Impact of Innovation and Sustainability on Customer Satisfaction in FMCG Retail of Pakistan

Abstract

A new retailing sector has emerged thanks to innovation and sustainability, which are strategic qualities of competitiveness and customer satisfaction. However, there is no empirical data regarding the combined effect on Pakistan's FMCG retail industry. The purpose of this study is to examine how customer happiness at FMCG retail establishments in Karachi, Pakistan, is affected by characteristics of innovation (product, marketing, and relational innovation) and sustainability (economic, social, and environmental sustainability). A standardised questionnaire with a five-point Likert scale served as the foundation for the quantitative and explanatory study design. Convenience sampling was used to choose the sample, which included 353 FMCG retail customers in Karachi. Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to measure the measurement and structural models. Cronbach alpha, composite reliability, average variance extracted (AVE), Fornell-Larcker, cross-loadings, and HTMT ratio were used to assess the validity and reliability. The structural model's results indicate that consumer happiness is significantly impacted by product innovation (b = 0.380, p < 0.001), social sustainability (b = 0.287, p = 0.011), marketing innovation (b = 0.038, p = 0.004), and economic sustainability (b = 0.036, p = 0.007). Environmental sustainability (b = 0.060, p = 0.464) and relational innovation (b = 0.147, p = 0.202) were not significant. The most powerful factor influencing consumer satisfaction in Pakistan's FMCG retail sector was product innovation. By combining the multifaceted concepts of the Triple Bottom Line model and innovation capability theory into a single structural framework, this study aims to present context-sensitive evidence in an emerging industry. The findings can help shops improve customer happiness and gain a competitive edge by concentrating on product developments and social responsibility.

       Keywords: FMCG, retail, innovation, sustainability, and customer pleasure.