Value Attenuation and Retail Out-of-Stocks : A Service-Dominant Logic Perspective

Purpose - Addresses the effects of retail out-of-stocks from a Service-Dominant (S-D) logic view.

Design/methodology/approach - Conceptual, combining classic S-D logic research with recent research of S-D logic in supply chains, and applying this to out-of-stocks in a retail setting of fast-moving consumer goods.

Findings - This article unveils out-of-stocks as emergent operant resources that alter and attenuate value creation across manufacturers, retailers, shoppers, users and their networks. It develops a model of value co-creation where manufacturer supply and shopper/user demand meet in the retailer's realm. Differentiating between shopper and user in a sequential model of value creation, it identifies the shopper as an active entity whose response to out-of-stocks redistributes value within the retail service ecosystem. An additional model is developed that illustrates the novel costs of an out-of-stock as uncovered by the S-D logic perspective, allowing retailers and manufacturers to align their interests in improving on-shelf availability.

Research limitations/implications - Moving distribution thought and management towards a goal of service provision, this article suggests three logistics research possibilities: retailer-manufacturer misalignment, spatio-temporal supply-demand mismatch, and shopper-user interaction.

Practical implications - This article shows how the S-D perspective can bring previously misaligned incentives of supply chain actors into alignment. Previous goods-dominant research showed little common ground for manufacturers and retailers to jointly improve on-shelf availability. The S-D logic view demonstrates compelling rationale for both parties' involvement.

Originality/value - Extends S-D logic literature by considering value attenuation through failures in physical distribution and logistics management, adding that non-availability causes operand resources to become operant and attenuate/redistribute value. Extends the out-of-stock literature by providing a theoretical foundation, and by showing the ecosystem effects of out-of-stocks.