Retail Store Execution: An Empirical Study

Overview

This paper describes a methodology by which a retailer can identify action steps that are likely to increase sales and customer satisfaction and demonstrate the methodology using proprietary data from a large retailer with over 500 stores. The paper uses monthly store-level data on a number of operational variables including in-stock rate, store staffing level as measured by payroll and store employee turnover, together with customer responses to satisfaction surveys. The paper develops a nested three-stage econometric model to analyze the marginal effects of various execution levers on sales, customer satisfaction and the percentage of customers who answer 'Yes' to the question 'Did one find everything they were looking for?', which the paper terms customer perceived in-stock.