Author: Chuck Finder

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About Chuck Finder

This long-ago graduate of the University of Missouri-Columbia returns to the state to lead a talented team of professionals in promoting the university’s efforts via media relations. I arrived here after helping to share news and information about the University of Pittsburgh Medical Center (UPMC) and Carnegie Mellon University. Before that, I spent three decades with the Atlanta Journal-Constitution, Birmingham News and Pittsburgh Post-Gazette, though also dabbled as a contributor to numerous outlets — ranging from the former St. Louis-based institution The Sporting News to The New York Times.


The global supply chain has experienced once-in-a-lifetime disruptions — at least four times in the past 12 years or so. The 2007-09 financial crisis was followed by Japan’s tsunami, earthquake and nuclear disaster of 2011, which was followed by the U.S.-China trade conflict that seemed to peak in 2018 and now the COVID-19 pandemic.

Resilience, once a hallmark that academics ascribed to the most successful supply chains, has become a “matter of survival,” writes an international team of researchers including an expert from Olin.

Why do some distribution businesses have it and others don’t? It’s all about the implementation and execution of resilience strategies, the team learned from supply-chain executives and shared in a paper forthcoming in Management and Business Review.

In a series of pandemic-era interviews with 14 senior executives from 12 companies representing a wide range of industries affected by the pandemic, the co-authors discovered that the businesses survived, if not thrived, due to “agile responses”—whether for the short term or long term, or both. These interviews allowed the researchers to derive an integrative framework similar to a how-to list, split into two basic categories: enablers and resilience strategies.

Enablers and resilience strategies

The resilience strategies are built upon policies that increase redundancy and operating flexibility: operation buffers (such as different inventories); footprint diversification (postponing or relocating production lines); supply options (flexible networks and financing); robust distribution (alternative warehousing, transport and routes); product standardization (sharing components or using off-the-shelf parts); and partner network (supplier relationships and sharing risks, costs and gains).

The enabler activities essentially are best practices and “prerequisites for implementing the strategy elements,” the researchers wrote: end-to-end visibility, end-to-end control, continuous IT infrastructure, and organizational readiness (previous or continuous risk management and planning).

Kouvelis

“While all executives seemed well-versed into the supply chain resilience theory and concepts, they all discussed the implementation barriers they encountered as they tried to move their company’s supply chain to a needed resilient state,” said co-author Panos Kouvelis, director of the Boeing Center for Supply Chain Innovation and the Emerson Distinguished Professor of Operations and Manufacturing Management at Olin. “The executives were quick to point out supply chain resiliency as the attribute to guide the companies’ adjustment in the new (ab)normal world we will face the next two years.”

Kouvelis and his co-authors— rom Stanford University, Georgetown University, Santa Clara University, Kobe University, Germany’s Otto Beisheim School of Management and the University of Pennsylvania—followed four themes in their interviews: How has your company responded to the crisis? What are the elements of your resilience strategy? How did you arrive at that strategy? What lessons are key moving forward?

Cisco, Colgate-Palmolive, Nike, etc.

They interviewed executives with firms anywhere from a 2,000-employee food business in Asia earning $2.5 billion annually to a 150,000-employee consumer products company in Europe earning $52 billion annually. Among them were Cisco, Colgate-Palmolive, HP Enterprise, Infineon, Nike, Unilever, Emerson and Bayer Crop Science.

The co-authors learned that these companies basically designed a resilient supply chain via a two-stage process: selecting the “right” fit of strategies—and nobody implements all of the aforementioned—and then defining how to implement them. This could mean that, in the definition process, company management decides their first choice proves to be unfeasible or costly and instead opts for a Plan B. A company may also design different strategies for different products under their umbrella.

The researchers also found that strategy implementation, in these times of outsourcing and global disruptions, was enhanced by a collaborative, cooperative relationship among logistics businesses, suppliers and customers.

Interestingly, the researchers learned that executives are more willing to invest in resilience strategies if they had trouble regaining their market position after a disruption. For instance, it was mentioned amid the interviews—as examples of best practices—how Japanese automakers invested in increased buffers to reduce disruption risks after the 2011 earthquake, and Cisco reviewed its supply chain network to assess suppliers’ financial health after the 2007-09 crisis. The expenses were justified as a long-term and cost-effective “insurance policy.”

