EconPapers    
Economics at your fingertips  
 

Assortment Rotation and the Value of Concealment

Kris Johnson Ferreira () and Joel Goh ()
Additional contact information
Kris Johnson Ferreira: Harvard Business School, Technology and Operations Management, Boston, Massachusetts 02163
Joel Goh: Department of Analytics and Operations, National University of Singapore Business School, Singapore 119245

Management Science, 2021, vol. 67, issue 3, 1489-1507

Abstract: Assortment rotation—the retailing practice of changing the assortment of products offered to customers—has recently been used as a competitive advantage for both brick-and-mortar and online retailers. We focus on product categories where consumers may purchase multiple products during a season and investigate a new reason why frequent assortment rotations can be valuable to a retailer. Namely, by distributing its seasonal catalog of products over multiple assortments rotated throughout the season, as opposed to selling all products in a single, fixed assortment, the retailer effectively conceals a portion of its full product catalog from consumers, injecting uncertainty into the consumer’s relative product valuations. Rationally acting consumers may respond to this structural difference by purchasing more products, thereby generating additional sales for the retailer. We refer to this phenomenon as the value of concealment and show that the retailer enjoys a positive and significant value of concealment under quite general conditions. However, we show that when consumers are forward looking, the value of concealment is context dependent. We present insights and discuss intuition regarding which product categories likely lead to a positive versus negative value of concealment.

Keywords: assortment optimization; retailing; imperfect information (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1287/mnsc.2020.3610 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:67:y:2021:i:3:p:1489-1507

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Matthew Walls ().

 
Page updated 2021-03-27
Handle: RePEc:inm:ormnsc:v:67:y:2021:i:3:p:1489-1507