Retailers are stocking fewer goods on their shelves, but have companies taken inventory reduction too far? A number of academic studies of U.S. retailers have revealed an overall decrease in product inventories.

Rogelio Oliva and Gregory Heim, professors in the Department of Information & Operations Management at Texas A&M University’s Mays Business School, are two of the researchers behind a study that examines this issue using data from 114 U.S. retailers during 2000 to 2013.

They examined the relationship between inventory leanness (in essence, holding less product on the shelves relative to their sales volume) and operational efficiency in brick-and-mortar retail stores.

“The notion of operational efficiency is essentially how well do you use resources? How well are your physical assets and labor being used to generate sales?” said Oliva. For retailers, inventory is a major cost. By stocking less product, retailers can use that cash for other investments.

Leanness has its limits

However, Oliva notes that retailers going “too low” on inventory leanness is a real problem.

“People have this idea of, ‘I have too much inventory, I have to streamline it, there’s all this technology, I can do it,’” Oliva added. “Our data shows that some firms are going too far and they’re having to back down.”

An important point of the study highlights that inventory leanness is not a “one size fits all” decision – it is largely dependent on the size of the company and demand variability. According to this research, small retailers experience a reduction in efficiency when increasing inventory leanness before large retailers do. In other words, large retailers can have higher leanness than small retailers, but they will also experience the drop in operational efficiency if they go too far.

Big retailers like Walmart and Target are better equipped to work with lean inventory positions because they have the resources to keep up with demand that smaller retailers often lack. Information technology can play a critical role in whether a company has the affordability to operate with leaner product on the shelves.

“If you have dependable IT, you can lower that inventory level because you can communicate quantity needs in a timely manner. If you lack the infrastructure, you have to raise up that inventory,” noted Oliva. “If you don’t have the capital, the relationships, or the scale – you can’t push leanness. You’ll run into inefficiencies a lot sooner than someone who has the ability to use capital and technology.”

Stocking for uncertainty

The study also found that retailers achieved higher efficiency by keeping more product on the shelves when demand was uncertain.

“If you have a very stable demand, you can have lower inventory,” explained Oliva. For example, home improvement products such as laminate flooring or faucet fixtures are common items that are less susceptible to purchase spikes. “If you have demand instability, you have to protect yourself by carrying a lot more inventory relative to the average sales. You have to take risks on having that inventory, because it might take off. You can’t start pushing leanness if you’re in a business that has high demand variability,” he noted. An example would be a specialty toy that unexpectedly becomes the “must have” holiday gift.

The researchers recommended that retail managers take special care when pursuing inventory leanness.

“Too much leanness is going to reduce your efficiency. You cannot satisfy customer demand with empty shelves. On the other hand, when you have excess inventory, a large portion of your assets is now idle and you’re spending too much time counting the product,” said Oliva.

Stock-outs have always been a pain point for customers. Indeed, this is another topic area where Mays Business School professors have devoted lots of effort to research stockout prevention. “In an era when Amazon can deliver packages to your doorstep in two days, or even two hours, store-based retailers cannot risk frustrating customers who make the effort to visit their physical store, only to encounter an empty shelf,” added Kelli Hollinger, Director of the Center for Retailing Studies at Texas A&M University.

The researchers hope to provide a big-picture outlook for retailers of all sizes who are working with inventory leanness levels to balance operational effectiveness with profits. Each company has varying resources, needs, and consumer demands – inventory leanness should be managed accordingly.

“The kind of recommendations we give are more strategic guidelines rather than operational,” Oliva concluded.

ABOUT MAYS BUSINESS SCHOOL

At Mays Business School, we step up to advance the world’s prosperity. Our mission is to be a vibrant learning organization that creates impactful knowledge and develops transformational leaders. Mays Business School educates more than 6,400 undergraduate, master’s, and doctoral students in accounting, finance, management, management information systems, marketing and supply chain management. Mays consistently ranks among the top public business schools in the country for its programs and for faculty research.

Categories: Center for Retailing Studies, Centers, Faculty, Featured Stories, Marketing, Mays Business, News, Research, Texas A&M

If you entered the Grand Stafford Theater on the evening of August 13, you would have been surrounded by some of the biggest proponents of entrepreneurship in Bryan/College Station. Business owners, Texas A&M University faculty, and members of local agencies such as the Brazos Valley Economic Development Corporation came together around one common interest: Startup Aggieland.

