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Servicescape and Employee analysis in management of liquor store, script to powerpoint presentation of assignment ...

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Andrew: Dan Murphy’s was founded in Melbourne 1952 and has grown to 226 stores across Australia. Distinguishable by the Logo of Dan Murphy himself, it is currently owned by Woolworths Limited, and has a reputation for having low prices and having an incredible range of products, with a particular passion for fine wine. [Slide 1] The story of Dan Murphy’s is encapsulated in a quote from the man of which the store is named, "Dan Murphy's was founded not only to enable you to obtain your liquor more cheaply but also to help you enjoy life in an atmosphere mainly concerned with wine; to instruct, to advise and to co-operate with you in any way you wish." - Dan Murphy, September 1958 The Dan Murphy’s Store that we will be specifically analysing today is the one situated in Phillip. [Slide 2] Connor: Charlie is a 22-year-old Male, however he has what many would call a ‘baby face’ and as such looks very young for his age. Charlie is earning a considerable salary despite his age and he fancies himself a bit of a wine connoisseur. Charlie is known to be quite difficult when asking for assistance. Charlie works in the Woden area and is in a wine tasting group with his fellow coworkers, of which they take it in turns each week to choose a wine. It is Charlie's turn this week to pick a wine, and he is anxious as he wishes to impress his colleagues.

We identified many servicescape elements that influenced the customers experience within Dan Murphys, being, ambient conditions, with the use of brightly lit areas so to clearly see products, and comfortable temperatures to create comfort. As well as Signage and Layout, so to distinctly show the range of products and help with directions. However, what we decided were fundamental in relation to both Dan Murphy’s and the wider influence of customer experience was the following: [Slide 3] Ambient Conditions – Music

Ambient Conditions refer to the characteristics that pertain to your five senses, and can affect both consumer and employee behaviour. Of significant importance is the use of noise, in particular music. It has been illustrated in (Millman 1982, 1986), that music tempo can affect the pace of shopping, length of stay, and amount of money spent. It has also been studied that the familiarity of music affects perceptions of how long a customer has been shopping, with familiar music helping distract customers. As you can probably recognise this is a significant tool that should be used to help your business prosper. With reference to Dan Murphy’s, they have considered this element of servicescape. They utilise the use of sound and music, usually playing slow-beat, relaxing music within there stores. The objective of such would be to keep customers inside their store longer, reducing customer walking pace, and inciting more opportunities for impulse buying. It also serves to shorten perceived waiting times for queues. Such a usage of music can be quite considerable and failure to employ this element could be detrimental to a business. With relation to Charlie, the relaxing music would have helped reduce his anxiety, helping him enjoy the process of purchasing a fine wine. Another aspect of this element is the ability for music to deter particular customers. With the use of unfamiliar sounds to a certain demographic, it assists in drive unwanted individuals away. An example of such deterring is being illustrated in Adelaide, with Barry Manilow playing in the streets to deter loitering. It can be compared that Dan Murphys, use of slow beat relaxing music, such that of Manilow’s, can help deter unwanted loitering from youths unfamiliar with such music. [Slide 4] Spatial layout The spatial layout and functionality of a store refers to the floor plan, size and shape of furnishings within the store. This key element provides both a visual and functional servicscape, helping facilitate the specific purpose of the store, being the consumption of products. Dan Murphy’s Spatial Layout and functionality is an element of servicescape that they greatly utilised. The arrangement of shelves and products is well thought out, deliberately placing fine wines at the heart of the store, making a real feature out of this category, with distinctive fixtures and using additional ambient elements such as signature lighting. This spatial layout creates an ‘Aladdin’s cave’ atmosphere, with the lamp being the all important tasting area, a service that Dan Murphy’s provide. The functionality of this layout is very practical. After being drawn into ‘Aladdin’s cave’ you find yourself walking out through wide aisles that are considerate of the use of