In fact, cross-company collaboration was seen as a necessary cost to the point where some companies financed suppliers and buyers, or at least provided technical support, to ensure a stronger supply chain.

‘Prescriptive recommendations’

The researchers offered a list of “prescriptive recommendations” such as centralizing the risk-management function, strengthening supplier relationships and innovative financing. However, they noted that the more resilient companies react early in such a crisis, and chains’ designs differ as much as their products, markets and countries. In other words, what works for toilet paper in Texas won’t work for cars in the Cayman Islands.

Kouvelis said he heard clear echoes of “never let a good crisis get wasted” throughout the executive interviews, and he paraphrased one of them: “You might even consider it a blessing in disguise … .” That particular company used the pandemic disruption to speed up digitalization of its supply chain and invest further in risk management.

In a separate paper written by Kouvelis and Morris A. Cohen, the Penn researcher from the resilience strategies study, and accepted for publication in the Production and Operations Management Society (POMS) journal, the co-authors rewrote the long-held Triple-A framework of successful global supply chains: agile, adaptable and aligned. They re-evaluated and reconfigured it, adding three R’s in addition: robust, resilient and realigned.

The reasons behind the redo are the global crises and the localized shocks that regularly have arrived the past decade-plus: Industrial supply chains have been found to experience a serious, one-month disruption every four years or so.

“The Triple-A framework of supply chain excellence served us well in the 1990s and early 2000s,” Kouvelis said of the rationale for, and the logic of, a new framework. “However, the last 15 years have seen frequent supply chain disruptions—and of alarming severity. Time to add the R’s in the supply chain excellence attributes model.

“Short-term agility has to be complemented with robustness for real-time responses across a wide range of scenarios. Adaptability to long-term technology and macroeconomic trends needs resilience to future shocks and the new (ab)normal world. Moreover, alignment of incentives of existing supply chain partners requires realignment to deal with evolving business models, changing consumer needs and preferences and a newly defined value system. The era of turbulence of the next 20 years needs a Triple-A-&-R portfolio of excellence capabilities in supply chains.”

POMS honored Kouvelis in its November 2020 issue, printing a career commendation called a Laudatio (subscription required). POMS also published as the lead article in that issue a study by Kouvelis and a Chinese University of Hong Kong professor on distribution channel compensation, initially posted online in June.




A member of a corporation’s board of directors may exert a similar amount of influence on a business’ outcome as its CEO.

Particularly if that board member has endured a bankruptcy at another company where they serve as a director.

So finds a new study from Olin researchers, plus a former Olin PhD at Indiana University, forthcoming in the Journal of Financial Economics.

In fact, Olin’s Radhakrishnan Gopalan and Todd Gormley, along with Indiana’s Ankit Kalda, learned that firms take more risks after a member of their board of directors undergoes a bankruptcy at another firm where they serve as a director. The co-authors discovered such risk-taking usually occurs when this particular director (a) experienced a quick, less-costly bankruptcy elsewhere and (b) serves in a position of greater influence.

Their findings suggest that these firsthand bankruptcies provide board directors with a learning experience that causes them to lower their estimate of distress cost—expenses faced by firms in financial distress beyond the cost of doing business.

Gopalan

“This is one of the first studies to highlight how a director’s later-life experience influences their attitudes about risk and risk-taking,” said Gopalan, professor of finance. “Our study highlights the importance of learning and understanding the director’s life experience when making hiring decisions.“

There are two extreme parts of the bankruptcy spectrum, the co-authors noted. A director could’ve seen a contentious process that ends in liquidation, emboldening a perspective that bankruptcy is costly. Or a director could’ve experienced a tidy, pre-packaged bankruptcy that ends in a successful return to operation, causing the director to infer that bankruptcy, and hence risk-taking in general, need not be as costly as they originally assumed.

To research a set of such corporate directors from the period 1994-2013, the co-authors used the Lopucki Bankruptcy Research Database, a US Securities and Exchange Commission database (Electronic Data Gathering, Analysis and Retrieval, or EDGAR), BoardEx, data from proxy statements and more. That enabled them to identify 718 firms sharing a director with 261 firms that filed for bankruptcy at some point in the study’s roughly 20-year window.

