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

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

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

Alliance combines research expertise and entrepreneurship for new transportation advances

Taking innovative transportation ideas and working with the private sector to develop them into viable products and services that improve transportation safety and mobility is the goal of a new partnership between the Texas A&M Transportation Institute (TTI) and the McFerrin Center for Entrepreneurship in Mays Business School at Texas A&M University.

The partnership was announced Wednesday, May 9, at the Texas A&M Transportation Technology Conference by TTI Agency Director Greg Winfree and Mays Business School Dean Eli Jones. It is the first partnership of its kind for both TTI and Mays, as it marries the entrepreneurial-focused educational and experiential opportunities offered by the McFerrin Center with the deep transportation research expertise at TTI, a state agency and member of The Texas A&M University System.

Designated the “Innovation Hub @ TTI,” the purpose of this venture is for TTI and the McFerrin Center to work together with a range of partners to develop transformative transportation solutions that address long-standing mobility and safety challenges.  The goal is for these solutions to be marketable to the public and provide product commercialization opportunities.

“This is a paradigm shift in how we at TTI might think about approaching a transportation problem and formulating a solution,” said Ginger Goodin, TTI senior research engineer, who is leading the initiative. “As a public transportation research agency, it is becoming increasingly important for us to engage more deliberately with the private sector in addressing today’s transportation issues because our transportation system is clearly becoming more reliant on private-sector innovation. The McFerrin Center offers TTI expertise in facilitating industrial partnerships and identifying marketplace needs to help us grow our private-sector relationships.”

“The Texas A&M University System has profound innovation capabilities, and our researchers are thought leaders within practically every industry,” said Blake Petty, director of the McFerrin Center for Entrepreneurship. “TTI’s researchers are a shining example of transportation thought leaders, and we are pleased to partner with TTI on this new venture. We envision the Innovation Hub @ TTI will make a significant impact on how we innovate and translate next-generation transportation technologies to the marketplace. We also see the partnership as a prototype for problem-solving innovation and entrepreneurship training across the Texas A&M System.”

The Innovation Hub @ TTI will function as a catalyst for interdisciplinary research and innovation in emerging transportation solutions and will include the involvement of TTI researchers, Texas A&M students, private-sector partners and the broader transportation community.

About the Texas A&M Transportation Institute

Recognized as one of the premier higher education-affiliated transportation research agencies in the world, TTI’s research and development program has made significant breakthroughs across all facets of the transportation system. TTI research is widely known as an excellent value with a proven impact of saving lives, time and resources. In the laboratory and the classroom, TTI researchers help prepare students for transportation careers.

About the McFerrin Center for Entrepreneurship

Since its inception in 1999, the McFerrin Center for Entrepreneurship has served as the hub of entrepreneurship for Texas A&M University. Offering more than 30 enterprising programs each year, the center engages student and non-student entrepreneurs in a variety of opportunities to enhance their entrepreneurial skills. From business plan competitions to entrepreneurship certificates to the Startup Aggieland accelerator to the Entrepreneurship Bootcamp for Veterans with Disabilities, the center’s programs are touted as transformative and inspiring.

Categories: Centers, Featured Stories, Mays Business, McFerrin Center for Entrepreneurship, News, Research, Texas A&M

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

The public is invited to watch the finals on April 20 for Aggie Pitch, the McFerrin Center for Entrepreneurship’s inaugural pitch competition in which students from Texas A&M System schools and branch campuses pitch their business concepts.

 

Registration will start at 9 a.m., and the program will begin at 9:30 a.m. The awards luncheon will begin at noon. RSVP here: www.AggiePITCH.com

In recent weeks, the participants have gotten a chance to showcase their ideas. In addition to a cash prize pool of $50,000, the winners potentially will be considered for nomination to additional business plan/pitch competitions across the nation.

Finalists invited to the April 20 event will be evaluated and scored by a panel of prestigious entrepreneur/investor judges who volunteer with the McFerrin Center for Entrepreneurship. The judging panel includes Blake Teipel, Ph.D., a local entrepreneur and former student collaborated with the McFerrin Center in 2015 to win a number of business plan competitions around his company concept, including the Rice Business Plan Competition. The Aggie Pitch award winners will be announced at the luncheon shortly after noon.

The goal of Aggie Pitch is to encourage all Texas A&M students to explore entrepreneurship and learn how to deliver their business concepts in the most compelling fashion.

…Read more

Categories: Center for New Ventures and Entrepreneurship, Centers, Entrepreneurship, Featured Stories, Mays Business, McFerrin Center for Entrepreneurship, News, Research, Students, Texas A&M

Providing 14 promising junior faculty members and advanced Ph.D. students from around the country the chance to showcase their academic work and receive constructive feedback from their peers as well as an elite group of 15 senior scholars brought in for the event, the Department of Finance at Mays Business School hosted the third annual Young Scholars Finance Consortium March 22-24. The first two consortiums were hosted at Mays’ CityCentre facility in Houston.

