EFFECTS OF LOGISTICS PROBLEMS ON LOGISTICS PERFORMANCE AND CUSTOMER SERVICE SATISFACTION IN RETAIL STORE THE CASE OF IKEA,

JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

EFFECTS OF LOGISTICS PROBLEMS ON LOGISTICS PERFORMANCE

AND CUSTOMER SERVICE SATISFACTION IN RETAIL STORE: THE
CASE OF IKEA, JEDDAH, SAUDI ARABIA
Sara Mashhur1, Ahmed Attia2
1,2
College of Business, Effat University, Qasr Khuzam St., Kilo. 2, Old Mecca Road.
P.O.BOX 34689, Jeddah 21478, Saudi Arabia.
Email: [email protected], [email protected]

Sara Mashhur, Ahmed Attia. Effects of Logistics Problems on Logistics Performance

and Customer Service Satisfaction in Retail Store: The Case of Ikea, Jeddah, Saudi
Arabia -- Palarch’s Journal of Archaeology of Egypt/Egyptology 18(15), 301-311.
ISSN 1567-214x

Keywords: Customer Satisfaction, Service Quality, Logistics, Performance

ABSTRACT
The study aimed to discuss on logistics problem that affected logistics performance and
customer services satisfaction in IKEA=Jeddah branch. The qualitative and quantitative
methods had been used to collect the data. The primary data had been collected through
interview and survey. Meanwhile, secondary data was collected through Key Performance
Index (KPI) reports. The questionnaire survey was present for IKEA customers and manger
at IKEA was selected to identify common logistics problems and provided required data for
this study. The survey questionnaire used to measure the customer satisfaction for the store
service. The result showed common logistics problems at IKEA Jeddah branch related to
order cycle time, lead time and stock availability. These problems affected the logistics
performance in the store that led to customer dissatisfaction. The service level performance of
IKEA Jeddah branch was less improving on their store that led to poor service and customer
dissatisfaction.

INTRODUCTION
The common important of logistics in any business is to achieve the
customer’s needs. Logistic also help in providing the company with the
highest level of capacity production with the lowest possible cost to serve
customers’ requirement. Therefore, the important of logistics also including
value creation of services, cost saving, and increasing the speed of the order
placement and order receiving.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Supply chain is defined as management of business processes or activities

correlated with coordination and there are linkages in the supply chain
network [1]. In additions, supply chain management (SCM) is defined as
arrangement, planning, control and realization of product flow from design
and purchase through production and distributes to end customer [2]. A supply
chain is facilities network and distribution options that perform the function
material procurement, material transformation into intermediate and finished
products and. Mutual dependence, trust, cooperation and shared goals between
supply chain partners are considered to be ultimate core capabilities [3]. The
SCM is business strategy to improve shareholder and customer value by
optimize product flow, services and related information from source to
customer [4]. SCM is holistic approach to demand, sourcing and procurement,
production and logistics process management [5]. Target of SCM is
developing processes that help the organization to achieve its overall results
through development of activities which result in maximum possible return in
shortest period [6]. Supply chain management is a network which involves all
parties concerned directly or indirectly includes company, supplier, seller,
client in producing and delivering goods or services to final customer in both
upstream and downstream level [7].
Logistics is a key driver of economic growth, wealth creation and jobs [8].
Logistics bases are private centers which all logistic activities for international
or national transitions such as transport, handling, storage, consolidation,
custom clearance, degradation, export, transit operations, insurance and
banking, infrastructure and consultancy [9]. SCM is important operational
strategy for improving organizational competitiveness and responding
adaptiveness to change market conditions [10].

IKEA is one of the largest retailer companies in the world furnishing founded
by Ingvar Kamprad in Sweden in 1943 at small village. IKEA was starting to
sell small things such as wallet, picture frames, tables, watches and pens. Now
IKEA is a well-known global brand company for modern and fashionable
home furniture and has 321 stores in different 38 countries around the world.
IKEA is success in furniture fields because high quality of furniture and
accessories and lower prices. IKEA has a good knowledge to developing and
understanding their customers need.

