The Effect of Place on Performance of Shopping Malls in Nairobi County Kenya

Simon Kanoga^*,Reuben Njugana, Shadrack Bett

Department of Business Administration, Kenyatta University, Nairobi, Kenya

Abstract

The purpose of this paper is to investigate the effect of place mix dimension on performance of shopping malls in the Kenyan context. The research in the area of shopping mall is very limited in Kenya .It involved examining the nature and extent of the moderating role of shoppers buying behaviors between two variables i.e. mall performance and place mix dimension. The research embarked on an empirical analysis of shopping mall performance that incorporated the place mix and purchase decision as moderating variable. The research target population was nineteen shopping malls and respondents consisted of marketing managers, tenants and shoppers. Stratified random sampling design was adapted in the study. In conducting the research, primary data was collected through use of structured questionnaires by adopting a five-point Likert scale. The data was analyzed through use of linear regression analysis. The split-half technique was used in testing reliability and Cronbach alpha score was adapted to measure internal consistency. Reliability results for all the set of variables in the questionnaires gave a cronbach alpha statistics of more than 0.7, thus the threshold value of 0.7 were met.

Keywords

Malls, Place Mix, Shopping, Behaviours and Retail

Received:June 12, 2015
Accepted: June 29, 2015
Published online: July 16, 2015

@ 2015 The Authors. Published by American Institute of Science. This Open Access article is under the CC BY-NC license. http://creativecommons.org/licenses/by-nc/4.0/

1. Introduction

1.1. Background of the Study

One of six key sectors that constitutes more than half (57%) of Kenya’s GDP is wholesale and retail (RoK, 2008). Growth in wholesale and retail trade increased from 7.3 and 6.4 per cent in 2011 and 2012 respectively (KNBS, 2012). The retail enterprises in Kenya comprise of the small, medium and large form of retail business. The history of shopping malls started in US and later spread to other countries in the world (Wang, 2011). Today’s urban fabric and shopping malls integration is becoming more important as they are raising trends and changing retail landscape both globally and locally (Kocaili, 2010).

The purchase decisions of consumers have changed drastically over a period of time due to rise in spending power, emergence of middleclass, shoppers looking for wide product assortment and the best brand at low price (Lighthelm, 2008). Therefore Retail attraction is a key factor in the retail location as regarded by the shoppers. This can be explained as the willingness and the capability of the customers to defeat the physical difficulties and the competition influential power (Khan, 2011).

The study is undertaken to understand the role of marketing mix dimensions focusing on place mix on the performance of shopping mall while buyer behavior taking a moderating role. The performance of mall is denoted by mall visits, service quality and purchase. The choice criteria of malls by shoppers help the malls’ stakeholders in designing the right marketing mix decision strategies for enhancing performance.

1.2. The Research Problem

Although the emergence of shopping malls as a major shopping, social interaction and entertainment in Kenya, the marketing managers are faced with dynamic shoppers’ behavior and unpredictable competitive environment. In such turbulent environment, the understanding and prediction of the performance of shopping mall is paramount. Thus shopping mall marketing managers are under pressure to modify their marketing mix strategies to fit new market trends. This has emanated from changing shoppers’ behavior that has led to unpredictable purchase decisions and intense competition between the shopping malls both in the same region and in the different regions. Consequently, this has made it challenging for malls to attract shoppers, encourage re-patronage and service delivery which have an impact on mall performance. Most of shoppers are looking for more than fair prices and convenience which are the cornerstones of utilitarian value (Karim et al., 2013).Thus complicating the marketing mix decisions that marketers adapt.

The research conducted by Kawai (2009) on marketing strategy of shopping centre for customer retention found that there was a close relationship between the marketing strategy and the performance. Therefore a well-blended marketing mix strategy can attract and retain the repeated shoppers in the shopping malls hence increasing the level of revenue. Mokgabudi (2011) further investigated the effect of shopping malls on consumer behavior, and the study found that the choice of preferred malls was not a rational decision based on pricing but on compromise of satisfying economic, social and psychological needs. Given the role of marketing mix strategies on shopping malls performance ,the mixed findings from previous studies, there is a need to review, update, and extend our understanding of the specific marketing mix i.e. place mix dimension .

