Modelling and simulating retail management practices: a first approach

Peer Olaf Siebers,Chris W Clegg,Helen Celia,Uwe Aickelin

doi:10.1504/ijspm.2009.031096

Abstract

Multi-agent systems offer a new and exciting way of understanding the world of work. We apply agent-based modeling and simulation to investigate a set of problems in a retail context. Specifically, we are working to understand the relationship between people management practices on the shop-floor and retail performance. Despite the fact we are working within a relatively novel and complex domain, it is clear that using an agent-based approach offers great potential for improving organizational capabilities in the future. Our multi-disciplinary research team has worked closely with one of the UK’s top ten retailers to collect data and build an understanding of shop-floor operations and the key actors in a department (customers, staff, and managers). Based on this case study we have built and tested our first version of a retail branch agent-based simulation model where we have focused on how we can simulate the effects of people management practices on customer satisfaction and sales. In our experiments we have looked at employee development and cashier empowerment as two examples of shop floor management practices. In this paper we describe the underlying conceptual ideas and the features of our simulation model. We present a selection of experiments we have conducted in order to validate our simulation model and to show its potential for answering “what-if” questions in a retail context. We also introduce a novel performance measure which we have created to quantify customers’ satisfaction with service, based on their individual shopping experiences.

Highlights

There exists a large body of work investigating the modeling and simulation of operational management practices, whereas people management practices have often been neglected
In order to be able to make a choice for our project, we reviewed the relevant literature spanning the fields of Economics, Organizational Behavior, Psychology, Retail, Marketing, Operations Research (OR), Artificial Intelligence, and Computer Science
The pattern of relationships can be clearly seen in Figure 4; overall customer satisfaction rises with the satisfaction weights in both departments, but to a greater extent in WW as confirmed by the significant interaction effect

Summary

Introduction

There exists a large body of work investigating the modeling and simulation of operational management practices, whereas people management practices have often been neglected. Research suggests that people management practices crucially impact upon an organization's performance (for example, Birdi et al, 2008). The overall aim of our project is to understand and predict the impact of different people management practices on retail productivity and performance. Focusing on management practices may offer an opportunity to further our understanding of the UK’s relatively low levels of retail productivity (Porter & Ketels, 2003). Instead of focusing on overall satisfaction as a global evaluation, we will investigate customer satisfaction as it is empirically driven by visitors’ in-store experiences and perceptions of service they receive (Torres et al, 2001)

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Conclusion