Abstract:
High congestion in checkout areas is a major issue in retail stores, especially in China. Waiting time affects both customer satisfaction and retention. Express checkout services for low volume customers is common in the West but has failed to take root in China. However, why is faster service offered to low rather than high volume customers (HVCs)? At present, there is a lack of queueing and operations management studies on offering express checkout services to HVCs. Utilising transaction data and customer surveys in Beijing supermarkets, we investigate the value of the new checkout segmentation rule high-volume express lanes (HVEL) - offering express checkout services to high volume customers. The purpose of this research is to understand the circumstances in which a retailer would benefit from offering HVEL; to identify operations policies for managing HVEL; and to explore the impact of HVEL on demand adaptation (changes in customer purchasing behaviour). The research conducts simulation experiments using ARENA, modelling two co-located supermarkets within a fixed customer catchment area. The environment allows for dynamic allocation of checkouts, and customers decreasing their shopping frequency to take advantage of the faster service. The model has two environmental variables (number of checkouts, and catchment size), and two decision variables (queue entry and jockeying practice, and express lane eligibility threshold). A full factorial experiment is used to observe the impacts on two performance measures related to customer purchasing behaviour (the percentage of customers in each of the five categories of implied value of time (IVOT), average order quantity per shopping visit, and average shopping interval), and store performance (market share, average checkout utilisation, average queue length, waiting time and weighted waiting time (mean and standard deviation), and customers’ annual total relevant cost of shopping). Results indicate numerous benefits including higher sales, lower checkout utilisation, shorter queue length, as well as lower mean and standard deviation of waiting time and weighted waiting time. Key words: queueing; checkout segmentation; high-volume customers; simulation modelling; dynamic allocation; supermarket; express lanes;