The Effect of Product Assortment Changes on Customer Retention

By Sharad Borle, Peter Boatwright, J. Kadane, Joseph C. Nunes, Shmueli Galit. 2005

218 citations recorded by the source corpus.

This research investigates the impact of a large-scale assortment reduction on customer retention, utilizing a model we develop to explore the effect on sales at both the store level and the category level simultaneously. We apply our model to a data set provided by an online grocer. The data contain detailed household purchase records for every category in the store. Our results indicate that the reduction in assortment reduces overall store sales, a result that contrasts with that of all of the recent studies on assortment reductions Food Marketing Institute. 1993. Variety or duplication: A process to know where you stand. Prepared by Willard Bishop Consulting and Information resources, Inc., in cooperation with Frito Lay; Dreze, Xavier, Stephen J. Hoch, Mary E. Purk. 1994. Shelf management and space elasticity. J. Retailing704 301-326; Broniarczyk, Susan M., Wayne D. Hoyer, Leigh McAlister. 1998. Consumers' perceptions of the assortment offered in a grocery category: The impact of item reduction. J. Marketing Res.35May 166-176; Boatwright, Peter, Joseph C. Nunes. 2001. Reducing assortment: An attribute-based approach. J. Marketing65July 50-63; Boatwright, Peter, Joseph C. Nunes. 2004. Correction note for "Reducing assortment: An attribute-based approach." J. Marketing. Forthcoming. We find the reduction had a negative effect on both shopping frequency and purchase quantity, and we find that the decline in shopping frequency resulted in a greater loss than did the reduction in purchase quantities. We also find that the impact of the assortment cut varies widely by category, with less-frequently purchased categories more adversely affected. The variation in the assortment reduction's impact across categories suggests that managers compare select categories in order to moderate the overall loss in sales.

Subfields: Economics and Econometrics, Marketing

View Paper: https://www.semanticscholar.org/paper/90710ef767daf83b828e03597e84f5db41079f2c

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Citations in the corpus

The Influence of Product Variety on Brand Perception and Choice (2007, background): “Supporting the notion that consumers like variety, in certain product categories a reduction in assortment has been shown to lead to reduced sales (Borle et al. 2005).”
The Short- and Long-Term Impact of an Assortment Reduction on Category Sales (2006, background): “Several studies have already shown sales effects (e.g., Boatwright and Nunues 2001; Borle et al. 2005; Zhang and Krishna 2005) without explicitly considering short- and long-term effects.”
Too Much of a Good Thing: The Impact of Product Variety on Operations and Sales Performance (2012, background): “The number of SKUs is a well-accepted measure of product variety in the literature (Alfaro and Corbett, 2003; Borle et al., 2005; Fisher and Ittner, 1999).”
The Effect of Product Variety and Inventory Levels on Retail Store Sales: A Longitudinal Study (2010, methodology): “But Borle et al. (2005), using data from an online grocer, find that at the store level reduction in variety is associated with both fewer store visits and smaller basket size.”
The Space-to-Product Ratio Effect: How Interstitial Space Influences Product Aesthetic Appeal, Store Perceptions, and Product Preference (2016, background): “Previous work has also examined how the assortment of products (e.g., Boatwright and Nunes 2001; Borle et al. 2005; Broniarczyk, Hoyer, andMcAlister 1998; Diehl and Poynor 2010; Lamberton and Diehl 2013) as well as the way in which a constant product selection is organized (e.g., Hoch, and Purk…”
Product Line Design and Production Technology (2007, background): “Complementing this analytical work, empirical researchers have examined the impact of variety on sales (see, e.g., Borle et al. 2005).”
Building with Bricks and Mortar: The Revenue Impact of Opening Physical Stores (2015, background): “Therefore, retention is manifested in getting customers to buy more often (see Borle et al. (2005) for a similar perspective).”
Can There Ever Be Too Many Options? A Meta-Analytic Review of Choice Overload (2010, background): “Yet, while researchers analyzing actual field data have reported some instances in which sales actually went up with fewer options, in many cases, reducing the number of different items apparently led to reduced sales or to no change (Boatwright and Nunes 2001; Borle et al. 2005; Drèze, Hoch, and Pu”
A Flexible Regression Model for Count Data (2010, unknown): “…useful in several applications, such as using the COM-Poisson sufficient statistics for purposes of data disclosure [Kadane, Krishnan and Shmueli (2006)], in marketing applications [Boatwright, Borle and Kadane (2003), Borle et al. (2005)], and online auctions [Borle, Boatwright and Kadane (2006)].”
The time-harried shopper: Exploring the differences between maximizers and satisficers (2009, background): “While one set of research findings promotes the positives of offering larger assortment sizes (e.g., Borle et al. 2005; Chernev 2006; Oppewal and Koelemeijer 1999), other evidence indicates that a surfeit of alternatives in the marketplace leads to information overload and related detrimental effe”
The interrelationships between brand and channel choice (2014, background): “Borle et al. (2005), Hoch et al. (1999), and van Herpen and Pieters (2002) provide insights on how consumers react to assortments.”
Buying Groceries in Brick and Click Stores: Category Allocation Decisions and the Moderating Effect of Online Buying Experience (2015, background): “1 While larger assortments may also come at the cost of more difficult evaluation processes because of information overload, choice conflict or regret (Dhar 1997; Huffman and Kahn 1998), the general expectation appears to be that the advantages of larger assortments tend to cancel out potential disa”