The McFerrin Center for Entrepreneurship hosted the Startup Aggieland Reveal Party after hinting that those in attendance would have a chance to “meet the new Startup Aggieland.” Attendees were treated to canapés provided by Chef Tai Lee and enjoyed the industrial-chic atmosphere of the historic downtown Bryan concert venue. Conversations drifted among clusters of attendees, each of them buzzing about what exciting new plans the McFerrin Center had in store for Startup Aggieland.

Director Blake Petty kicked off the night with a booming “Howdy!” and introduced Assistant Director LauraLee Hughes. Hughes joined the McFerrin Center in early 2018 and has brought with her a background in technology commercialization and an undeniable passion for early-stage ventures. “It is an exciting time for entrepreneurs at Texas A&M,” said Hughes. “There is more awareness than ever among students, faculty, staff, and the community about entrepreneurship and they are all looking for resources that can help navigate the path to becoming an entrepreneur.”

Unveiling the entrepreneurial journey

As the night unfolded, Hughes shared her new vision for Startup Aggieland, which is centered on a multi-phase “entrepreneurial journey.” Students and clients of Startup Aggieland will work with staff members to see which of the three phases they’ll most benefit from; Explore, Pursue, or Launch. Students who engage with programs in any phase will be introduced to a wide array of workshops, meetups, and mentor nights that will allow them to grow and develop their knowledge of entrepreneurship.

In addition, Hughes debuted Startup Runway, a first-of-its-kind pre-accelerator program that will allow students to determine whether their businesses will have a viable place in the market. Hughes also announced the development of the Startup Aggieland Business Incubator that will provide validated early-stage ventures with the resources necessary to formally launch and grow a business. The Business Incubator and many of the Startup Aggieland resources and programs will now be available to Texas A&M faculty and staff along with members of the local community. “Through our new programs at Startup Aggieland, we are providing an environment in which aspiring entrepreneurs can learn, test their ideas, network, and hopefully achieve their dreams of owning their own business,” Hughes said. “I am excited about the impact these programs will have in growing the community at Startup Aggieland and helping more people realize that entrepreneurship can be for them too.

The packed audience also enjoyed presentations from three student teams who have been a part of the Startup Aggieland Summer Program.

At the end of the evening, Hughes spoke to attendees directly, calling upon “the friends and supporters of the McFerrin Center” to help ensure Startup Aggieland continues its success. “The involvement and support of mentors is critical to the success of the McFerrin Center and Startup Aggieland. The real-world experience, expertise, and guidance mentors offer to our entrepreneurs is more valuable than anything they will learn in the classroom.”

During her closing remarks, Hughes announced one of Startup Aggieland’s newest programs, Mentor Network. The program is specifically designed to engage with mentors and professionals in meaningful and mutually beneficial ways. “As our programs grow, we hope to expand our mentor network and be able to provide more opportunities for our mentors to engage with the Startup Aggieland community,” she said. “Whether you are interested in being a speaker, holding office hours, or working with individuals or teams on their business venture, I’d like you to join us at Startup Aggieland and help us in developing the next generation of Aggie entrepreneurs.”

Categories: Centers, Entrepreneurship, Faculty, Featured Stories, Mays Business, McFerrin Center for Entrepreneurship, News, Spotlights, Staff, Startup Aggieland, Texas A&M, Uncategorized

’Jon (Sean) Jasperson has been appointed to the newly-created position of Assistant Dean of Learning Transformation and Academic Technology to be the keeper of data for Mays Business School. Jasperson is uniquely qualified for this position, as he has served as a clinical professor in the Department of Information and Operations Management and as the academic director of the MS-Business program.

“This appointment has been made in the spirit of Strategic Initiative #3, Goal 2 of the Strategic Plan for Mays Business School,” Mays Dean Eli Jones wrote in an email to the faculty and staff of Mays.

Jasperson’s main objectives in his new role will be to:

  • Provide strategic oversight for digital technology and learning pedagogies
  • Provide leadership in learning design and distance education
  • Serve as the IT liaison with Texas A&M University …Read more

Categories: Dean Eli Jones, Faculty, Featured Stories, Mays Business, News, Staff

Award-winning research publisher and prolific scholar David A. Griffith has joined Mays Business School as its new Marketing Department Head. From Lehigh University in Pennsylvania, he was inaugurated as the Hallie Vanderhider Chair in Business and named the recipient of this year’s Hans B. Thorelli Award by the American Marketing Association.