Best Paper Winner

The consortium’s topic alternates each year among corporate finance / financial intermediation and asset pricing/investments. The 2018 Consortium focused on corporate finance and financial intermediation.

Activities at the three-day event at the George Hotel and Mays included a cocktail party, 1.5 days of presentation, a keynote address, and a networking dinner. Mays Executive Associate Dean Duane Ireland kicked off the event Friday morning. The keynote speaker was Peter M. DeMarzo, a chaired professor from Stanford University. From all of the Ph.D. student submissions, MIT student Daniel Green was the winner of the Best Ph.D. Student Paper Award.

Participants – many of whom had never been to College Station – said they were “impressed with our facilities, our faculty, the quality of the program, and how well it was organized,” said one of the organizers, Mays Associate Professor of Finance Christa Bouwman.

“Our event is truly unique,” Bouwman said of the rich opportunity for the Ph.D. students and junior faculty members to present and hear feedback from such renowned scholars in the audience.

Categories: Finance, Mays Business, News, Ph.D., Research, Students, Texas A&M

Mays Distinguished Professor Emeritus Michael Hitt will receive an honorary doctoral degree from Jonkoping University in Sweden in May. He will also deliver a research presentation to the broader university community the day before the award ceremony.

This is a very prestigious honor – particularly given that Jonkoping has a strong worldwide reputation for excellence in entrepreneurship research.

Hitt was told he was selected for the award because of his “academic quality and his contributions to the success of Jonkoping University” as well as “research contributions to entrepreneurship and family business research.” Following is information about his relationship with Jonkoping University:

  • Visited the university, as a visiting scholar, for a period of time to work with Ph.D. students and faculty on their research projects
  • Served as an outside advisor and reader for a Ph.D. student’s dissertation
  • Served as an advisory editor and helped Jonkoping faculty develop a special issue of a journal called Organization Studies. Family business topics were the focus of the special issue. Family business is a core research topic for Jonkoping faculty.
  • Served as an advisory editor and wrote a forward for an edited book on family business research that includes chapters written by Jonkoping faculty.

“I am highly honored to be offered an honorary doctorate by Jonkoping University,” he said. Honorary doctorates are rare, and are almost always awarded to people who have made distinguished contributions in their field of endeavor. Hitt said it is also not unusual to award to people whom they consider to be or wish to be “friends” of the university.

Hitt is a big supporter for the academic quality of Jonkoping’s work. His connection to the university is through the Jonkoping International Business School. According to Hitt, the university’s world-renowned program in family business complements the entrepreneurship program at Texas A&M.

“Through our previous cooperation and exchanges, faculty there have conducted joint research with faculty here, and in addition, we have jointly co-authored articles which also include several of our Ph.D. students,” Hitt said. He believes that this type of cooperation could continue and perhaps be enhanced if desired. “I am certain that we can learn from their programs and successes in entrepreneurship and family business, and they can learn from our outstanding and encompassing entrepreneurship programs, as well.”

Executive Associate Dean Duane Ireland, a long-time colleague of Hitt’s, said Hitt has positively touched thousands of students’ lives while teaching at all levels – undergraduates, master’s, doctorate, and executive. “Mike has truly ‘done so much for so many,’” Ireland said.

While at Mays, Hitt served as a University Distinguished Professor in the Department of Management. He received his Ph.D. from the University of Colorado and has co-authored or co-edited 26 books and many journal articles. The Times Higher Education in 2010 listed him among the top scholars in economics, finance and management based on the number of highly cited articles he has authored. Hitt received awards for the best article published in the Academy of Management Executive (1999), Academy of Management Journal (2000), the Journal of Management (2006), and the Family Business Review (2012).

Categories: Business Honors, Faculty, Featured Stories, Management, Mays Business, News, Ph.D., Research, Spotlights, Staff, Students, Texas A&M

World Cancer Day 2018 observed on Sunday, Feb. 4 – is a global campaign that aims to save millions of preventable deaths each year by raising awareness and education about the disease. The objective is to get as many people as possible to talk about cancer, including on social media with the hashtag #WorldCancerDay, pressing governments and individuals across the world to take action in the fight against cancer.

Leonard L. Berry, a Texas A&M University healthcare expert from Mays Business School, advocates for practical improvements in cancer care services for both the patient and the family based on his ongoing study of how to improve the service journey that cancer patients and their families take from diagnosis through treatment, recovery and in some cases end-of-life care. “Cancer not only impacts the patient but also the family, and it is especially appropriate to take a holistic approach to cancer care in discussions on World Cancer Day,” Berry says. 

Drawing on Berry’s research conducted at 10 innovative cancer centers, he and his co-authors provide important guidelines for designing cancer care services that prevent avoidable suffering and improve the care experience. These guidelines focus on integrating humanity into a service that requires sensitivity and compassion.

