useful scale to use in measuring service quality by making appropriate adjustments for industry and country contextual effects. It has been proven the validity and reliability across a large range of service contexts. Tyre Shop (Carman, 1990), discount and department stores (Finn and Lamb, 1991; Teas, 1993), medical services (Brown and Swartz, 1989), hospitals (Babakus and Mangold, 1992), higher education (Boulding et al., 1993), are some of the services where SERVQUAL was applied. Dabholkar et al., (1996) reported that in many services the SERVQUAL must be adapted with more or less items, with different group of factors. The perceived performance model deviates from the above model in that expectations play a less significant role in satisfaction formation. The model performs especiallly well in situations where a product/service performs so

positively that the customers expectations get discounted in her/his postconsumption reaction to the product/service. Increasingly, researchers (Mittal and Lassar, 1996; Olsen, 2002) are simply measuring perceptions (SERVPERF) as indicators of service quality (ignoring expectations completely) and are finding good predictive power in their studies. Some researchers (Babakus and Botler, 1992; Cronin and Taylor, 1992) have compared computed difference scores with perceptions to conclude that perceptions are a better predictor of service quality than disconfirmation. A study by Churchill and Suprenant (1982) also partially supports the efficacy of using only performance perceptions to measure service quality. Below, we report, some studies that we investigated and uses the SERVPERF or modified scales that seem to be according to SERVQUAL. As it is seen in table 1, the diversity of studies applied to many different service industries, results on a great acceptability of this constructs. Many other studies are made but those seem to us the more approachable with the study on pharmacies satisfaction. Only a few numbers of studies are made with the focalization on health industry and a smaller number (almost rare) of those on pharmacies. The study reported in pharmacy industry is only about the pharmacist service, not on the pharmacy as a store (Schommer and Wiederholt, 1994).

Another problem is what attributes does contain a service quality scale. We know that customers of services observe and evaluate the production process as they experience the service they receive (Parasuraman, Zeithaml, and Berry, 1988). Berry et al., (1985) argued that service quality attributes of search, experience, and credence, are used by consumers to evaluate service quality. Search attributes, such as physical facilities, appearance of personnel and suppliers image can be considered before consuming the service. Experience attributes, like responding quickly to a request and performing a service at the agreed time are assessed on the basis of the actual service experience. Credence attributes like financial security of an investment cannot be determined even after repeated use of service. In our study we have the preoccupation to incorporate these attributes on the construction of the scale.

Customer Satisfaction As concluded by the literature review Customer Satisfaction is a summary affective response of varying intensity, with a time-specific point of determinate and limited duration, directed toward focal aspects of product acquisition and/or consumption. Some researchers (Cronin and Taylor, 1992; Taylor and Baker, 1994) treat service quality and customer satisfaction as distinct constructs, in the sense that service quality is an attitude while customer satisfaction is often a transaction-specific measure. Customer satisfaction has been defined in various ways, but the conceptualization, which appears to have achieved the widest acceptance, is that satisfaction is a post-choice evaluative judgment of a specific transaction. Fornell (1992) suggests that satisfaction can be viewed directly as an overall feeling. Satisfaction is related closely to, but is not the same as, the customers general attitude toward the service. The key to distinguishing satisfaction from attitude is that satisfaction assessments relate to individual transactions whereas attitudes are more general (in Bitner, M.J. (1990). Similarly, one interpretation suggests that satisfaction can be distinguished from perceived quality. Parasuraman, Zeithaml, and Berry (1998) define perceived (service) quality as the consumers judgement about a firms overall excellence or superiority. This definition suggests that perceived quality is similar to an individuals general attitude toward the firm (Zeithaml, 1988). Another question with customer satisfaction is the study of antecedents and consequences (Anderson and Sullivan, 1993). They had found that customer satisfaction is best specified as a function of perceived quality and disconfirmation and quality has a greater impact on satisfaction and repurchase intentions than quality which exceeds expectations. More important, they had found that elasticity of repurchase intentions with respect to satisfaction is lower for firms that provide high expectations. In table 2 we resume some studies that we have analyzed to achieve a construct that could traduce the best operationalization. There isnt a so universal acceptable scale to the construct of customer satisfaction than for the construct of service quality. In the operationalization of the constructs of customer satisfaction we have adopted the scale of Bloemer and Ruyter (1998) because it seems more adapted to pharmacy services.

