Exploratory Research: A New Paradigm for the Design of Retail Facilities

Texas A&M Engineering Experiment Station, College Station TX

Investigators

Abstract

Manufacturing and service enterprises invest significant resources in the design and operation of factories and warehouses. If properly executed, the physical configuration of these facilities can simplify the flow of material and products. If poorly executed, it can lead to severe inefficiencies, high operating costs, and poor quality. Over the years, much attention has been focused on effectively planning the layout of manufacturing and logistical facilities. In contrast, the design and planning of retail facilities has been given little attention despite the importance of the retail sector to the overall economy. Retail layout problems differ from manufacturing/logistics layout problems in several significant ways: (1) the objective of retail facilities is to maximize sales rather than to minimize travel time or material moves; (2) customer demand is both highly variable and unpredictable; (3) customers often augment an initial shopping list with impulse items that they encounter in their sojourn through the facility; (4) retail facilities are essentially self service facilities; (5) and except for checkout, customers are an integral part of the service mechanism. The goal of this research is to develop a framework for a quantitative approach to the design of retail facilities. Our activities are focused on modeling customer demand, characterizing customer flow, and formulating suitable optimization problem(s), including specifying an appropriate objective function and constraints for both the physical layout of customer paths and the sequencing of product families in the facility. We intend to focus on non-traditional layouts that we believe may significantly outperform traditional aisle-based layouts commonly found in many retail facilities. While this research is exploratory in nature, it will build on the long history of research in layout for manufacturing facilities. Moreover, we believe this research has the potential to extend operations research techniques to an important economic sector that has been overlooked in the past. Additionally, this research will open a new area for teaching facility design. It will provide the foundation for introducing retail facility layout into facility design courses, which are common core courses in industrial engineering curricula.