“In terms of choosing to come to A&M, there were many draws,” said Griffith. “The outstanding faculty in Mays, Dean Jones’ vision and passion for A&M, former colleagues who have joined Mays and love it here. The core values of the institution were also a big draw for me, and of course the outstanding reputation of Texas A&M in both academics and athletics.” …Read more

Categories: Faculty, Featured Stories, Marketing, Mays Business, News, Staff, Texas A&M

Fifty years into his career of studying marketing, Leonard Berry continues to garner accolades. The Mays Business School leader is only the second person in history to receive the “Big 4” national marketing awards – a grand slam of sorts.

Berry is a University Distinguished Professor of Marketing, Regents Professor, Presidential Professor for Teaching Excellence, and holder of the M.B. Zale Chair in Retailing and Marketing Leadership at Mays Business School,

He received the fourth prestigious award, The Sheth Foundation Medal for Exceptional Contribution to Marketing and Practice, during the American Marketing Association (AMA) Summer Academic Conference on Aug. 10. …Read more

Categories: Faculty, Featured Stories, Marketing, Mays Business, News, Research, Spotlights, Texas A&M

The 2018 back-to-school shopping season is underway, and spending is expected to reach almost $27.6 billion – nearly 50 percent of annual school-related spending for a quarter of U.S. households. The one-month countdown to the first day of classes is under way, as many school districts have a start date of Monday, August 20.

In-store vs. online

Brick-and-mortar stores remain in the lead with back-to-school shoppers, but online spending continues to increase. Based on a survey by Deloitte, 57 percent of back-to-school shopping will be conducted in-store compared to 23 percent online, with 20 percent undecided how they will shop. Up from 2017, online shopping has gained ground in sales of school supplies, clothing, and computers. However, in-store sales are up for electronic gadgets. Despite the increasing push from online shopping, 96 percent of parents will head to a physical store at least once during the back-to-school shopping season, according to RetailMeNot.

“While a healthy economy is likely to lift purchasing across all categories, electronics spending is on track to out-pace apparel by 2019. Looking cool is certainly not just about what brand you do or don’t wear, but about what smartphone is in your pocket,” (Reference: RetailMeNot) says Kelli Hollinger, director of the Center for Retailing Studies at Texas A&M University’s Mays Business School.

How much time do shoppers allow?

Approximately $18 billion will be spent in the four-week period between mid-July and mid-August, reaching a peak in early August. Nearly 62 percent of parents have started their back-to-school shopping before August. According to a study by Deloitte, early shoppers are likely to spend 20 percent more than those who start late, and 68 percent of consumers intend to finish their back-to-school shopping within a month. However, the longer a person extends his shopping, the more he is likely to spend.

“It’s possible that people who enjoy shopping tend to start shopping earlier and plan to spend more while shopping,” added Christina Kan, an assistant professor of marketing at Mays Business School who researches consumer behavior and psychology.

Time to look for deals?

According to RetailMeNot, 67 percent of shoppers say they look for more savings during the back-to-school season than other times of the year, which is up from 36 percent in 2017. Anticipated spending is up across all major categories, with shoppers looking to spend the most on clothing. For 65 percent of parents, final price is the biggest factor in what they will buy for their kids. Based on figures from the National Retail Federation, households with children in elementary through high school plan to spend an average of nearly $685 each.

Categories: Center for Retailing Studies, Centers, Faculty, Featured Stories, Marketing, Mays Business, News, Texas A&M

Categories: Alumni, Dean Eli Jones, Entrepreneurship, Faculty, Mays Business, Mays Innovation Research Center, McFerrin Center for Entrepreneurship, Selfless service, Texas A&M, Uncategorized

General Data Protection Regulation (GDPR) will require more consumer control and creative digital marketing. To clear up some of the confusion, Venky Shankar, Professor & Coleman Chair in Marketing and Director of Research at the Center for Retailing Studies, answers some questions about it.

What is GDPR?

GDPR stands for General Data Protection Regulation and is a sweeping set of new rules developed by the EU to protect consumers in Europe.

