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

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

The master’s in accounting program at Mays Business School ranked #1 in North America for the first time in the Eduniversal Best Masters Ranking Financial Markets – a ranking of the best master’s and MBA programs.

Eduniversal classifies and highlights masters and MBA programs which prepare and graduate the most competent students into the global workforce by surveying current graduating students and recruiters. Their methodology takes into account the reputation of the program, the salary of the employed graduates, and the graduates’ satisfaction with the program. …Read more

Categories: Accounting, Departments, Featured Stories, Finance, Management, Marketing, Mays Business, MBA, MS Business, News, Programs, Rankings, Spotlights, Texas A&M

Put the phone down, earn prizes.

That’s the premise of SAFE 2 SAVE, a mobile app that rewards users for staying off their phones while driving. Since its launch in Fall 2016, it has grown to attract more than 70,000 users. And its founder Mays former student Marci Corry ’01 is continually working to improve it and increase its reach.

While having a conversation with a Texas A&M University student, Corry noticed everyone around them was on their phone. “As I reflected on that and the dangers of texting, especially while driving, it hit me that I should start a positive app that targets adults as well as teens that would encourage people to be hands-free,” said Corry.

The tipping point came when she heard the news of a 19-year-old student who lost his life after he was struck by a driver who was texting. “That’s when I knew I needed to start this company to help grow the awareness and prevent distracted driving as much as we could in Aggieland,” said Corry.

…Read more

Categories: Alumni, Entrepreneurship, Featured Stories, Former Students, Marketing, Mays Business, News, Spotlights, Startup Aggieland, Students, Texas A&M

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

Lauren Osborne has been named Advisor of the Year. The university-level recognition from the Division of Student Affairs recognizes advisors who distinguish themselves by providing exemplary guidance, support, and dedication to the advisement of a recognized student organization at Texas A&M University.

Awards are presented annually to one advisor from each of the three categories: registered, affiliated, and sponsored. Osborne advises the Student Retailing Association, which is a registered organization.

Osborne is the program manager for the Center for Retailing Studies (CRS) in Mays Business School’s Department of Marketing.

Osborne encourages officers to step up as leaders, said CRS Director Kelli Hollinger. “SRA runs incredibly smoothly and provides extraordinary professional development opportunities for its 65 members.”

Hollinger said she sees Osborne’s passion for her work exhibited every day. “Students admire her so much for genuinely caring about their academic success, career ambitions, and personal stories,” she said.

Osborne graduated from Texas A&M in 2005 with a degree in Recreation, Park and Tourism Sciences with an emphasis in Tourism Marketing. She will celebrate her five-year anniversary with Mays on July 1. She started with CRS as program coordinator, and was promoted to program manager in 2016.

She previously worked as the director of development for the Children’s Museum of the Brazos Valley. Before that, she worked as an executive meeting manager in the hotel industry for 6 ½ years at properties in Texas and Mississippi.

Categories: Center for Retailing Studies, Centers, Featured Stories, Marketing, Mays Business, News, Selfless service, Spotlights, Staff, Texas A&M

Janet Parish Headshot

Janet Parish has been honored with a University Professorship for Undergraduate Teaching Excellence (UPUTE) and was recognized as part of the Transformational Teaching and Learning Conference on April 18. She is a clinical professor and associate department head in the Department of Marketing in Mays. In addition, she is the director of the department’s Professional Selling Initiative.

The award is conferred only upon the university’s most distinguished teachers of undergraduates. The faculty members selected to receive past awards have exhibited uncommon excellence and devotion to the education of undergraduate students of Texas A&M University, according to university officials.

“I am very honored by this recognition,” said Parish. “The administrative and service roles in which I serve have given me a great platform to influence undergraduate education outside of my own classrooms.” 

These professors are not only exceptional classroom teachers, but are also innovators in pedagogy, exploring new teaching methods and seeking engagement with other educators in pursuit of excellence.

“Texas A&M University strives to meet our unique mission for Texas by supporting and recognizing our faculty’s outstanding efforts in teaching, research, and service,” said Carol A. Fierke, provost and executive vice president of Texas A&M. “These University Professorships acknowledge the particular expertise these faculty hold in working with our undergraduate students, as they become the future productive citizens of Texas and beyond.”

Yadav Manjit, interim department head of the Department of Marketing, said he is pleased Parish was selected for the award. “Over the years, Dr. Parish has shown considerable leadership in developing initiatives that have significantly impacted undergraduate education in Mays Business School,” he said.

The professorships are made possible through endowments by George and Irma Eppright, and Arthur J. and Wilhelmina Doré Thaman.

About Parish:

Janet Parish is a Clinical Professor and Associate Department Head in the Department of Marketing in Mays Business School at Texas A&M University. In addition, she is the director of the department’s Professional Selling Initiative, which is aimed at creating new opportunities for students in sales-related careers. Parish is a Mays Teaching Fellow and a recipient of the Association of Former Students College-Level Distinguished Achievement Award for Teaching and the Mays Business School Faculty Service Excellence Award.

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

Marketing Professor Venkatesh Shankar was an invited guest of the U.S. State Department in  Cairo, Egypt last week, where he delivered multiple presentations on marketing. He said online promotion can make a quantum leap in the trade between Egypt and the United States.

At the International Conference on Business Sciences on April 15-16, Shankar delivered presentations on “Innovations in Emerging Economies” and “Digital Marketing: Trends and the Future.” He spoke at the American Chamber of Commerce, Cairo University, Nile University, Ain Shams University, American University in Cairo, and American Embassy.

During a meeting with a number of journalists at the American Embassy in Cairo, he said electronic marketing helps to provide information about the products available in Egypt, and is a competitive advantage in the U.S. market. “Electronic marketing can make a difference in the movement of trade in the sectors of cars and technology among countries in the next five years,” he said.

Shankar said the advantages of electronic marketing will not stop at exports and imports between Egypt and the U.S., but could also introduce American consumers to some Egyptian products and services, enabling Egyptian entrepreneurs to market their products electronically and exchange experiences with their counterparts in the U.S.

“The challenge here is that some communication technologies are not as powerful in rural areas,” Shankar said. “They will have to focus on covering those regions.”

Shankar called on all companies to increase their investments in the development of the technology sectors infrastructure, which helps to expand the establishment of electronic stores and facilitates the transport of electronic goods. “Large companies rely on electronic marketing because they consider it a powerful tool to promote their products,” he said.

About Shankar:

Venkatesh (Venky) Shankar is the Coleman Chair Professor of Marketing and Director of Research at the Center for Retailing Studies, Mays Business School. His areas of specialization include digital business, marketing strategy, innovation, retailing, international marketing, and pricing. He has been recognized as one among the World’s Most Influential Scientific Minds by Thomson Reuters and as a Top 10 scholar worldwide on innovation.

 

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