IDEAS home Printed from https://ideas.repec.org/a/eee/jouret/v85y2009i1p71-83.html
   My bibliography  Save this article

Why is Assortment Planning so Difficult for Retailers? A Framework and Research Agenda

Author

Listed:
  • Mantrala, Murali K.
  • Levy, Michael
  • Kahn, Barbara E.
  • Fox, Edward J.
  • Gaidarev, Peter
  • Dankworth, Bill
  • Shah, Denish

Abstract

When retailers conduct product assortment planning (PAP), they determine (1) The variety of merchandise, (2) The depth of merchandise, and (3) Service level or the amount of inventory to allocate to each stock-keeping unit (SKU). Despite longstanding recognition of its importance, no dominant PAP solution exists, and theoretical and decision support models address only some of the factors that complicate assortment planning. This article simultaneously addresses the variety, depth, and service level aspects of PAP to provide a more thorough understanding. A review of current academic literature and best trade practices identifies open questions and directions for further research and applications.

Suggested Citation

  • Mantrala, Murali K. & Levy, Michael & Kahn, Barbara E. & Fox, Edward J. & Gaidarev, Peter & Dankworth, Bill & Shah, Denish, 2009. "Why is Assortment Planning so Difficult for Retailers? A Framework and Research Agenda," Journal of Retailing, Elsevier, vol. 85(1), pages 71-83.
    • Handle: RePEc:eee:jouret:v:85:y:2009:i:1:p:71-83
    DOI: 10.1016/j.jretai.2008.11.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022435908000882
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jretai.2008.11.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Simonson, Itamar, 1989. "Choice Based on Reasons: The Case of Attraction and Compromise Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 16(2), pages 158-174, September.
    2. Narendra Agrawal & Stephen A. Smith, 2003. "Optimal retail assortments for substitutable items purchased in sets," Naval Research Logistics (NRL), John Wiley & Sons, vol. 50(7), pages 793-822, October.
    3. Erjen van Nierop & Dennis Fok & Philip Hans Franses, 2008. "Interaction Between Shelf Layout and Marketing Effectiveness and Its Impact on Optimizing Shelf Arrangements," Marketing Science, INFORMS, vol. 27(6), pages 1065-1082, 11-12.
    4. Ariely, Dan & Levav, Jonathan, 2000. "Sequential Choice in Group Settings: Taking the Road Less Traveled and Less Enjoyed," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 27(3), pages 279-290, December.
    5. Alba, Joseph W & Hutchinson, J Wesley, 1987. "Dimensions of Consumer Expertise," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 13(4), pages 411-454, March.
    6. Susan M. Broniarczyk & Wayne D. Hoyer, 2006. "Retail Assortment: More ≠ Better," Springer Books, in: Manfred Krafft & Murali K. Mantrala (ed.), Retailing in the 21st Century, pages 225-238, Springer.
    7. Huffman, Cynthia & Houston, Michael J, 1993. "Goal-Oriented Experiences and the Development of Knowledge," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 20(2), pages 190-207, September.
    8. Taher, Ahmed & Leigh, Thomas W. & French, Warren A., 1996. "Augmented retail services: The lifetime value of affection," Journal of Business Research, Elsevier, vol. 35(3), pages 217-228, March.
    9. Garrett van Ryzin & Siddharth Mahajan, 1999. "On the Relationship Between Inventory Costs and Variety Benefits in Retail Assortments," Management Science, INFORMS, vol. 45(11), pages 1496-1509, November.
    10. Alain Bultez & Philippe Naert, 1988. "SH.A.R.P.: Shelf Allocation for Retailers' Profit," Marketing Science, INFORMS, vol. 7(3), pages 211-231.
    11. Menon, Satya & Kahn, Barbara E, 1995. "The Impact of Context on Variety Seeking in Product Choices," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 22(3), pages 285-295, December.
    12. Drolet, Aimee, 2002. "Inherent Rule Variability in Consumer Choice: Changing Rules for Change's Sake," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 29(3), pages 293-305, December.
    13. Gérard P. Cachon & Christian Terwiesch & Yi Xu, 2005. "Retail Assortment Planning in the Presence of Consumer Search," Manufacturing & Service Operations Management, INFORMS, vol. 7(4), pages 330-346, August.