Why is it important?

GDPR comes at the right time as we all are still recovering from the Facebook-Cambridge Analytica breach of consumer trust. The new set of rules will go into effect starting May 25. Non-compliant companies can face fines up to 4 percent of company revenues or Euro 20 million, whichever is greater. Although the jurisdiction is limited to EU, it will represent a test case for other countries to develop their own data protection regulations.

Unfortunately, only about one-third of marketers have heard about it and about one-fifth of the companies haven’t made any meaningful changes to their data collection and use to the point of non-compliance.

How will it affect consumers? …Read more

Categories: Center for Retailing Studies, Faculty, Featured Stories, Marketing, Mays Business, News, Research, Texas A&M

The spring faculty and staff meeting was a time of celebration. Among the announcements were news that the Association to Advance Collegiate Schools of Business (AACSB) had reaccredited Mays Business School and the Department of Accounting. The process required extensive documentation and a site visit from a peer review team.

Dean Eli Jones also announced plans to celebrate the 50th anniversary of Mays Business School. More details about this special weekend are at wereamaysing.com. A celebratory toast with nonalcoholic juice and cakes was held in the lobby of the Wehner Building.

Also announced were the following promotions:

  • David Griffith, professor and head of the Department of Marketing, professor and head, with tenure on arrival. Manjit Yadav was thanked for his service as interim head of the Department of Marketing.
  • Jeremiah Green (Accounting), to associate professor with tenure on arrival.
  • Neil Giesmar (INFO) and Dechun Wang (Accounting), to professor.
  • Michael Howard and Michael Withers (both of Management), to associate professor with tenure.
  • Aaron Becker (INFO), Michelle Diaz (Accounting), and Sudarsan Rangan (INFO), to clinical associate professor.
  • Tara Blasor (Accounting) to senior lecturer.

Reappointments were:

  • Anwer Ahmed (Accounting), Ashley ’88 and David Coolidge ’87 Chair in Business,
  • Wendy Boswell (Management), Jerry and Kay Cox Chair in Business,
  • Jim Benjamin (Accounting), Deloitte Leadership Professorship

Chairs and professorship appointments announced were:

  • Dechun Wang (Accounting), Ljungdahl PwC Chair in Accounting,
  • Rich Metters (INFO), Paul M. and Rosalie Robertson Chair in Business,
  • David A Griffith (Marketing), Hallie Vanderhider Chair in Business,
  • Jeremiah Green (Accounting), Ernst & Young Professorship in Accounting,
  • Mary Lea McAnally (Accounting), PwC Professorship in Accounting,
  • Stephen Courtright (Management), John E. Pearson Professorship in Business Administration,
  • Cindy Devers (Management), Lawrence E. Fouraker Professorship in Business Administration.

…Read more

Categories: Faculty, Mays Business, News, Texas A&M

The Texas A&M Foundation recognized Cydney Donnell, executive professor of finance and director of real estate programs in Mays Business School, as the 2018 Partner in Philanthropy Faculty Award recipient for her continued efforts to support and fundraise for the Texas A&M University Master of Real Estate program. Donnell received the award at a reception on April 27.

Cydney Donnell

Cydney Donnell ’81, executive professor of finance and director of real estate programs, was named the 2018 recipient of the Texas A&M Foundation’s Partner in Philanthropy Faculty Award for her commitment and generosity to Mays Business School.

The Foundation established the Partner in Philanthropy Faculty Award in 2016 to celebrate faculty members who demonstrate dedicated and lasting participation, commitment and creative leadership to philanthropy and Texas A&M University. This accolade acknowledges faculty efforts to build long-term productive relationships between the university, former students and other private partners in philanthropy.

To be selected, faculty must be nominated by a member of the Texas A&M Foundation development staff. Brian Bishop ’91, Texas A&M Foundation assistant vice president for development for Mays Business School, nominated Donnell for the award.

“Cydney is such a treasured asset to Mays Business School,” said Bishop. “Not only is she a tremendous leader of our Master of Real Estate program, but she is also willing to step up and contribute significant financial support to the program for the betterment of our students’ education and the future of the program.”

…Read more

Categories: Alumni, Donors Corner, Faculty, Featured Stories, Finance, Mays Business, News, Spotlights, Texas A&M