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RP Variety And Inventory Trade Off In Retailing
Research Paper

Research Paper: Variety and Inventory Trade-off in Retailing: An Empirical Study

Identifying the right level of variety and associated inventory has been an open question in both the retail industry and academia for a long time. 

In general, more variety is expected to generate higher traffic to store and higher conversion for incoming customers. Another argument is that too much variety reduces sales due to the confusion it creates in the customers’ minds (choice paradox). Higher variety also implies lower inventory per product due to limited shelf space in the stores. Hence, a critical question for a retailer is to determine where their stores are currently positioned on the variety-sales curve, and whether they should increase/decrease variety by extending/cutting the long tail of slow-moving products or not. 

This research paper, written by Prof. Gurhan Kok (founder and CEO of Invent Analytics), investigates the trade-off between variety and inventory in retailing using data from a bookstore chain. 

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