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The Significance of Self-Service Technology Adoption on Service Quality in Linking Customer Satisfaction and Customer Loyalty in Singapore’s Supermarket Context

Akademische Arbeit 2020 20 Seiten

BWL - Marktforschung



In this advanced era, people should be aware of the practicality of technology adoption, especially in service-based businesses. As technology’s efficiencies and its effectiveness had been sensed by both customer and firm, this resulting in a competitive business model among particular service industries; Supermarket businesses. Therefore, the need for a tech-based yet fruitful innovation has become increasingly relevant towards grocery businesses. However, during past decades, numbers of researchers and business experts’ have narrowed their focus to a term called self-service technology (SST). This cutting-edge advancement enhances firm’s performances in productivity and profitability spectrums (Parasuraman, 1996). Next, Meuter et al. (2000) has outlined SST as “technological interfaces that enable customers to obtain services from the staffs of the particular service firm without any direct involvement with them. On the business viewpoint, cost reductions and improved efficiency are the major highlights of having a SST system. With aid of SST, supermarket business can now serve various service demand from customers as SST system is more consistent and stable and it disregard worker’s state of mind who sometimes is affected by personal issue or mood swing. With that so, SST creates a good added value which time and place conveniences are escalated to both supermarket manager and customer. In practices, SST comes in various channels ranging from self-service installations to self-service checkout machine. In this research proposal paper, I will examine the significance of Self-Service Checkouts usage on customer loyalty and their satisfaction given the service quality in the Singapore’s supermarket context with relevant journals and examples considered.


Supermarket business might hold a bright business prospect towards service industries within the Singapore economy. To support this statement, there is a statistic reported by, Singstat (2019), which showcases wholesale and retail stores cater to the largest proportion in the service-related business sector in GDP measures.

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Figure 1. Singapore GDP presented by sector during 2012-2018

With statistics, supermarket and convenience stores explicitly play a role in adding up 81.7 million dollars, which is 6.8 million dollars monthly. Additionally, in terms of compound annual growth rate (CAGR), supermarket-related firms show productive and resilient progress over 2014 to 2019 (see fig. 2).

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Figure 2. Supermarket sales and other attributes in terms of CAGR on 2014-2019

Alternatively, still on the same source, over the next six years, there will be expansion rate up to 2.1 per cent CAGR which implicitly means a surge of more than 400 million dollars in 2024 (see fig. 3). Thus we might assume that grocery and wholesale and retail stores are regarded as a promising economy sector in Singapore.

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Figure 3. Singapore’s supermarket sales forecast value and growth rate over 2019-2024

Unfortunately, not all channels of service delivery in supermarket industry will experience the potential growth. According to Singapore Business Review (2019), full service only account for 0,8 per cent CAGR from 2010-2018 which possibly exist due to the lower percentage on customer satisfaction level compared to self-service system that has significantly won customer satisfaction level at 76,4 per cent and resulting in a contrast 8 per cent CAGR. Thus, implicitly, we can assume that there has been an adjustment of customer preference towards self-service supermarkets. Therefore, supermarket managers should adopt SST to retain the market share and its customer retention rate.

Furthermore, Singapore economy has experienced workforce shortages in recent years. Thus, at the firm level, Government of Singapore has made their respond by granting financial aid to firm under Capability Development Grant program (CDG). This program defrays up to 70 per cent of their costs relating to consultancy, workforce, and improving productivity such as the adoption of SST system. Furthermore, with renewed policies, firm is required to upskilled their employees’ skillset, and gradually it will create more jobs opportunities such as technicians, product designers and even entrepreneurs (Yap, 2014). Therefore, Singapore would become a more potential and competitive country at global level.

Moreover, top market players in Singapore’s grocery sector has been showing progressive acknowledgement on SST adoption rate. Based on Strait Times (2017), in their report, the largest market player, NTUC Fairprice, has implemented SST over 59 out of its 130 stores island-wide, followed by Cold Storage and Sheng Siong who also cope with this trend. Hence, with an understanding of Singapore economy and supermarket industry backgrounds, an important consideration will be about the significance of SST adoption towards service quality and customer loyalty.


SST and service quality concepts One finding by Globerson and Maggard (1991) bring up the contrast on self-service and professional service concepts because these service activities are executed by customers, in other words, free of service-business staff existence. Ding et al. (2007) highlight that this concept is being universal as the mutual care delivered within the service sector has gradually being adjusted by the “self-service” scenario. One potential aspect supporting this swift is that the self-service system, in particular, offers a degree of comfort equally not only for consumers but also for service providers. It empowers customers of the firm to have more control over the service delivery process, thus lowering the workload of the service industry, likewise to hinder the liability in case of service breakdown (Bendapudi & Leone, 2003).­ Furthermore, the term of service quality of a firm will also fundamentally affect customer ratings towards service providers. On the side note, service quality is consist of service delivery procedures (Parasuraman et al., 1985) and service outputs (Lehtinen & Lehtinen, 1991). Furthermore, analysis relating to service quality dimensions have been the topic of current debate among researchers (Jain & Gupta, 2004; Lehtinen & Lehtinen, 1991). An extensive study by (Lin & Hsieh, 2011) have constructed an SSTQUAL scale whereby the following dimensions is crucial and needs to be satisfied in order to achieve excellent service quality

(1) Functionality links to the SSTs highlights comprise of “reliability, usability, and responsiveness of SST system”.
(2) Enjoyment refers to the perspective of the customer with features of the system.
(3) Security/privacy dimensions are associated with individual-private issue.
(4) Design regards to the user interface of the system
(5) Assurance reflects on the degree of competence and credibility of service providers
(6) Convenience notion is associated with the ease of use in which grant customer control over the service produced by firm.
(7) Customisation is related to the capacity of customers familiarity in which they could co-create service to fulfil the self needs and wants.

Therefore the possible hypothesis is as following:

H1. Supermarket customers would receive more service provided by service providers hence increase rating scores on service quality in SST adoption compared to traditional service.

Customer satisfaction linking customer loyalty on SST context Satisfaction term examines the scope in which a consumer radiate beneficial elements to a service provider (Lin & Hsieh, 2006). Satisfaction is related to the situation of the consumer being fairly rewarded in a purchasing circumstance in return for individual costs (Al-Alak, 2009). Furthermore, Oliver (1997) view the degree of satisfaction by analysing the “customer’s gratifying reaction” concept. In simple words, it is an evaluation concerning the features of product or service, providing a pleasant consumption-related experience. Also, value percept theory suggests that satisfaction is personal feedback which is introduced by the process of cognitive evaluation (Parker & Mathews, 2001). Therefore, to develop customer satisfaction effectively, service companies currently integrate SST as their novel service channels to service customers (Demirci Orel & Kara, 2014).



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University of Birmingham
significance self-service technology adoption service quality linking customer satisfaction loyalty singapore’s supermarket context



Titel: The Significance of Self-Service Technology Adoption on Service Quality in Linking Customer Satisfaction and Customer Loyalty in Singapore’s Supermarket Context