The Impact of Stockouts on Customer Loyalty to Lean Retailers

The Impact of Stockouts on Customer Loyalty to Lean Retailers by Jeffery I. Turk MBA, Strayer University, 2008 BS, Oklahoma State University, 1985 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University August 2012 Abstract The lean inventory concept has been shown to streamline operations and improveThe lean inventory concept has been shown to streamline operations and improve efficiency in a retail environment. The negative side of the practice is that limited inventories increase the risk of stockouts, where a routinely available product is missing and the retailer is not able to meet customer demands. The purpose of this exploratory case study was to examine stockouts as an event and document their effects on changes in customer attitudes and behaviors. Guided by a constructivist conceptual framework, the research question explored how stockout experiences affected customers’ purchasing behaviors and loyalty to brand and retailer. A survey containing both open-ended and categorical response elements was validated through a pilot study and used to collect data from 40 randomly selected participants shopping at a retail mall in eastern Pennsylvania. Data coding for qualitative data consisted of 3 sequential stages of open, axial, and selective coding into a priori themes. Categorical responses were employed in downward analyses that revealed patterns in the qualitative data. The results indicated that repeated stockout experiences decreased customers’ loyalty to brand and retailer and caused customers to abandon both retailers and brand. Respondents indicated that stockout impacts can be buffered through improved inventory management and better customer service. Specific recommendations included monetary incentives, personal contacts, coupons, and item discounts. Results of this study will enable retailers to gain deeper understanding of how stockout affects customers shopping experiences and loyalty, and offer mitigation measures to improve both. Results will provide a positive change to both consumers and retailers, where shoppers will enjoy pleasant shopping experiences and retailers will maintain their competitive advantage through loyalty of their customer base. The Impact of Stockouts on Customer Loyalty to Lean Retailers by Jeffery I. Turk MBA, Strayer University, 2008 BS, Oklahoma State University, 1985 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University August 2012 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent on the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. All rights reserved. This edition of the work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, MI 48106 1346 UMI 3522222 Copyright 2012 by ProQuest LLC. UMI Number: 3522222 Dedication I would like to dedicate this dissertation to my wife Debbie and my children, Sarah and Connor, for their unwavering support and understanding during my pursuit of this degree. Debbie’s unconditional love and understanding were essential to my success, and her kindness and patience provided me with inspiration and strength during the challenging times in this academic endeavor. My two wonderful children provided further motivation to be an example to them and kept me focused on completing my educational goals. I feel special gratitude to my wonderful mother, whose guidance and love during my childhood and throughout her life as well as her belief in the importance of education instilled in me a sense of lasting curiosity and love for learning. Acknowledgements I wanted to extend a special thanks to my supportive mentor and committee chair, Dr. Karin Mae, and to the members of my committee, Dr. Judith Blando and URR Dr. Charlene Dunfee, for their guidance and support throughout this memorable and rewarding academic experience.