Estimating the impact of understaffing on sales and profitability in retail stores

Vidya Mani, Saravanan Kesavan, Jayashankar M. Swaminathan

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

In this study, we use hourly data on store traffic, sales, and labor from 41 stores of a large retail chain to identify the extent of understaffing in retail stores and quantify its impact on sales and profitability. Using an empirical model motivated from queueing theory, we calculate the benchmark staffing level for each store, and establish the presence of systematic understaffing during peak hours. We find that all 41 stores in our sample are systematically understaffed during a 3-hour peak period. Eliminating understaffing in these stores can result in a significant increase in sales and profitability in these stores. Also, we examine the extent to which forecasting errors and scheduling constraints drive understaffing in retail stores and quantify their relative impacts on store profits for the retailer in our study.

Original languageEnglish (US)
Pages (from-to)201-218
Number of pages18
JournalProduction and Operations Management
Volume24
Issue number2
DOIs
StatePublished - Feb 1 2015

All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

Fingerprint Dive into the research topics of 'Estimating the impact of understaffing on sales and profitability in retail stores'. Together they form a unique fingerprint.

Cite this