Supermarket Reputation: A Theoretical Review
Suresh Kumar, Yuyus Suryana, Popy Rufaidah and Meydia Hasan
Faculty of Economics and Business, Padjajaran University, Bandung, Indonesia
Keywords: Reputation, Construct, Supermarket, Retail.
Abstract: For the last three decades, the tremendous growth of retail industries in Indonesia has led to a fierce
competition among retailing companies. Some of them, say Starmart of Hero, Seven-Eleven, have closed
down their businesses up to 2017. Some new entries especially foreign investors are opening their retail
companies in Indonesia, such as Lulu form Saudi Arabia, looking at the flourish growth of retail industry and
the big population with high purchasing power of the people. Hence, it is very necessary for the retail
companies to find a way to survive and win the competition. Based on previous empirical research, a company
with a good reputation keep it in the competition for its intangible character makes it difficult to imitate and
give unique differentiation among other companies. Reputation has thoroughly been measured in many
perspectives of business context, like marketing, finance, etc. However, it is still rare to find a measurement
to suit supermarket. This research paper aims to construct supermarket reputation measurements. This
research paper uses extensive literature review method ranging from 1980s up to 2017 research papers to
propose new constructs for supermarket reputation. The result is Customer Oriented, Products, Good
Employer, Services, Comfortable Workplace, Location, Chic , Social and Environment Responsibility, Trust,
Innovation, Omnipresence and Financially Strong Company are possible dimensions to measure supermarket
reputation..
1 INTRODUCTION
Observing at today’s businesses, there are no new
businesses, instead there is only an extended version
of business. There is once a brick-and-mortar retail
store and the extended one now is e tailing or e-
commerce business. There is once an offline
bookstore and now there is an online version of
bookstore like Amazon, eBay etc. In an education
world, not only an e-learning platform but free
knowledge appears through blog, websites, YouTube,
Khan Academy, etc. Hence, business today is having
competition not only from their line of business, but
also from online platform. The heating up
competition forces companies to find a new way to
reach sustainable competitive advantages (Engizek
and Yasin, 2017). Companies need to look for
intangible factors to create their competitive
advantage since it is difficult to copy in a short time
by competitors. One of them is corporate reputation
(Engizek and Yasin, 2017). A Corporate reputation
becomes crucial especially for service industries
because from the perspective of customers, they are
not able to measure the service quality. Competitors
are not able to duplicate a reputation because it
represents the company itself, hence it becomes a
crucial strategic resource to strengthen competitive
advantages (Engizek and Yasin, 2017; Fombrun and
Riel, 1997; Fombrun and Shanley, 1990; Jalilvand et
al., 2017; Walsh and Beatty, 2007). A company’s
performance is believed to increase by having a good
reputation (Engizek and Yasin, 2017; Jalilvand et al.,
2017; Swoboda et al., 2016).
Retail industry in Indonesia has shown a
significant growth around 12-15% per year and
employed twenty-six million workers (Pulungan,
2017). There are over thirty thousand retail stores in
Indonesia (Simorangkir, 2017) dominated by
hypermarket (17.9%), minimart (17.4%) and
supermarket (3%) with revenue reaching USD 48
billion (Margrit, 2016). With all these tremendous
achievement, retail business in Indonesia really
shows huge opportunity. However, everybody wants
to take his or her share, hence retail industry in
Indonesia is having the toughest and feast
competition nowadays. Victims are falling. Seven–
Eleven once was the top brand based on Frontier
Consulting Group assessment, declared bankrupt in
842
Kumar, S., Suryana, Y., Rufaidah, P. and Hasan, M.
Supermarket Reputation: A Theoretical Review.
In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 842-846
ISBN: 978-989-758-315-5
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

2017 (Fauzie, 2017). Profit of Indomart decreased to
71% in 2017 (Akhir, 2017). Ramayana department
store closed 8 department stores along with Matahari
department closed 2 department stores (Intan, 2017).