1.3. Objectives of the Study

i.   Test the validity of the measurement scale assessing shopping mall performance along two dimensions of place mix and purchase decision.

ii.   Measure and test the moderating effect of purchase decision on mall performance.

iii.  Measuring the statistical effects place mix dimension on the performance shopping malls

2. Literature Review

Retail attraction is a crucial aspect in the retail location strategy as viewed by the shoppers. Retailers may be able to develop a sustainable competitive advantage through location strategy (Levy &Weitz, 2007). It involves deciding where to locate and how many stores to have at the convenience of the shoppers. Retail location strategy can be divided into two broad areas i.e. the market factors and the operative factors (Khan, 2011).Market factors are those relating to the potential of the location for attracting consumers and enhancing sales, while operative are more related to the effort involved in opening and operating the store.

A strategic location allows easy access, attracts a larger number of customers, and increase potential sales of a retail outlet. Thus accessibility affects catchment population of a shopping mall (Kocaili, 2010). Retail location has long been considered as an important strategic business decision for a number of reasons. First, consumers’ store choice decisions are influenced greatly by accessibility of retail locations according to spatial interaction models, which denote the relationship between a consumer’s perception of utility and characteristics of a destination (Saxena, 2011).Secondly, retailers may be able to develop a sustainable competitive advantage through location strategy (Levy et al. 2007).The choice of a retail store location has a major and deep impact on its business performance. A wrong choice in most times could mean failure, whereas a good choice may lead the business toward all-time success.

In today’s highly competitive environment, choosing the correct site location for a retail outlet ranks amongst the top factors in determining that outlet’s success or failure. Maximizing sales is a primary objective for retailers, hence, finding the perfect site location that will facilitate both footfall and growth, is of key importance (Saxena, 2011).Currently customers’ shopping trend is heading toward merging different destinations and purposes in their shopping trips, which is known as cross-shopping (Khan, 2011).A location provides the firm, with strategic advantages that competition may find difficult to overcome.

The Spatial Interaction Theory

This theory relates to the way competing retail areas affect the shopper in an intermediate residential areas. The theory is based on the assumption that consumers will not always go to the closest shopping area offering them the products they need. However, shoppers will sacrifice longer distances in order to go to larger shopping areas with more options (Wang, 2011). The theory also states that the distance a consumer is willing to travel to a shopping center is proportional to the size of the shopping center even though the shopping center is far. Thus a shopper is ready to spend more on travelling cost and time in order to get what they want from a mall as a long as it is accessible. The theory explains why the shoppers travel longer distance to carry out shopping . The importance of the theory in the study underscores the role of marketing mix decisions on the performance of shopping mall. The mall’s marketing manager must therefore design marketing mix dimension to attract shoppers from other areas. Travelling a longer distance can be justified by availability of wide variety of products and brands, competitive pricing, regular promotion, availability of recreational facilities and strategic location of mall to attract shoppers from other areas.

Table I. Summary and Research Gaps.

3. Research Methodology

3.1. Research Design

This study adopted a descriptive cross-sectional survey design. According to Cresswell and Clark (2007), a combined descriptive cross-sectional survey research design is used when seeking to gather information, summarize, present and interpret it for the purpose of clarification. This design was therefore chosen as the study sought personal views, opinions, attitudes, and perceptions about place mix dimension as determinants of performance of shopping malls in Kenya.

3.2. Target Population

The study targeted 19 shopping malls in Nairobi County and its environs within Kenya. The respondents therefore included all customers visiting the malls, tenants and marketing managers.

3.3. Data Collection

Questionnaires and face-to-face interview was used in collecting data from the target population. All interviews were set up by requesting permission from the malls’ management.

3.4. Data Analysis

After data collection, the data was converted into some amounts of statistical information that can be understood and interpreted so that they can be used effectively. The questions were measured using Likert scales statements, to which respondents were required to state their level of agreement or disagreement. In order to use the Likert-scale for interpretation, weighted mean to represent each question was computed. Weighted mean is the average wherein every quantity to be averages has a corresponding weight. These weights represent the significance of each quantity to the average. To compute for the weighted mean, each value will be multiplied by its weight. The products were then added to obtain the total value. The total weight was also computed by adding all the weights. This statistical treatment is called data processing which includes operations such as; data editing, data coding, data classification and tabulation. Linear regression analysis was used to determine the strength of the relationship of the independent variables and the dependent variable.

4. Results Analysis and Discussion

The results are based on response from 159 respondents out of the 179 who participated (88.8% response rate).

4.1. Demographic Characteristics of the Respondents

The study identified the demographic characteristics of the respondents and their average income per month. In total there more female respondents with a prevalence of 53.3 than male respondents who formed 46.7% of the sample. These results show that the study was not gender biased. The age of the respondents show that in general most of the respondents (62.5%) were between 25-34 years of age with minority (7.5%) being below 25 years. This proves that the sample was composed of all age groups. The level of income for the respondents was also sought in the questionnaires. Overall results showed that almost a half (44.2%) of the study participants earned less than ksh. 50,000 per month with 37.5% earning above Ksh. 100,000 per month.

