Customer orientation, merchandising competencies, and financial performance of small fashion retailers in Bangkok

Abstract

Purpose

The purpose of this study is to examine customer orientation and fashion merchandising competencies to learn which strategic option has a stronger relationship with retailer financial performance.

Design/methodology/approach

A cross‐sectional survey was used to collect self‐report data from a random sample of 275 small specialty retailers of women's clothing in Bangkok. Retailers offer similar merchandise assortments and customer services in dense, highly competitive, agglomerative environments. The survey form contained multi‐item scales measuring customer orientation, fashion merchandising competencies, and store financial performance. Bivariate correlations, multiple regression coefficients, and hierarchical linear model coefficients describe relationships of interest, controlling for retailer location.

Findings

Results show medium to large effect sizes for several fashion merchandising competencies but no substantive effects for the two customer orientation constructs. Effect sizes depend on whether financial performance is measured subjectively or as retailer return on investment or as probability of retailer survival.

Research limitations/implications

Data are restricted in range and reported effect sizes are smaller than true effect sizes. Data also are influenced by common method variance, influencing reported effect sizes in an opposite direction. Effect sizes may or may not describe causal relationships because of the study's cross‐sectional design. Because of the study's setting in Bangkok, results must be extended to similar retail settings with caution. Results indicate that a clustered fashion retailer can improve financial performance by striving for a fashion leadership position, anticipating fashion trends, and offering merchandise assortments in terms of styles and usages. Results indicate that a clustered fashion retailer will have difficulty improving financial performance via customer service and CRM activities.

Originality/value

Few studies in fashion retailing address predictors of financial performance at the individual store level. The authors help fill this knowledge gap by examining relationships between customer service activities, CRM activities, and key merchandising competencies and retailer subjective financial performance, return on investment, and probability of survival. Retailers compete in a spatially confined area, facilitating comparison shopping and heightening rivalries between retailers.

Citation

Chotekorakul, W. and Nelson, J. (2013), "Customer orientation, merchandising competencies, and financial performance of small fashion retailers in Bangkok", Journal of Fashion Marketing and Management, Vol. 17 No. 2, pp. 225-242. https://doi.org/10.1108/JFMM-02-2011-0007