Up Next

ki-logo-white
Market-Based Solutions to Vital Economic Issues

SEARCH

ki-logo-white
Market-Based Solutions to Vital Economic Issues
Research
Feb 1, 2015

Estimating the Impact of Understaffing on Lost Sales and Profitability in Retail Stores

Abstract

In this study, we use hourly data on store traffic, sales, and labor from 41 stores of a large retail chain to identify the extent of understaffing in retail stores and quantify its impact on sales and profitability. Using an empirical model motivated from queueing theory, we calculate the benchmark staffing level for each store, and establish the presence of systematic understaffing during peak hours. We find that all 41 stores in our sample are systematically understaffed during a 3-hour peak period. Eliminating understaffing in these stores can result in a significant increase in sales and profitability in these stores. Also, we examine the extent to which forecasting errors and scheduling constraints drive understaffing in retail stores and quantify their relative impacts on store profits for the retailer in our study.


View Publication on UNC Library View Publication on Journal Site

You may also be interested in: