Managing the Impact of Fitting-Room Traffic on Retail Sales: Using Labor to Reduce Phantom Stockouts

40 Pages Posted: 14 Nov 2014 Last revised: 9 Sep 2019

See all articles by Hyun Seok Lee

Hyun Seok Lee

Korea University Business School

Saravanan Kesavan

University of North Carolina Kenan-Flagler Business School

Vinayak Deshpande

University of North Carolina (UNC) at Chapel Hill - Operations Area

Date Written: September 8, 2019

Abstract

Problem definition: Brick-and-Mortar (B&M) retailers must enhance the customer in-store experience to better compete with online retailers. Fitting rooms in B&M stores play a critical role in the customer experience as a venue to experience products and examine alternatives. High traffic in fitting rooms, however, obstructs the customer's ability to choose a product. In this paper, we (1) examine the impact of fitting-room traffic on store performance using archival data, (2) identify phantom stockouts as a plausible mechanism for this impact, and (3) provide a potential solution and quantify the magnitude of its impact using two field experiments.

Academic/Practical Relevance: The consumer purchase decision process framework has been widely used in disciplines such as Marketing and Information Systems. We consider the impact of high traffic in fitting rooms on customer’s purchase decision process. We show that high traffic in fitting rooms affects store sales negatively as it can obstruct customers’ ability to perform information search, evaluation of alternatives, or both.

Methodology: We use archival data analysis, a field study, and a field experiment to demonstrate our findings.

Results: We demonstrate an inverted-U relationship between fitting-room traffic and sales using archival data analysis. Our field study reveals that high traffic in fitting rooms exacerbates phantom stockouts, which could contribute to the decline in sales. Finally, through field experiments at two retailers, we show that a timely backend recovery operation through a dedicated fitting-room associate reduces phantom stockouts and increases sales by 22.4%-22.7%.

Managerial Implications: First, contrary to conventional wisdom that traffic drives sales, we identify that fitting-room traffic beyond a certain point can hurt store sales. Second, we find a large magnitude of phantom stockouts in fitting rooms. Finally, we show that dedicated fitting room labor can significantly boost store sales by alleviating phantom stockouts. Our proposed solution was adopted by both retail organizations that we worked with.

Keywords: Retail operations, Empirical research, Field experiments, Phantom stockouts, Fitting-room traffic

Suggested Citation

Lee, Hyun Seok and Kesavan, Saravanan and Deshpande, Vinayak, Managing the Impact of Fitting-Room Traffic on Retail Sales: Using Labor to Reduce Phantom Stockouts (September 8, 2019). Available at SSRN: https://ssrn.com/abstract=2523680 or http://dx.doi.org/10.2139/ssrn.2523680

Hyun Seok Lee (Contact Author)

Korea University Business School ( email )

LG-POSCO 519, 145 Anam-ro
Seoul, 02841
Korea, Republic of (South Korea)
+82-2-3290-1915 (Phone)

Saravanan Kesavan

University of North Carolina Kenan-Flagler Business School ( email )

300 Kenan Center Drive
Chapel Hill, NC 27599
United States

Vinayak Deshpande

University of North Carolina (UNC) at Chapel Hill - Operations Area ( email )

300 Kenan Center Drive
Chapel Hill, NC 27599
United States

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