It’s Not Your Supply Chain That’s to Blame

Posted by Ricki Sharpe on April 24, 2007
Filed Under Personality

You know the feeling; can’t find what you want at the supermarket; no one to help; leave shop frustrated. You may well think this is a supply problem, but what ever reason you attribute to your non-purchase, your experience with that store has been soured. If only there was a store that would offer you some service.

And, retailers may think that shopper satisfaction is driven by the customers ability to find everything they are looking for, which is essentially a supply chain problem. Not according to a new study, Retail Store Execution: An Empirical Study by Wharton management professors Marshall L. Fisher and Serguei Netessine.

Using proprietary data collected over 17 months from a large retail operation with more than 500 stores, the researchers determined that sales and customer satisfaction are not merely driven by a customer’s ability to find products on the shelf, 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 analysing 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.

When the researchers analysed the impact of increasing staff, increasing inventory and providing more training to employees, “The biggest surprise was the enormous measurable impact from increasing staffing,” Fisher says. “And that’s the one that’s the easiest to act on.”

The study’s findings could have a significant impact on how retailers view supply chain issues. As Netessine points out, most of the traditional retail supply chain concerns focus on planning and getting the product to the store. “You forecast demand and plan just-in-time deliveries to the store, but our paper points out that this is really not enough,” he says.

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