IE Seminar: “The Spread of Scarcity: An Empirical Analysis of Intra-Firm Product Substitutability in Fashion Retailing”, Mehmet Gümüş, 4.00PM February 19 (EN)

The Spread of Scarcity: An Empirical Analysis of Intra-Firm Product
Substitutability in Fashion Retailing

Mehmet Gümüş – McGill University
February 19, Friday, 16:00

Zoom Meeting
To request the event link, please contact to the department.

This study offers an empirical investigation of product shortages on
sales in neighboring outlets in the setting of a multi-store fast
fashion retailing chain. We use a unique dataset consisting of the
weekly sales and inventory levels for all the products sold by this
retailer across more than 300 stores. We perform various specifications
that test for the impact of stock-outs in a store chain structure. Our
analysis reveals that sales for a particular item at a focal store
increases when that same item experiences stock-outs in neighboring
stores, especially so for neighboring stores that are physically closer
to the store experiencing the stock-out. Following these empirical
results, we produce some managerial insights by further exploring the
data. First, we show that inferred product substitutability patterns
across stores vary depending on the location type, in that product
substitutability is more pronounced the outlet facing the stock-out is
located on streets as compared with outlets located in malls. Second, we
investigate the revenue impact of making inventory allocation decisions
using the neighboring outlets’ stock-out information.

(Joint work with Elçin Ergin and Nathan Yang)

Mehmet Gumus is Professor of Operations Management at the Desautels
Faculty of Management at McGill University. In his research, he focuses
on supply chain management, dynamic pricing, and risk management. His
papers are accepted for publication in Management Science, Operations
Research, Manufacturing and Service Operations Management, Marketing
Science and Production and Operations Management. He serves as SE for
Production and Operations Management, AE for Manufacturing and Service
Operations Management, and IIE Transactions. In 2017, he developed a new
specialized Masters Program in Management Analytics (MMA) and since its
inauguration, he is managing the MMA program as the Academic Director.
In 2015, he co-founded Plannica Inc. to develop an integrated Decision
Support System for the supply chain planning solution and implemented
Plannica to various industries.