Next, they stacked these firms and a control group (lacking any bankruptcy-veteran directors) against three sets of risk measures: corporate financial policies such as net leverage, cash holdings and equity issuance; corporate risk such as cashflow volatility, stock volatility and distress; and measures of acquisition activity. Why acquisition activity? Because prior evidence showed firms engage in diversifying their acquisitions to reduce their risk.

On average, the data showed, firms increased their risk taking and moved closer to bankruptcy, following a director’s previous experience with it.

On average, the data showed, firms increased their risk taking and moved closer to bankruptcy, following a director’s previous experience with it.

The firms with bankruptcy veterans on their boards saw their net leverage increase after their own bankruptcies, as well as seeing increases in cash flow volatility (by 0.9 percentage points), stock volatility (by 0.2 percentage points) and distress events. Similarly, those businesses’ diversifying acquisitions (by 2.9 percentage points) decrease and their likelihood of default increases.

These weren’t new or even newly bankruptcy-scarred directors, either. On average, they were sitting on these boards for more than six years prior to a bankruptcy filing.

To try to ensure that there weren’t any crossover issues in their findings, the co-authors analyzed for any possibility of common shocks and industry-wide issues in a shared business silo. They conducted what they called placebo tests, identifying multiple firms that previously shared a director with a corporation that filed for bankruptcy but didn’t share one at the time of that corporation’s bankruptcy.  They found no evidence of a shift in behavior in this placebo test. Nor did they observe a change in risk-taking when a director experiencing bankruptcy elsewhere exits that board soon after.

The co-authors also analyzed how risk-taking differed based on how costly the previous bankruptcy was.

It didn’t surprise them to find more risk-tasking by businesses with directors who experienced lower-cost, pain-free bankruptcies, and less risk-taking by firms with directors who endured protracted, costly ones.

What did surprise them: The aftershocks to that particular director’s career. The data showed that a person’s number of board memberships declined in the years following a bankruptcy, but this only occurred among directors who led their firms through protracted, costly bankruptcies.

Gormley

“Directors serve two main roles,” said Gormley, assistant professor of finance. “One, monitor the manager to make sure they act in shareholders’ best interests. Two, advise the manager on important decisions.

“Typically, independent directors — those with no prior connection to the firm or CEO — are thought to serve more of a monitoring role. Non-independent directors are thought to provide more of an advisory role. We find our results are concentrated among non-independent directors, suggesting the change toward risk-taking is driven by a change in the advice directors provide rather than a change in their monitoring.”

Moreover, in parsing the influence of board members who aren’t on the management team but have some connection or advisory role, the co-authors found that many of them had backgrounds in private equity (13.1%), manufacturing (10.3%), venture capital (8.6%) and consulting (7.5%). Such portfolios might explain why CEOs and other directors might more highly regard, and abide by, their views when making decisions over finance and risk.

“It’s well known that CEOs and their experience matter,” Gormley said. “But here, we are seeing that individual directors also matter. This is different than what most investors typically focus on, which are the board-level characteristics like what fraction of directors are independent.

“These findings suggest that it’s important for firms to hire individual directors with the experience set they consider most important for improving the quality of the advice they will provide the manager.”




Liberty Vittert looks at polls and the pollsters from a data-analytics perspective, given her statistical background. She is professor of practice in data analytics at Olin.

As she wrote Nov. 5 in a New York Daily News op-ed and Nov. 7 for Fox News, using a data lens she publicly foretold of Trump’s victory before it surprised the pollsters and oddsmakers in 2016, and she predicted in October how this 2020 balloting would go.

Liberty Vittert

“The pollsters really did flub up 2016, and, unfortunately, they have not only not learned from their mistakes, but also flubbed up 2020 to an even more epic degree. While they did get it right that Biden would win, the error in their estimate of how much he would win by was off by an even bigger margin than 2016,” Vittert said. “So what happened?

“We have two main issues at play: shy/scared voters and a misunderstanding of approval ratings.

“First, pollsters greatly underestimated — and did this to a much greater extent in 2020 than in 2016 — the number of ‘shy’ voters. These are people who chose not to answer truthfully to the pollsters. I would argue that ‘shy’ is a misnomer, and the better terminology is ‘scared’ voters who are unwilling to risk the hassle, harassment and real-life, very serious downsides to admitting that they might vote for Trump.