Design cancer care services to be less stressful

Cancer care is a high-emotion service. The need for the service alone elicits intense emotions. The wonders of high-tech cancer care are best complemented by high-touch care. Guidelines for helping healthcare organizations deliver services to better anticipate and respond to patients’ and family’s emotional needs were developed based on interviews with more than 350 cancer patients, family members, oncologists, surgeons, oncology nurses, non-clinical staffers, and leaders of healthcare organizations: 1) Identify emotional triggers such as the need for cancer care services, 2) Respond early to intense emotions, including preparing patients for what’s next, 3) Enhance the patients’ control, and 4) Hire the right people and prepare them for the role. The complete guidelines are available in the Harvard Business Review.

Manage the clues in cancer care

Patients’ experiences, good and bad, accumulate as a result of clues embedded in these experiences. Clues are the signals patients perceive in using a service. When interacting with a system of care, patients filter clues, organizing them into a set of impressions. Patients may perceive clues rationally or emotionally, and clues may be defined by their presence or absence. Optimizing cancer patients’ service experiences requires sensitive management of the clues that comprise the overall service. Well-managed clues can evoke positive feelings, such as trust and hope. Poorly managed clues can exacerbate negative emotions, such as anxiety, stress, helplessness, anger, and fear.

…Read more

Categories: Departments, Faculty, Health Care, Mays Business, News, Research, Selfless service, Texas A&M

By Venkatesh Shankar, Mays Business School at Texas A&M University

Courtesy: The Financial Brand

As we near the end of 2017, what’s in store for 2018? Will it be economically better for us? What technological shifts will we witness? How will it change our and organizations’ behaviors? What will be the major business trends? How will marketing change? How will retailing transform? Marketing Professor Venkatesh Shankar of Texas A&M University offers his predictions for such questions.

The world and U.S. economies are expected to continue their growth in 2018. Although the world economy is predicted to grow by about 3.6 percent, developed economies are anticipated to grow just under 2 percent. The U.S. economy will grow in the low-to-mid 2 percent level. Unemployment in the U.S. will remain in the low four percent level. Inflation will continue to be modest. U.S. wages might rise by 3 percent, but U.S. healthcare costs will also likely grow faster, by 6 percent. China’s economic growth might slow a bit, but China will march on in economic prosperity. Interestingly, next year, Chinese tourists will far outspend American tourists, a trend that will continue until 2025.

Courtesy: cioandleader.com

2018 will witness the emergence of Gen Z or centennials (those born 1995 or after), the first generation born with devices in hand. Currently numbering 70 million, members of Generation Z are entering college or the workforce and are rising in influence. Because they are more digitally native than the baby boomers and millennials, they will play a huge part in digital transformation. Regardless of the level of their influence, the interplay among three generations, baby boomers, millennials, and centennials will lead to interesting digital dynamics in the society and workforce.

Deeper into digital

More people will be connected and will be digital. For example, by the end of 2018, half of adults in developed countries will have at least two online-only media subscriptions.

Spurred by Pokemon augmented reality (AR) experience, AR will become more mainstream with AR enabled apps and smartphones. More than a billion smartphone users around the world will create augmented reality content at least once during 2018.

Livestreaming will become more mainstream. China will become the world’s largest livestreaming market at $4.5 billion, almost doubling in size from 2017.

Consumers will increasingly use visual and voice searches. In fact, as more devices, people, content, and services become intertwined, we will see a super digital network – or what Gartner calls a digital mesh.

By the end of 2018, digital will impact more than half of the $4 trillion U.S. retail market. Groceries, the last bastion of brick-and-mortar retail, will start moving more rapidly online. The role of sales associates in retail will diminish or dramatically transform.

Courtesy: vca.ag

Artificial intelligence (AI) will continue to make rapid strides, affecting our daily lives, business decisions, and societal changes. AI will reshape customer experience. Chatbots will become the face of AI and will change the way apps are configured. However, these technological enhancements come with downsides. About 30% of the organizations will see a decline in customer experience performance.

Companies will use more of machine learning and AI tools to enhance their businesses. For example, about one-tenth of the purchase decisions will be guided by AI or machine-learning powered agents.

Behind the learning curve

The negative rub of the technology advances is that by 2018, the United States could face a shortage of 140,000-190,000 people with deep analytical skills as well as 1.5 million managers and analysts with big data analysis expertise. This creates huge challenges as well as opportunities for data science and analytics programs.

Courtesy: bitcoin.com

Finally, cryptocurrencies like bitcoin, ethereum, and litecoin will surge in popularity. Blockchain technology, the backbone behind the cryptocurrencies, will start to take a stronghold in financial exchanges and collaborations. Speculation will keep the cryptocurrencies’ values wildly volatile, but they will rise in importance as a viable future alternative. In fact, if one had invested $1,000 in bitcoin in 2008, it would be worth over $40 million now. Similarly, litecoin has returned 5,700 percent in 2017 alone!

 

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