Customer Perception in Kathmandu's Organized Retail Sector: Effects of Design, Ambient and Social Factors

Abstract

Background: Store environment has become an important component of contemporary retail experience because customers evaluate not only merchandise and price but also design, ambient conditions, and social interactions within the store. This study examines the effect of three store-environment dimensions’ design factors, ambient factors, and social factors on customer perception of organized retail stores in Kathmandu.

Methods: A quantitative, cross-sectional survey design was employed. Primary data were collected from 250 customers of organized retail stores in Kathmandu Valley using a structured questionnaire and convenience sampling. Reliability analysis, descriptive statistics, exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM) were used.

Results: Social factors had the strongest positive effect on customer perception, followed by ambient factors. Design factors also had a significant positive effect, although it was the weakest of the three.

Conclusion: The findings indicate that employee-related interactions and ambient conditions are more influential in shaping customer perception than physical design alone. Retailers should therefore treat employees and sensory conditions as strategic components of the retail environment.

Novelty: The study extends store-environment research to the organized retail context of Kathmandu Valley and empirically compares the relative effects of design, ambient, and social factors on customer perception.