trolleys, and lining the shelves are related products, to those you just saw. Forming a natural progression through the store. [Slide 5] The People within the Environment Founded by Tombs and McColl-Kennedy (2003) the appearance of both the service personnel and customers can reinforce or detract from the impressions created by a servicescape. For staff this element includes the recruitment of specific staff to fill specific roles and skills, and the use of uniforms that are consistent with the servicescape that they’ll be working in. Further elements are scripted speech and movement of staff. In relation to customers it is critical that you attract people of specific characteristics that matches the ambience of your establishment. The desired and targeted customer demographic will help actively enhance your own store ambience, attracting new customers of similar standing. Although Dan Murphy’s is an incredibly diverse store that fulfils many needs for an array of customers, the use of weekly wine related activities, particularly wine tasting, is an element that helps attract targeted customers. This Customer can be described as a person who is typically of more maturity, preferring more complex alcoholic drinks. Charlie on entering the store would have identified ‘fellow wine lovers’ and this would have strengthened his confidence in the store. This specific customer targeting helps obtain customers that elevate the profile of Dan Murphy’s of one of sophistication in comparison to other liquor stores, which in turn helps new customers understand the environment of the establishment. [Slide 6] Andrew: Due to the size, and extensive tangible products that Dan Murphy’s sell, front-line employees play a vital role in delivering customer service. We have identified 3 key front-stage employee actions which we believe are essential to the success of the business, being: 1. Product knowledge 2. Systems knowledge 3. Store layout knowledge -

Product Knowledge: o Customers are always interested in knowing what’s a good product, recommendations, competent and knowledgeable employees are able to provide this service, potentially increasing sales. An example might include a customer who is having fish and chips for dinner and doesn’t know what a suitable beverage to pair with their meal would be. The customer expectation is that employees will be able to provide a certain level of information to help

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answer their query. This falls under the assurance and empathy dimensions of service quality, where customers are highly dependent on employees’ ability to communicate their credibility and inspire trust. Systems Knowledge o It is essential that employees are competent in utilising all systems and technology. Examples include eftpos machines, point of sale computers, scanners, item searches, etc. Employees displaying high levels of systems knowledge and use allows smooth service of customers, particularly when they are at the purchase stage of consumption. Customers who are provided with efficient service are more likely to return to the store, thus increasing sales. For example, customers who have experienced quick service previously are more inclined to return when they are operating under a limited time frame. This systems knowledge falls under the service quality dimension of reliability. Store Layout Knowledge o Due to the size of store, and range of tangible products, it is important that employees are aware of the store layout, and where everything is located. For example, a customer is wondering where they can find Italian Nebbiolo’s as there is a lot of wine in the store. An employee able to promptly direct the customer to the correct area increases the customer satisfaction levels based on the service quality dimension of responsiveness.

By ensuring front-stage employees meet all of the dimensions of service quality in regard to these 3 key actions and skills, customers are more likely to return to the store, thus increasing sales and revenue. [Slide 7] Connor: Being able to identify potential or current fail points enables managers to design procedures to avoid their occurrence or to prepare appropriate contingency plans in the event of a service failure. It is therefore important to identify these issues as quickly as possible. I found that It was difficult to find servicescape failpoints or bottlenecks within Dan Murphy’s, which is a credit to the store, although there were some particular issues. Firstly, the signage within Dan Murphy’s, although initially very prominent, quickly becomes lacking when searching for specific items. The store has large signs that label specific areas within the store in accordance with particular drinks. However, when one finds themselves within these sections, signage can become limited and confusing. In reference to our persona Charlie, and he’s desires, finding the section for wine was clear and direct, although specific wines were harder to distinguish. Applying the MehrabianRussell theoretical model (M-R model), it becomes clear how this can cause failings in the servicescape:

