Out of Stock? It Might Be Your Employee Payroll -- Not Your Supply Chain -- That's to Blame

In: Miscellaneous

Submitted By blaine
Words 2146
Pages 9
Attention, shoppers: Did you find everything you were looking for? Retail customers who answer "yes" to this question might very well represent the Holy Grail to retail operators who want to increase their sales with only a modest increase in costs or, in some cases, increase sales by merely reallocating staff within a store at no extra cost.

Impossible? Not according to a new study on retail store execution by Wharton operations and information management professors Marshall L. Fisher and Serguei Netessine, and Wharton doctoral student Jayanth Krishnan. Using proprietary data collected over 17 months from a large retail operation with more than 500 stores, the Wharton experts determined that sales and customer satisfaction are not merely driven by a customer's ability to find products on the shelf. Instead, "customer perceived in-stock" -- a metric the Wharton experts use to describe the number of customers who answer "yes" to that all-important "Did you find everything?" question -- is driven not only by actual in-stock but by how well the customer rates employee knowledge about the store and the products they are looking to purchase.

In short, customers get lower satisfaction from their shopping experience when stores have too few employees and, more importantly, when stores lack employees who are knowledgeable about what's in the store. After analyzing the results of the study, the researchers suggest that a "modest reallocation of the payroll budget among stores" in this particular chain could yield a 2-3% increase in sales with no increase in cost -- a clear signal that adequate, knowledgeable staff help drive customer satisfaction and retail execution success.

But what surprised Fisher, Netessine and Krishnan the most was the potential financial return if the unnamed retailer were to make even a modest investment in hiring more staff. According to the…...

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