In table 1 and table 2 are focalized in the specificity of Store Image, Store Satisfaction, and Store Loyalty. In present study, it was important to study the particular aspect of certain services, where the concepts linked to the concept of store are important, such as physical evidence, image, localization, and parking. Behavioural Intentions Several researchers make the distinction between offensive and defensive marketing policies. According to those researchers, offensive marketing actions refer to capturing new customers by investing in service quality, and defensive marketing actions refer to retaining existing customers. There are compelling arguments of the superiority of the defensive marketing over de offensive one. For example, lowering customer defections can well can have a strong impact on a companys profits (Reichheld and Sasser, 1990) as well as market share (Rust and Zahorik, 1993). Relative retention has been shown to explain profits better than market share, scale, cost position, or any other variables usually associated with competitive advantage (Reichheld, 1996).Similarly Fornell and Wernerfelt (1987) concluded that is better for a company to spend resources to keep existing customers than to attract new ones.

Customers who remain loyal to the company are likely to engage in favourable word-of mouth behavioural responses and are possible to cross-sell to theses customers or even charge them a premium price. Customer loyalty expresses an intended behaviour related to the product or service. This includes the likelihood of future purchases or renewal of service contracts or, conversely, how likely it is that the customer will switch to another brand or service provider. Customers may be loyal owing to high switching barriers related to technical, economical or psychological factors, which make it costly or difficult for the customer to change supplier. Customer may also be loyal because they are satisfied with the supplier or product brand, and thus want to continue the relationship. As most barriers appear to be of limited durability, companies tend to approach satisfaction as the only viable strategy in the long run. For the construction of service loyalty (a positive behavioural intention) the constructs are more diversified. Meanwhile the investigations of Bloemer et al. (1998), Bloemer (2002), Bloemer and Ruyter (1998), and Zeithaml et al., (1996), are the best contributions to the research. For Behavioural Intentions we have adopted the Scale of Zeithaml et al., (1996) In table 3, we present studies that analyze the consequences of Customer Satisfaction. The customer transmits their satisfaction with behaviors. Those behaviors could be such of word of-mouth, complaint, and loyalty. Favourable Behavioural Intentions One group of behavioural intentions could be designed as positive behavioural intentions. One of this is loyalty. Certain behaviours signal that customers are forging bonds with a company. When customers praise the firm, express preference for the company over others, recommend the company of service to others (Parasuraman, Berry, and Zeithaml, (1991a), say positive things about company to others (Boulding et al. 1993), increase the volume of their purchases, or agreeably pay a price premium (Rust and Zahorik, 1993), they are indicating behaviourally that they hare bonding with the company. Several studies have examined the association between service quality and more specific behavioral intentions. Parasuraman, Berry, and Zeithaml (1991a) find a positive and significant relationship between customers perceptions of service quality and their willingness to recommend the company. Increased customer retention has two important effects: (1) it can lead to a gradual increase in the firms customer base which is vital in an era of low sales growth, and (2) the profits earned from each individual customer grow the longer the customer remains loyal to the firm. Existing customers also tend to purchase more than new customers (Rose, 1990). And costs to retain customers are about 80% lower than the costs to acquire new customers. A focus on ones current customers, if it results in increased satisfaction, may also generate other benefits, for example, the generation of positive word-of mouth. And with enhanced loyalty the prevailing practice of offering costly loss leaders to generate store traffic may become less necessary. However, how customers develop loyalty to a particular store and how that loyalty can be maintained are open questions. An understanding of current customers store loyalty intentions and their determinants is an important basis for the identification of optimal retailer actions. Loyalty is frequently defined as observed behaviour (Liljander and Strandvik 1995) or actual behaviour that drives the performance of an industry. Repeat purchasing and purchasing sequence are measures of actual behaviour. Loyalty is also an attitude,

expressed for example, in the willingness to recommend a service provider to other consumers (Selnes, 1993). Loyalty is also cognitive, that could be operationalized as a product or service that comes first to mind when making a purchase decision or the product or service that is the first choice among alternatives (Ostrowski et al., 1993), or price tolerance (Anderson, 1996; Fornell et al., 1996). So, when defining an instrument to measure behavioural intentions (loyalty is a positive behaviour) we must consider behavioural, attitudinal and cognitive aspects. Unfavourable Behavioural Intentions Customers perceiving service performance to be inferior are likely to exhibit behaviours signalling they are poised to leave the company or spend less in the company. These behaviours include complaining, which is viewed by many researchers as a combination of negative responses that stem from dissatisfaction and predict or accompany defection. Complaining behaviour itself is conceptualized as multi-faceted. According to Singh (1988), dissatisfaction leads to consumer-complaining behaviour that is manifested in voice responses, private responses or third-party responses. Specific indicators of unfavourable behavioural intentions suggested by the preceding discussion include different types of complaining (complaining to friends or external agencies) and contemplation of switching to competitors. Another indicator of eventual defection is a decrease in the amount of business a customer does with a company.