Guanyi Lu: Product variety in local grocery stores: Differential effects on stock-keeping unit level sales
Reporter：Guanyi Lu
Abstract：We empirically examine the effect of product variety on sales at the stock-keeping unit (SKU) level. Prior empirical operations management studies generally treat product variety as a single-dimensional measure (e.g., the number of SKUs carried by the store, distribution center, or firm) and study its impact on aggregate sales (e.g., sales at the store, distribution center, or firm). As such, SKUs from different brands are assumed to contribute equally to total sales, which is not always the case. To address this, we need to conceptualize product variety within brands and investigate its impact on sales at a more granular level. In this study, we propose and theoretically articulate two product variety dimensions (within-brand variety [WV] and average WV of other brands [AWVO]) to investigate the mechanisms that connect product variety to SKU-level sales. Using a detailed transaction dataset from a local grocery retailer, we first show that product variety conceptualized within brands (i.e., the mean of WVs [MWV]) does have an impact on aggregate subcategory sales, as the literature suggests. At the SKU level, we find WV increases same-brand SKU sales, while AWVO reduces it. Our work provides an alternative explanation to the inverted U-shaped relationship between product variety and aggregate sales observed in the literature.
Introduction to the Reporter：
Dr. Guanyi Lu is on the faculty of the Department of Business Analytics, Information Systems and Supply Chain at Florida State University’s College of Business. His areas of expertise are retail operations, supply chain structure and integration, supply chain risk and security, and information and communication technology. Lu’s research has appeared in Journal of Operations Management, Production and Operations Management, Decision Sciences, Journal of Supply Chain Management and IEEE Transactions on Engineering Management among others. He serves as an Associate Editor for Journal of Operations Management and Decision Sciences Journal and is on the editorial board of Journal of Supply Chain Management. Guanyi’s service was recognized by the 2018 best reviewer award of Decision Sciences and the 2020 best reviewer award of Journal of Operations Management.