The research also sought to establish the length of time the respondents have been doing business or shopping in the mall. Findings indicate that most of the tenants and marketing managers (41%) have doing business with the malls for 0-2 Years while a few (7.7%) have doing business with the malls for over 8 years. On the other hand most of the shoppers (45.4%) have been shopping in the malls for 3-5 Years with close to a third (30.8%) for over 8 years. The graph below illustrates the length of time shopping and doing business in the shopping mall.

Figure 1. Experience with the shopping mall.

4.2. Place Mix Dimension

To assess place mix dimension, respondents were presented with a list of five statements and asked to rate how much they agreed with each statement. The statements were measured on a five point likert scale with responses ranging from strongly agree-5; agree=4; neutral=3; disagree-2 to strongly disagree-1. Average score for each statement was calculated and the results disintegrated by type of respondents and results displayed in table below.

TableII. Place Mix dimension.

Generally respondents were observed to agree with most of the statements on place mix dimension and its influence on the shoppers’ visits, service quality and purchase decision. However, the strategic location of mall, the security and safety of mall were rated as the highest place mix dimension factors that influence on the shoppers’ visits, service quality and purchase decision with scores of 4.5 and 4.4 respectively. Across the type of respondents categories, marketing manager and shoppers rated the strategic location of mall as the highest place mix dimension factor that influence on the shoppers visits, service quality and purchase decision with scores of 5.0 and 4.5 respectively. Tenants rated the security and safety of mall as the highest place mix dimension factor that influence on the shoppers’ visits, service quality and purchase decision with scores of 4.7.

Univariate Linear Regression for the Place Mix dimension

Using the enter method it was found that Place Mix dimension explain a significant amount of the variance in the Shopping Mall Performance (R² = .497, R²_Adjusted = .483).

Table  displays the coefficient of the regression model of Shopping Mall Performance on Place Mix dimension. Regression coefficients (B) represent the mean change in the response variable for one unit of change in the predictor variable while holding other predictors in the model constant. The standard error is an estimate of the standard deviation of the coefficient, the amount it varies across cases. It can be thought of as a measure of the precision with which the regression coefficient is measured. If a coefficient is large compared to its standard error, then it is probably different from 0.The t statistic is the coefficient divided by its standard error. The t statistic on our variable is compared with values in the Student's t distribution to determine the P value. The Student's t distribution describes how the mean of a sample with a certain number of observations is expected to behave. From the results of the regression model the coefficient for Place Mix dimension was significant at 5% level of significance.

Therefore, Shopping Mall Performance can be predicted using Place Mix dimension in the following equation:

Y=1.667+.595X2

Where; Y is Shopping Mall Performance

X2 is the Place Mix dimension

TableIII. Coefficients for Place Mix dimension.

a. Dependent Variable: Shopping Mall Performance

The above equation for regression of Shopping Mall Performance on Place Mix dimension indicate that a unit increase in Place Mix dimension would lead to .595 unit increase in Shopping Mall Performance.

Marketing Implications

The research findings would be of great importance to all stakeholders especially investors, mall managers and marketers in understanding the impact of strategic location of mall as key attraction factor. In light of these, mall managers and potential investors would get more insight on where to locate their mall and what to incorporate in the architectural design for the purpose of benchmarking in order to remain competitive and acquire competitive advantage.

In response to ever changing shopper’s behavior and the intense competition between malls, there is need adapt and blend marketing mix strategies for effectiveness. The key to enhancing mall performance is in understanding the needs of shoppers. Thus executing the right marketing mix strategies improves mall performance.

Limitations and Future Research

The findings of this study provide an insight in understanding the impact of marketing mix dimension on performance of shopping mall. However, the study has limitations in generalizing the findings since it focused only in one county in Kenya, Nairobi. The study focused on one retail format whereas the sector is larger in scope hence limitations of this study suggest several directions for future study. Future work also could examine the same variables but adapt different research design. The hypothesis could be tested using discriminant analysis approach. The reliability test and exploratory factor analysis could be used to verify the constructs. Finally, it would be worthwhile to explore other moderating effects on variables such as macro environment on performance of malls.

