Modelling and simulating retail management practices: a first approach

Multi-agent systems offer a new and exciting way of understanding the world of work. We apply agent-based modeling and simulation to investigate a set of problems in a retail context. Specifically, we are working to understand the relationship between people management practices on the shop-floor and retail performance. Despite the fact we are working within a relatively novel and complex domain, it is clear that using an agent-based approach offers great potential for improving organizational capabilities in the future. Our multidisciplinary research team has worked closely with one of the UK's top ten retailers to collect data and build an understanding of shop-floor operations and the key actors in a department (customers, staff, and managers). Based on this case study we have built and tested our first version of a retail branch agent-based simulation model where we have focused on how we can simulate the effects of people management practices on customer satisfaction and sales. In our experiments we have looked at employee development and cashier empowerment as two examples of shop-floor management practices. In this paper we describe the underlying conceptual ideas and the features of our simulation model. We present a selection of experiments we have conducted in order to validate our simulation model and to show its potential for answering " what-if " questions in a retail context. We also introduce a novel performance measure which we have created to quantify customers' satisfaction with service, based on their individual shopping experiences. 1 BACKGROUND 1.1 Why is Retail Productivity Important? The retail sector significantly contributes to the UK's relatively low productivity compared to France, Germany and the USA (Reynolds et al., 2005), popularly termed the 'productivity gap'. A large-scale literature review of management practices and retail performance and productivity (Siebers et al., 2008) concluded that management practices are multidimensional constructs which tend to demonstrate a complex relationship with productivity. The authors concluded that it may be the context-specific nature of management practices and productivity which precludes clear patterns in the results of empirical studies (for a further review see Wall & Wood 2005). Many experts agree that the focus is shifting to looking inside organizations to