Value attenuation and retail out-of-stocks

Purpose – The purpose of this paper is to address 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 – The paper unveils out-of-stocks as emergent operant resources that alter and attenuate value creation across manufacturers, retailers, shoppers, users and their networks. The paper 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 – The paper 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. The paper extends the out-of-stock literature by providing a theoretical foundation, and by showing the ecosystem effects of out-of-stocks.