The Effect of Assortment Rotation on Consumer Choice and Its Impact on Competition

Felipe Caro () and Victor Martínez- de-Albéeniz ()
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Felipe Caro: UCLA Anderson School of Management
Victor Martínez- de-Albéeniz: University of Navarra

Chapter Chapter 3 in Consumer-Driven Demand and Operations Management Models, 2009, pp 63-79 from Springer

Abstract: Abstract The recent success of fast fashion retailers has changed the (affordable) fashion industry dramatically. These companies, such as Zara, are characterized by a flexible supply chain that has allowed them to reduce design and production lead times to just a few weeks, rather than months. More importantly, they are using these capabilities to change the assortment (i.e., introduce new products) more frequently, which many practitioners claim increases sales, since there is evidence showing that customers visit more often the stores with fresher products. We propose in this chapter a customer consumption model with satiation and multiple competing retailers. The model implies that the consumers will spend a higher share of their budget in retailers that renovate the assortment at a faster pace. Using the insights from the model, we determine how often retailers should change the assortment in the competitive equilibrium.

Keywords: Supply Chain; Ment Rotation; Cost Structure; Consumer Choice; Production Lead Time (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-0-387-98026-3_3

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