    14. Wedad Elmaghraby & P{i}nar Keskinocak, 2003. "Dynamic Pricing in the Presence of Inventory Considerations: Research Overview, Current Practices, and Future Directions," Management Science, INFORMS, vol. 49(10), pages 1287-1309, October.
    15. Marcel Corstjens & Peter Doyle, 1981. "A Model for Optimizing Retail Space Allocations," Management Science, INFORMS, vol. 27(7), pages 822-833, July.
    16. Murali K. Mantrala & Surya Rao, 2001. "A Decision-Support System that Helps Retailers Decide Order Quantities and Markdowns for Fashion Goods," Interfaces, INFORMS, vol. 31(3_supplem), pages 146-165, June.
    17. McAlister, Leigh, 1982. "A Dynamic Attribute Satiation Model of Variety-Seeking Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(2), pages 141-150, September.
    18. Barton A. Weitz & Mary Brett Whitfield, 2006. "Trends in U.S. Retailing," Springer Books, in: Manfred Krafft & Murali K. Mantrala (ed.), Retailing in the 21st Century, pages 59-75, Springer.
    19. Bettman, James R & Luce, Mary Frances & Payne, John W, 1998. "Constructive Consumer Choice Processes," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 25(3), pages 187-217, December.
    20. Peter C. Verhoef & Laurens M. Sloot, 2006. "Out-of-Stock: Reactions, Antecedents, Management Solutions, and a Future Perspective," Springer Books, in: Manfred Krafft & Murali K. Mantrala (ed.), Retailing in the 21st Century, pages 239-253, Springer.
    21. Ratner, Rebecca K & Kahn, Barbara E, 2002. "The Impact of Private versus Public Consumption on Variety-Seeking Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 29(2), pages 246-257, September.
    22. Paul E. Green & Abba M. Krieger, 1985. "Models and Heuristics for Product Line Selection," Marketing Science, INFORMS, vol. 4(1), pages 1-19.
    23. Gérard P. Cachon & A. Gürhan Kök, 2007. "Category Management and Coordination in Retail Assortment Planning in the Presence of Basket Shopping Consumers," Management Science, INFORMS, vol. 53(6), pages 934-951, June.
    24. Puneet Manchanda & Asim Ansari & Sunil Gupta, 1999. "The “Shopping Basket”: A Model for Multicategory Purchase Incidence Decisions," Marketing Science, INFORMS, vol. 18(2), pages 95-114.
    25. David R. Bell & James M. Lattin, 1998. "Shopping Behavior and Consumer Preference for Store Price Format: Why “Large Basket” Shoppers Prefer EDLP," Marketing Science, INFORMS, vol. 17(1), pages 66-88.
    26. Felipe Caro & Jérémie Gallien, 2007. "Dynamic Assortment with Demand Learning for Seasonal Consumer Goods," Management Science, INFORMS, vol. 53(2), pages 276-292, February.
    27. McAlister, Leigh & Pessemier, Edgar, 1982. "Variety Seeking Behavior: An Interdisciplinary Review," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(3), pages 311-322, December.
    28. A. Gürhan Kök & Marshall L. Fisher, 2007. "Demand Estimation and Assortment Optimization Under Substitution: Methodology and Application," Operations Research, INFORMS, vol. 55(6), pages 1001-1021, December.
    29. Edward J. Fox & Raj Sethuraman, 2006. "Retail Competition," Springer Books, in: Manfred Krafft & Murali K. Mantrala (ed.), Retailing in the 21st Century, pages 193-208, Springer.
    30. Ratner, Rebecca K & Kahn, Barbara E & Kahneman, Daniel, 1999. "Choosing Less-Preferred Experiences for the Sake of Variety," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 26(1), pages 1-15, June.
    31. Huber, Joel & Payne, John W & Puto, Christopher, 1982. "Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 9(1), pages 90-98, June.
    32. Stephen J. Hoch & Eric T. Bradlow & Brian Wansink, 1999. "The Variety of an Assortment," Marketing Science, INFORMS, vol. 18(4), pages 527-546.
    33. Stephen A. Smith & Narendra Agrawal, 2000. "Management of Multi-Item Retail Inventory Systems with Demand Substitution," Operations Research, INFORMS, vol. 48(1), pages 50-64, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wu, Pei-Hsun & Kao, Danny Tengti, 2011. "Goal orientation and variety seeking behavior: The role of decision task," Journal of Economic Psychology, Elsevier, vol. 32(1), pages 65-72, February.
