Managing the Impact of Fitting Room Traffic on Retail Sales: Using Labor to Reduce Phantom Stockouts

Manufacturing & Service Operations Management, Volume 23, Issue 6, November-December 2021
Hyun Seok (Huck) Lee , Saravanan Kesavan , Vinayak Deshpande 

Brick-and-mortar (B&M) retailers must enhance the customer in-store experience to better compete with online retailers. Fitting rooms in B&M stores play a critical role in the customer experience as a venue to experience products and examine alternatives. High traffic in fitting rooms, however, obstructs the customer’s ability to choose a product. In this paper, we (1) examine the impact of fitting room traffic on store performance, (2) identify phantom stockouts as a plausible mechanism for this impact and (3) provide a potential solution and quantify the magnitude of its impact. Specifically, we demonstrate an inverted-U relationship between fitting room traffic and sales using archival data analysis. Our field study reveals that high traffic in fitting rooms exacerbates phantom stockouts, which could contribute to the decline in sales. Finally, through field experiments at two retailers, we show that a timely backend recovery operation through a dedicated fitting room associate reduces phantom stockouts and increases sales by 22.4%–22.7%. Our findings provide the following managerial implications. First, contrary to conventional wisdom that traffic drives sales, we identify that fitting room traffic beyond a certain point can hurt store sales. Second, we find a large magnitude of phantom stockouts in fitting rooms. Finally, we show that dedicated fitting room labor can significantly boost store sales by alleviating phantom stockouts. Our proposed solution was adopted by both retail organizations that we worked with.

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