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
Date Written: September 8, 2019
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
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