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Journal of Business Research 60 (2007) 215 – 221

Culture and marketing strategy in discount retailing
Bill Merrilees a,⁎, Brent McKenzie b , Dale Miller a

Griffith University, Griffith Business School, Department of Marketing, Gold Coast Campus PMB 50, GCMC, Queensland 9726, Australia Aubrey Dan Program in Management and Organizational Studies, University of Western Ontario, SSC 2210,London, Ontario, Canada N6A 5C2 Received 1 March 2006; received in revised form 1 October 2006; accepted 1 October 2006


Abstract Retail development and activity in transition economies is the context for this paper. The paper examines if differences exist in how retailer brand attitudes and store loyalty are realized across cultures. The objective is to contrast the Estonian situation withthat of a typical Western country, Canada. Retail service quality (personal service and store organization), pricing and location express retail marketing strategy. This article focuses on retail marketing strategy. The article examines if the same structural model of the brand formation process applies to both cultures. To make the comparison meaningful, the article describes a study coveringdiscount or low-price department stores. Confirmatory factor analysis tests the equivalence of constructs across cultures, and structural equation modeling with AMOS software was used to estimate the overall model of retailer brand formation. Retail service quality is a pivotal variable in the brand formation model. © 2006 Elsevier Inc. All rights reserved.
Keywords: Retail service quality;Transition economies; Brand formation; Discount department stores

1. Introduction Retailing and services often epitomize the transition from a planned economy to a market economy, yet these sectors receive limited attention in the literature. The Baltic countries, including Estonia and Lithuania, have received even less attention than other Central and Eastern European countries (Loker et al., 1994).Estonia was under very strong control during the Soviet era, and more isolated than some other Central and Eastern European countries until the early 1990s. Focusing research in Estonia helps to address the knowledge gap about the retailing domain in one of the Baltic States. This paper measures various strategic marketing constructs in Estonia and Canada to compare the equivalence of theconstructs across the two cultures. A new model of retailer brand formation is presented that is relevant to retailers in the discount department store category. Retail service quality is a pivotal variable in the model, which is estimated in both countries to ascertain whether similar processes apply to the way consumers form attitudes about the retailer as a brand. One retail category, discountdepartment
⁎ Corresponding author. E-mail addresses: (B. Merrilees), (B. McKenzie), (D. Miller). 0148-2963/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2006.10.016

stores, is used to standardize the comparison between countries. In Estonia, Tallinna Kaubamaja and Maksimarket are two discountdepartment stores. Canada is the Western country chosen as a benchmark for an East–West comparison (Merrilees et al., 2001). The Canadian retailing industry is very mature, with a long history of department store activity, specialist stores and more recently superstores. The two major chains in the discount department store category are Zellers (part of The Hudson Bay Company) and Wal-Mart (USA).2. Literature review The extensive service quality literature provides a backdrop for the specific literature on retail service quality, which is the foundation for this study. This study considers the retail service quality literature in the context of transition economies. Dabholkar et al. (1996) develop a model of service quality specifically grounded in the retail sector. Dabholkar et al....
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