It is a red alarm for retail industry in Indonesia and in
need of solution either in short run and long run as
well. Through corporate reputation measurement,
retail industries in Indonesia are able to learn how to
build a stronger retail reputation especially
supermarket reputation and make it as their
competitive advantages.
Numerous attempts have been made to construct
corporate reputation measurement to help companies
in measuring their reputation. Fombrun, Gardberg,
and Sever (2000) measure reputation based on all
stakeholders, Davies et al. (2004) measure
reputation based on employees as an internal
perspective and customer as an external perspective
and Walsh and Beatty (2007) measure reputation
based on customer. However very few research
papers found measuring reputation in retail industry.
This research aims at constructing a new
measurement for reputation in retail industry,
especially supermarket. The structure of this research
is first, revealing the importance and gap of the
research paper in introduction section. Second, under
literature review section theories from the past until
the latest implementation are produced in regards to
the definition and industries involved. Third,
construct measurement section is used to bring up
relevance construct measurement for reputation
especially in the service industries since retail is
under service industry section. Lastly, the discussions
and conclusion section are to sum up and produce set
of new constructs for supermarket reputation.
2 LITERATURE REVIEW
Fombrun and Riel (1997) has reviewed company
reputation from extensive literature review and
merging all the views, they state a company
reputation is a whole form of combining portrayal
based on its past deeds and consequences which
depicts their capacity to present favored
consequences to many partners. It gages an
association's relative standing both with internal
workers and with external stakeholders, based on
their bureaucratic and fierce environments.
While Fombrun and Riel (1997) focus defining
reputation based on industrial customers or multiple
stakeholder groups, a customer based definition is
given by Walsh and Beatty (2007) as the patron's
general judgement of a company in view of his or her
reactions to the company's tangible and intangible
products, divulgence exercises, connections with the
company or potentially its agents or proponents, (for
example, representatives, administration, or different
patrons) or potentially known corporate exercises.
They argue that though the perceptions of all
stakeholders are important in building company
reputation, on the other hand customers using the
products or services may have different view
regarding their hope and cognizance compare to all
stakeholders.
Davies et al. (2004) come with assessing
reputation based on internal view such as employees
and external view, which are customers. In other
words, they assess reputation based on human
character. They believe that when a client is facing a
worker and the worker shares a positive perspective
of the company then a positive connection between
them will probably happen. Thus, it is important for
companies to create environment that result in a
positive view internally and creates positive view
externally. Hence et al. (2004) define reputation as
something that is needy upon genuine encounter of
the company, when contrasted with image for
instance, which is regularly used to allude to a
mindset that is free of genuine encounter and based
on emotional response to image of the company.
Another interesting construct and indicators of
corporate reputation come from Vidaver-Cohen
(2007) where she tries to define corporate reputation
for business schools as a perceptual marvel – rising
up out of eyewitnesses' aggregate judgments around
an association in view of appraisal of the company
execution after some time in regions eyewitnesses
consider vital.
3 REPUTATION CONSTRUCT
Fombrun, Gardberg, and Sever (2000) have
developed a multi-dimensional construct for
reputation by converging opinions from economists,
strategists, marketers, organization theorists,
sociologists, communication expert and accountants.
The construct for reputation is also the result of
thorough study of existing reputation survey
instruments, such as Fortune AMAC, Asian Business,
Manager Magazine, Management Today, and
Fortune GMAC. Thus born the new reputation survey
called The Reputation Quotient. It consists of 6
dimensions and 20 item statements to measure the
dimensions. The dimensions are Emotional Appeal
(three-item statements), Products and Services
(four-item statements), Vision and Leadership
Supermarket Reputation: A Theoretical Review
843

(three-item statements), Workplace Environment
(three-item statements), Social and Environmental
Responsibility (three-item statements), and
Financial Performance (four-item statements).