The goal of IKEA in-store logistics is to provide customers with large volumes
of products available, lower costs and highest standard of service level to meet
customer satisfaction for the service in the store. Moreover, logistics is helping
the store to collect the information of the sales and creating the balance
between the physical space and the safety stocks size. Logistical problems
have a negative effect on logistics performance and customer service
satisfaction. Logistical problems of IKEA store are common at the order cycle
time, lead time, and stock availability. The study aimed to discuss on logistics
problem that affected logistics performance and customer services satisfaction
in IKEA Jeddah branch.

METHODOLOGY
In this study, the qualitative and quantitative methods had been used to collect
the data. There were three core of qualitative method such as self-reflexivity,

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

context and thick description. Self-reflexivity is way the study had view on
past experiences and interaction. Meanwhile, context was inundation the
meeting with company or interviewed with people to build knowledge from
different people and work aspects. Thick description directly related to the
idea, context and particular circumstances of present and past. Quantitative
method had used graphical diagrams, statistical and mathematical sampling.

The data had been collected through primary and secondary data. The primary
data had been collected through interview and survey. In additions, secondary
data was collected through Key Performance Index (KPI) reports. The
interview had been done with deputy logistics manager at IKEA-Jeddah
branch. The IKEA KPI and service level report for last four year and identify
common problems in logistics area to analyse finding.

Furthermore, there were two sampling techniques was selected in this study.
The questionnaire survey was present for IKEA customers and manger at
IKEA was selected to identify common logistics problems and provided
required data for this study.

The survey questionnaire used to measure the customer satisfaction for the
store service. The survey helped to understand customer opinion on staff
working in the store, product availability and way for customer looking the
product in the store.

RESULT AND DISCUSSION

The interview was held in IKEA store to discuss main logistics problem. The
respondent was Mr. Mahmoud Sonbol was deputy logistics manager who
explained common logistics problem faced the store and effect on logistics
performance and customer’s service satisfaction. The respondent had been
classified the problem into internal and external problems. The external
problem accrued which delayed in clearance procedures happened at the port.
The external problems lead to increment of order cycle, lead time and stock
availability. There was importance of increment resources in improving the
store performance and customer satisfaction.

In Figure 1, 84% respondents were female and 16% respondents where male
which female were satisfied from IKEA Jeddah branch service but none for
male respondents which not satisfied with the service.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 1: Respondent Distribution Based on Gender.

In Figure 2, 61% respondents were aged between 18 years and 25 years old
and 18% respondents were aged between 26 years old and 35 years old.
Meanwhile, 15% respondents were aged between 36 years old and 45 years
old and 6% respondents were aged more than 50 years old.

Figure 2: Respondent Distribution Based on Age.

In Figure 3, there were 75% respondents who completed college level and
12% respondents had master’s degree. In additions, 5% respondents had
PhD’s degree and 7% respondents had completed their high school level.

Figure 3: Respondent Distribution Based on Education Level.

In Figure 4, 61.8% respondents had earned income between 1000-5000SR and

15.46% respondents were earned income between 6000-10000SR. In
additions, 9.28% respondents had earned 11000-15000SR and 10.31%
respondents had earned income between 16000-20000SR. Meanwhile, 4.12%
respondents had earned income more than 20000SR.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 4: Respondent Distribution Based on Income.

In Figure 5, 76% respondents were agreed that IKEA staffs were helpful and
kindness based on their experiences. Besides, the respondents also claimed the
staffs had good attitude with customers but some respondents claimed that
staffs only helpful during less customer in store. In additions, 24%
respondents claimed bad experience at IKEA store and the respondents
claimed staffs always unavailable and very difficult to deal with IKEA staffs.
The lack of staffs in serves all customers during peak hours.

Figure 5: Classification of IKEA Staff’s Attitude.