Appendix

Appendix 1: Introduction Letter to the Questionnaires

Simon Kanoga

Department of Business Administration

School of Business

Kenyatta University

P.O BOX 43844-00100

NAIROBI

Dear Sir/Madam,

I am researching on the effects of place on performance of shopping malls in Nairobi County. Having been selected as one of the research respondent kindly read and fill the attached questionnaire.

Kindly note that all information provided will be treated with utmost confidentiality and are solely meant for academic purpose. Your participation will be highly appreciated, as it will immensely contribute to the success of this research.

Yours faithfully

Simon Kanoga

Appendix 2:Questionnaire

Research Questionnaire-The Shopping Mall Shoppers

Introduction

This questionnaire is part of the study that is being carried out study on shopping mall performance. The researcher is kindly requesting you to furnish him with appropriate information. Please note that this information is meant for academic purpose and will be treated with utmost confidentiality.

Please provide the following information in regards to shopping mall. Answer each question as completely and clearly as possible by ticking appropriately in the box (choose only one answer per question).This will take approximately 4 to 5 minutes of your time.

Part 1: Respondent Profile

1.   Kindly select your gender.

□ Male     □ Female

2.   In which of the following age bracket do you belong?

□ 18-24     □ 25-34    □35-44 years     □ 45 and above years

3.   What is your current income bracket per month (Kshs)

□ Less than 50,000   □50,001–100,000   □100,001-150,000   □ Over 150,001

Part 2: Purchase Decision

4         Please indicate how strongly you agree or disagree with the statements using the scale provided (1- Strongly agree, 2- Agree, 3-Neutral, 4- Disagree and 5- strongly disagree) in regards to mall visit, quality of service and purchase decision by ticking the appropriate box.

Part 3: Place Mix Dimension

5    Please rate the level of agreement or disagreement on the following characteristic of shopping mall influence on performance i.e. mall visits, service quality and purchase decision using scale (1- Strongly agree, 2- agree, 3-neutral, 4-disagree, 5-strongly disagree)by ticking the appropriate box .

Research Questionnaire-Marketing Manager

Introduction

This questionnaire is part of the study that is being carried out study on shopping mall performance. The researcher is kindly requesting you to furnish him with appropriate information. Please note that this information is meant for academic purpose and will be treated with utmost confidentiality.

Kindly provide the following information in regards to shopping mall. Answer each question as completely and clearly as possible by ticking appropriately in the box (choose only one answer per question).This will take approximately 4 to 5 minutes of your time.

Part 1: Respondent Profile

1    Kindly indicate your role/position in this mall?

□ Marketing Manager □Mall Manager □Business development manager □Others

2    How long have you been working in this shopping mall?

□ 0-2 Years □ 3-5 Years □6-8 Years □ above 8 years

Part 2: Place Mix Dimension

3    Please rate to what extent you  agree or disagree on the following characteristic of shopping mall influence on purchase decision, shoppers visits, service delivery and using scale (1- Strongly agree, 2- agree, 3-neutral, 4-disagree, 5-strongly disagree)by ticking the appropriate box.

Part 3: Shopping Mall Performance

4    Please rate to what extent you agree or disagree on the impact of marketing mix dimensions on shopping mall performance using the scale (1-Strongly Agree, 2-Agree, 3-Neutral, 4-Disagree and 5 - Strongly Disagree) by ticking appropriate box.

Research Questionnaire-Tenant

Introduction

This questionnaire is part of the study that is being carried out study on shopping mall performance. The researcher is kindly requesting you to furnish him with appropriate information. Please note that this information is meant for academic purpose and will be treated with utmost confidentiality.

Kindly provide the following information in regards to shopping mall. Answer each question as completely and clearly as possible by ticking appropriately in the box (choose only one answer per question).This will take approximately 4 to 5 minutes of your time

Part 1: Tenant Profile

1    Kindly indicate the nature of your business?

□ Food court    □Retail store □     Service provider     □Others

2    How long have you been doing business in this shopping mall?

□ 0-2 Years     □ 3-5 Years     □6-8 Years     □ Above 8 years

Part 2: Place Mix dimension

3    Please rate the level of agreement or disagreement on the following statements on shopping mall performance using scale (1- strongly agree, 2-Agree, 3-Neutral,4-Disagree, 5-Strongly disagree)by ticking the appropriate box.

Part 3: Shopping Mall Performance

4    Please rate to what extent you agree or disagree on the impact of place mix dimensions on overall shopping mall performance using the scale (1-Strongly Agree, 2-Agree, 3-Neutral, 4-Disagree and 5 - Strongly Disagree) by ticking appropriate box.

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