Ou and Abratt (2006) made the first attempt to
apply Reputation Quotient in retail industry and call
it as Retailer Reputation. Their study was conducted
for supermarket customers in Taiwan. Their findings
show that from six dimensions of Reputation
Quotient, one dimension was dropped due to lack of
reliability and the other five dimensions converged
into three new dimensions namely, Company
Assessment (six- item statements), Emotional
Appeal (five-item statements), and Leadership
Perceptions (four-item statements). Though
Emotional Appeal is still the same dimension from
Reputation Quotient, but the item statements become
five items compare to the previous one, which was
three items.
Davies et al. (2004) have developed a new
construct to measure reputation based on three
approaches, direct approaches, projective approaches
and qualitative approaches. These approaches are
derived from extensive literature review from 1972
up to 2000. They come up with a new measurement
for reputation, which they call as Corporate Character
Scale, involving dimensions: Agreeableness,
Enterprise, Competence, Chic, Ruthlessness,
Informality, and Machismo. Agreeableness consists
of three sub dimensions namely, warmth, empathy
and integrity measured by thirteen-item statements.
Enterprise consists of three sub dimensions namely,
modernity, adventure and boldness measured by nine-
item statements. Competence consists of three sub
dimensions namely, conscientiousness, drive, and
technocracy measured by nine-item statements. Chic
consists of three sub dimensions namely, elegance,
prestige and snobbery measured by eight-item
statements. Ruthless consists of two sub dimensions
namely, egotism and dominance measured by six-
item statements. Informality is measured by three-
item statements without sub dimensions and
Machismo is measured by three-item statements
without sub dimensions.
Vidaver-Cohen (2007) constructs reputation
predictors for business school based on the RepTrak
model from Reputation Institution. Her Business
School Reputation has two views, reputation
predictors and reputation perceptions. Reputation
predictors are related to business-school-quality
dimensions, which are performance, product,
service, leadership, governance, workplace,
citizenship and innovation. Reputation perceptions
are related to business-school-reputation assessments
with dimensions of trust, admiration, good feeling,
and perceived public esteem. She further adds a
mediator of stakeholder expectations and moderator
of third party judgements.
Järvinen and Suomi (2011) use reputation
construct by Vidaver-Cohen (2007) in their research
in retail context. They argue that reputation in retail
is based on not only stakeholders but also customers.
The quality dimensions that they have found are
similar with Vidaver-Cohen (2007) model with some
changes. The dimensions are performance, services,
products, leadership, governance, workplace
climate, citizenship, innovation and location.
Location is one of the new sub dimensions found by
Järvinen and Suomi (2011) which is different to
Vidaver-Cohen (2007). It is recommended to have
bigger car park lot in bigger cities. Other than that
major differences of Järvinen and Suomi (2011) lie
on their attributes and contents.
Walsh and Beatty (2007) have developed a new
multi-dimensional construct for reputation based on
customers’ perspective and named it as Customer-
Based-Reputation (CBR). CBR has 5 dimensions and
31-item statements to measure the dimensions. The
dimensions are Customer Oriented (six-item
statements), Good Employer (five-item statements),
Reliable and Financially Strong Company (nine-
item statements), Product and Service Quality
(five-item statements), Social and Environmental
Responsibilities (four-item statements). Walsh and
Beatty study is based on Fombrun et al. (2000). The
dimension of customer oriented is totally new
dimension and new items compare to the other
variables where most of them following the work of
Fombrun et al. (2000). Five item statements of good
employer are from workplace environment, vision
and leadership and social and environmental
responsibility. Nine item statements of reliable and
financially strong company come from financial
performance, vision and leadership, and focus group
study result. Five item statements of product and
service quality are from products and services of
Fombrun et al. (2000). The social and environmental
responsibilities item statements are similar to that of
Fombrun et al. (2000).
Walsh et al. (2012) further confirm the use of
Customer-Based Reputation in service industries
namely, banks, telecommunication service providers,
retailers and restaurants in French. They measure
reputation based on reflective measure instead in
contrast to formative measure by Helm (2005). In line
with Walsh and Beatty (2007) findings, they also
have the perfect model fit for Customer-Based
Reputation including the sequence.
ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy
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4 DISCUSSIONS AND
CONCLUSIONS
Reviewing corporate reputation from 1980s to 2017,
various researchers have attempted to create a
reputation measurement due to neither consensus on
its definition nor on its measurement. Nevertheless,
most of them only either following Fombrun et al.
(2000) which focus more on stakeholders and make
some adjustments to their respected field of research
or following Walsh and Beatty (2007) who give a
more concern on consumers’ perspective. Davies et
al. (2004) looking at reputation more to their human
character. However, all these measurements have
something in common that is, they refer reputation as
an assessment instead of asset or awareness. Other
than that, the underlying attributes of reputation is
seen as either reflective or formative measure with
reflective as the most measurement followed. It is
clear that most researchers fill there must be a
differentiation between reputation from stakeholders’
perspective and customers’ perspective. However,
looking at business today, customers become the
priority to sustain their business. Hence, a customer-
based reputation is in need. It does not mean the
stakeholders are not important; instead, finding a way
to combine stakeholders’ and customers’ need in
future give benefit for company to sustain. At this
moment, retail business is flourished either offline or
online throughout the world. Thus, customers become
even more important to consider avoiding the closing
down of the retail stores. Convenience stores use
location as their main strategy but supermarket is not
the same. Though location becomes prime target,
however other considerations need to be taken care as
well. Products need to be guaranteed on their
reliability and functionality and at the same time
quality becomes the king in offering the products.
Private label products become a trend to nowadays
retailers as the source of income generator.
Nevertheless, it does not mean that quality is
deductible. Employees, on the other hand, play an
important role in succeeding the company’s vision
and mission since they are the companies spear to
meet and fulfill customers’ needs. A high turnover
rate of employees in any retailers is difficult to cover.
It creates bad impression to the company because
most of their customers are employees as well.
Hence, it is important to retain employees in any retail
stores. Customer Oriented becomes the only way for
retailers to see how they run their business. By
equipping employees with satisfaction, there is a
guarantee that they will in turn give it back to
customers, because satisfied employees will satisfy
customers as well. Customers only problem is
handling complaint fast and satisfying. Socially
responsible has seen one of crucial factor for society
especially on the used green products, taking care of
green environment, play a role in society. Hence, by
following or be part of society activities and
environmentally responsible will bring image to
customers that they are concern retailers. Trust is
always an issue for customers. Due to massive
advertisement on offline media and online media, it
seems customers need to be very careful to choose
from which store they have to buy. Promotions are
given to good products or out of date products.
Overall, retailers need to honest on what they are
doing and promising. A Comfortable working
environment does not only bring joy to employees but
also to the customers. A nice place to work usually
gives employees joy feel. This joy feel gives positive
motivation at the work that impact to how they serve
the customers. Customers also feel joy in a cozy place
where they fulfill their needs and even more being
served by positive employees. Innovation may come
handy for retailers and customers. A big place like
supermarket, customers need to queue in the cashier.
Let’s say a customer would like know the price of a
product, which unfortunately the price tag is missing,
would be very annoying to queue just to ask the price.
Having a price detector or kiosk may help the
customers who are in a hurry. Chic may be another
criterion needed to boost the company’s image
because nowadays youngsters prefer a prestigious
and stylish company to shop at. Omnipresence is
another important measurement for today’s retailers.
Customers tend to have their products from not only
one place but also other places when they are on
vacation or business trip etc. Having the store in the
place wherever they go is benefiting retailers. Even
more better if retailers provide online shopping as
well. Financially strong company in a sense will give
perception to customers that this company is selling
good products or services. So companies need to look
financially strong. Hence, a supermarket reputation
that is proposed here with dimensions such as
Products, Services, Comfortable Workplace,
Customer Oriented, Location, Good Employer,
Social and Environment Responsibility, Trust,
Innovation, Omnipresence and Financially Strong
Company.
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