In Figure 6, 29.29% respondents were very satisfied with product availability

since the respondents always found on need and 50.51% respondents were
somehow satisfied with product availability since the respondents had found
the product on certain times. Meanwhile, 16.16% respondents were neither
satisfied nor dissatisfied since order cycle took longer time and some poor
product quality and 4.04% respondents were very dissatisfied due to product
out of stocks.

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EFFECTS OF LOGISTICS PROBLEMS ON LOGISTICS PERFORMANCE AND CUSTOMER SERVICE SATISFACTION IN RETAIL STORE THE CASE OF IKEA,
JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 6: Respondent Classification on Product Availability.

In Figure 7, 80.41% respondents were believed that easily to find needed

products since the respondents were familiar with the store direction and
layout of the store was organized by rows and lines. Meanwhile, 19.59%
respondents believed was not easy to find the items in the stores because the
store arrangement was unorganized. Besides, there were no good trained
employees to help the customers and respondents explained there was
confusion due to lack of clear direction.

Figure 7: Respondent Opinion on Difficulty to Find The Product.

In Figure 8, 3.03% respondents felt the IKEA products are very expensive and
20.20% respondents felt IKEA products are expensive. Meanwhile, 70.71%
respondents felt the products have average price and 6.06% respondents felt
IKEA products were cheap. Most customers felt the price was on average
level that meant IKEA products are affordable for majority respondents.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 8: Respondent Opinion on IKEA Product Prices.

In Figure 9, 61% respondents felt that waiting time at cashier was too long.
The queues line was long and crowded and the waiting time was more than 15
minutes. Lack of people to load the products and low number of cashiers
slowed down the progress of checking out customers.

Figure 9: Respondent Opinion on Time Consumption at The Cashier.

In Figure 10, 61% respondents agreed want to visit IKEA due to there was
product variety. Most respondents claimed that IKEA was their choices since
the respondents were loyal customers. In addition, respondents preferred
IKEA due to their creativity in furniture design and easy to find products.
Meanwhile, 39% of the respondents did not preferred IKEA due to crowded
store, lack of customer service and did not find the product that wanted.

Figure 10: Respondent Opinion on IKEA Store Visit.

In Figure 11, service 1 was most important level since involved high product
demand and top seller that was not performed in good way to reach stock
availability target with 95%. There was increment by end of 2014 and
decreased in 2015 due to news product in and end product out in this period.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 11: Service Level-1

In Figure 12, the service did not reach the target which was 90.5% and there
was increased on last weeks of 2014 and first weeks of 2015 due to new and
end products.

Figure 12: Service Level-2

In Figure 13, the performance level was better than service level-1 and service
level-2 since this level reached the target requirement of this level which was
88.3%.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 13: Service Level-3.

In Figure 14, service level-4 was best performance of all level since reached
the target and above the target which was 84.6%. Service level 4 was less
important than other service levels but can reach the target and meant less
product demand from this category which stock are available.

Figure 14: Service Level 4.

Figure 15 had described and compared between service level at IKEA Saudi
Arabia branches at Dhahram, Jeddah and Riyadh. Jeddah-branch had less
performance competed between other two branches which meant there was a
problem at IKEA Jeddah that need to improve their performance to reach the
target for each service level.

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JEDDAH, SAUDI ARABIA : PJAEE, 18 (15) (2021)

Figure 15: Comparison of Service Level In Kingdom Saudi Arabia Branches.

CONCLUSION
In conclusions, common logistics problems at IKEA Jeddah branch related to
order cycle time, lead time and stock availability. These problems affected the
logistics performance in the store that led to customer dissatisfaction.
Customer satisfaction were affected by logistics problems and performance
which customers waiting for long time to receive their order. Besides,
customers were dissatisfied with stock availability, deal with IKEA staff and
long waiting time for check out.

ACKNOWLEDGMENTS
The author would like to thank to all respondents and Effat University for
unconditional support.

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