    2. Miller, Christopher M. & Smith, Stephen A. & McIntyre, Shelby H. & Achabal, Dale D., 2010. "Optimizing and Evaluating Retail Assortments for Infrequently Purchased Products," Journal of Retailing, Elsevier, vol. 86(2), pages 159-171.
    3. Zhang, Wei & Rajaram, Kumar, 2017. "Managing limited retail space for basic products: Space sharing vs. space dedication," European Journal of Operational Research, Elsevier, vol. 263(3), pages 768-781.
    4. Mou, Shandong & Robb, David J. & DeHoratius, Nicole, 2018. "Retail store operations: Literature review and research directions," European Journal of Operational Research, Elsevier, vol. 265(2), pages 399-422.
    5. Lingxiu Dong & Panos Kouvelis & Zhongjun Tian, 2009. "Dynamic Pricing and Inventory Control of Substitute Products," Manufacturing & Service Operations Management, INFORMS, vol. 11(2), pages 317-339, December.
    6. Vidya Mani & Douglas J. Thomas & Saurabh Bansal, 2022. "Estimating Substitution and Basket Effects in Retail Stores: Implications for Assortment Planning," Management Science, INFORMS, vol. 68(7), pages 5002-5024, July.
    7. A. Gürhan Kök & Marshall L. Fisher, 2007. "Demand Estimation and Assortment Optimization Under Substitution: Methodology and Application," Operations Research, INFORMS, vol. 55(6), pages 1001-1021, December.
    8. Gérard P. Cachon & A. Gürhan Kök, 2007. "Category Management and Coordination in Retail Assortment Planning in the Presence of Basket Shopping Consumers," Management Science, INFORMS, vol. 53(6), pages 934-951, June.
    9. Grewal, Dhruv & Levy, Michael & Kumar, V., 2009. "Customer Experience Management in Retailing: An Organizing Framework," Journal of Retailing, Elsevier, vol. 85(1), pages 1-14.
    10. Kim, Jungkeun, 2020. "Impact of the perceived threat of COVID-19 on variety-seeking," Australasian marketing journal, Elsevier, vol. 28(3), pages 108-116.
    11. Çömez-Dolgan, Nagihan & Dağ, Hilal & Fescioglu-Unver, Nilgun & Şen, Alper, 2023. "Multi-plant manufacturing assortment planning in the presence of transshipments," European Journal of Operational Research, Elsevier, vol. 310(3), pages 1033-1050.
    12. Stelios Tsafarakis & Charalampos Saridakis & Nikolaos Matsatsinis & George Baltas, 2016. "Private labels and retail assortment planning: a differential evolution approach," Annals of Operations Research, Springer, vol. 247(2), pages 677-692, December.
    13. Talebian, Masoud & Boland, Natashia & Savelsbergh, Martin, 2014. "Pricing to accelerate demand learning in dynamic assortment planning for perishable products," European Journal of Operational Research, Elsevier, vol. 237(2), pages 555-565.
    14. Shin, Hojung & Park, Soohoon & Lee, Euncheol & Benton, W.C., 2015. "A classification of the literature on the planning of substitutable products," European Journal of Operational Research, Elsevier, vol. 246(3), pages 686-699.
    15. Felipe Caro & Victor Martínez-de-Albéniz, 2012. "Product and Price Competition with Satiation Effects," Management Science, INFORMS, vol. 58(7), pages 1357-1373, July.
    16. Fernando Bernstein & A. Gürhan Kök & Lei Xie, 2015. "Dynamic Assortment Customization with Limited Inventories," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 538-553, October.
    17. A. Gürhan Kök & Yi Xu, 2011. "Optimal and Competitive Assortments with Endogenous Pricing Under Hierarchical Consumer Choice Models," Management Science, INFORMS, vol. 57(9), pages 1546-1563, February.
    18. Dorothée Honhon & Vishal Gaur & Sridhar Seshadri, 2010. "Assortment Planning and Inventory Decisions Under Stockout-Based Substitution," Operations Research, INFORMS, vol. 58(5), pages 1364-1379, October.
    19. Tang, Christopher S., 2010. "A review of marketing-operations interface models: From co-existence to coordination and collaboration," International Journal of Production Economics, Elsevier, vol. 125(1), pages 22-40, May.
    20. Qiu, Jiaqing & Li, Xiangyong & Duan, Yongrui & Chen, Mengxi & Tian, Peng, 2020. "Dynamic assortment in the presence of brand heterogeneity," Journal of Retailing and Consumer Services, Elsevier, vol. 56(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jouret:v:85:y:2009:i:1:p:71-83. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/journal-of-retailing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.