The missing and confusing signage is the environmental stimuli – which causes an emotional reaction at the ‘organism’ level, being Charlie, of which he would be unsatisfied, for he is unable to easily find specific wines. – This prompts a behavioural response of two options; approach and avoidance behaviour. Approach behaviour would consist of (1) spending, (2) time in a store, (3) intention to revisit, or (4) number of items bought (Dennis & Newman, 2005). In this circumstance it would cause avoidance behaviour likely leading to the customer having an intention of not wanting to revisit. This fail point of signage continues with lacking of price labels. Similar to above, when applying the M-R model, the behavioural response is again one of avoidance. This is of particular frustration as many consumers are conscious of the amount they desire to spend, and having to personally search for a price is a significant inconvenience and often can lead to feelings of embarrassment. Thirdly, a substantial fail point was the scent in the store. There was a conscious lingering smell of cleaning substances that in accordance with Russell’s model of affect, would classify as distressing, as it was both arousing and unpleasant. This distressing response can be associated with the powerful impact unpleasant smells can impart on consumers and employees alike. Such smell doesn’t necessarily need to be consciously perceived by consumers, or be related to a single product. Scent has been proven to solicit certain emotional, physiological and behavioural responses and as such unpleasant smells will negatively affect the consumer in buying products. Solutions Scent The solution for the unpleasant cleaning scent is a simple fix. All it would require is the use of alternate cleaning products, ones that should be rather odourless with slight fragerece of lavender. This is owing to studies that have determined that lavender has potential to be relaxing and calming. This should have the counter-effect that the previous scent had, scaling this arousal to relaxing on the Russell’s model of affect. The use of lavender will also fit the current ambience of the store. Signage – price and specific labels The issue of pricing and specific labels are also an easy fix and should be completed rather quickly. The addition of supplementary signs will help direct consumers and communicate essential information. The challenge associated with signage is the cohesion within design, ensuring they are clear and precise, although not to the detriment of the stores design. It is a critical balance as lack of clarity can lead to confusion and anger.

However what Dan Murphy’s have in their favour is the already existing use of labels incorporated within their store design. This will help in producing new labels and should seamlessly fit into the store layout. [Slide 8] Andrew: 3 Fail Points and Their Solutions Fail points in the actions of front-stage employees can be detrimental for a business, resulting in potential loss of income. -

Serving a minor o By law as well as licensing regulations, minors can not be served in the store. If an employee were to serve a minor, this can result in fines for the employee, as well as fines for the store. This in turn can result in bad publicity spreading for the store, affecting customer perceptions, and affecting the business. With Charlie, he has a very young looking face, and as such ID should be requested from him. o Solution: All employees are required by law to hold a current responsible service of alcohol (RSA) certification. The RSA trains staff how to ethically serve alcohol and reduces the chance of serving minors. Furthermore, store policies are being introduced where employees are checking the age of customers who look younger than 25, further ensuring they are acting within legal parameters.

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Overordering or underordering stock o A frontline employee (usually the manager) who over orders or under orders stock can have negative impacts on the business of a store. By having too much stock, this can be costly for the business, as products take up space, not generating income by not selling in a timely manner, and potentially expiring, wasting capital. Furthermore, by under ordering stock, customers who are unable to purchase items may be inclined to not return, or purchase from a different store, directly impacting revenue. This fail point can be found where the employee who orders stock is improperly qualified or trained to analyse trends and order accordingly. o Solution: To order stock as accurately as possible, look at past sales trends to influence decisions. Notably, analyse when events are on, for example, the Christmas period had a higher levels of white wine purchasing, therefore, in the build-up to Christmas, more white wine should be ordered. Where too much stock has been ordered, the store can run deals in order to move items, such as by spending $50, the customer is entitled to a 6 pack of an

overordered item at a cheaper price. Similarly, where stock has been underordered, staff need to be able to identify and offer similar products for customers, this falls onto staff having the necessary knowledge of products. -

Inattentive/rude staff o Employees who do not attend to the needs of the customer and/or are rude to customers has negative connotations for the business. Customers are more likely to leave, not return, and speak negatively of the store through word of mouth and reviews, directly affecting the business of the store. This fail point is found when staff members untrained or unsuited to the job are employed. The attentiveness and helpfulness of employees falls under ‘consultation’ in the flower of service model (IMAGE HERE) and is essential component of customer service in the sale of tangible goods. o Solution: To ensure staff are attentive and friendly, staff members should be initially hired so that their personality traits meet the requirements of the store. Then they should be adequately trained in how to deal with customers. Examples include staff policy, where, for example, it is a requirement that staff members greet all customers entering the store and offer assistance.

[Slide 9] Thankyou for listening and if you have any questions we would be happy to answer them for you now....