“A study out of USC showed that if you ask voters who they think their neighbors or friends are going to vote for, instead of asking who they are going to vote for, then magically Biden’s 10-point lead shrunk by half to a 5-point lead. Now, it is clear this was a problem in 2016 and 2020 — the real question is that with President Trump headed out of office will this be a problem with the polls in 2024?

Approval ratings

“Second, there is one polling device that tends to be a very significant variable in pollster’s determination of which candidate is in the lead: approval ratings. While Trump has the lowest approval rating in history at only 41% — almost 15 percentage points below the average — we are missing two very important aspects of approval ratings.

“Approval ratings don’t compare between people, they simply ask if you approve of the president, meaning that while you may ‘disapprove’ of Trump, you could have potentially disapproved of Biden even more — meaning you would vote for Trump. More importantly, what the pollsters are missing is that it really doesn’t make sense to compare Trump’s approval ratings to past presidents because he already started off so low.

“Let me explain: Trump has the smallest difference in spread — highest and lowest — of approval ratings over time. He never varied by more than 13%; the next-lowest spread was President John F. Kennedy at 27%! This means that Trump has what is arguably the strongest base of any president since Franklin Delano Roosevelt. Furthermore, a simple analysis shows that Trump tended toward even higher approval ratings ever since he took office — a clear sign that his base wasn’t going anywhere and was, in fact, growing.

“These two issues were enough to have pollsters off by epic margins. So can we still trust them? If they finally fix their ways, we can trust them again, but they have a long way to go.”




At a time when evictions and mortgage defaults have been likened to an oncoming tsunami across America, a big-data study of loan-to-value ratios in the wake of the 2007-08 recession carries a cautionary forecast for vexing economic weather ahead:

The higher a worker’s outstanding mortgage relative to their home value, the worse their future income growth and job mobility.

Those were the key findings when four researchers, including two from Washington University in St. Louis’ Olin Business School, delved into the wage data and credit profiles encompassing 30 million Americans across 5,000 companies. They found a negative relationship between workers’ income and their home loan-to-value (LTV) ratio, especially when the home was underwater (higher principal owed than value).

For example, the scientists discovered that people with underwater mortgages earned $352 — or 5% — less monthly than workers with less mortgage debt relative to home values.

Compounded by credit and liquidity issues, these workers are virtually stuck, unable to move to a job with a better income or a new area, the researchers wrote in their study forthcoming in The Review of Financial Studies.

And it could well translate to the COVID-19 economic effects today.

Radha Gopalan

“The impact of the current crisis on local economies varies widely across the U.S.,” said Radhakrishnan Gopalan, professor of finance at Olin and study co-author. “Our study highlights the difficulties someone in a worse-affected area may face in trying to pack up and move to a less-affected region. Furthermore, our study also highlights an important cost of homeownership: For instance, buying a home will constrain your labor mobility, and in the long run that may adversely affect your labor income.”

“This is one of the first studies to tie detailed credit histories to information on worker mobility and pay increases,” added co-author Barton Hamilton, the Robert Brookings Smith Distinguished Professor of Economics, Management & Entrepreneurship and director of the Koch Center for Family Business at Washington University. “Prior work has analyzed these factors in isolation and has not made the connection between the two.”

Bart Hamilton
Bart Hamilton

Seeking ways to scrutinize the effect of home equity and labor income, in addition to the mechanisms intertwined, the researchers used Equifax information and Corelogic house-price indices to drill down to study a random sample of 300,000 workers with an active mortgage over a 72-month period earlier in this decade.

They measured home equity as LTV — the unpaid mortgage vs. the market value — on the workers’ primary residence. They additionally accounted for home-value increases/decreases using ZIP-code level price fluctuations and controlled for local economic conditions. Moreover, they contrasted the income path of homeowners versus renters who worked at the same firm, were of a similar age and job tenure, and held a similar level of income and non-mortgage debt.

What the data essentially showed: Homeowners facing high LTVs were less likely to change homes, but more likely to change jobs, if they could. And renters working at the same companies and with similar job tenure faced no such issues. Additionally, homeowners with high LTVs faced slower income growth while renters faced no such penalties.

It wasn’t as cut and dried as a rent-vs.-own debate, though. Income and mobility for homeowners could vary. A worker could face relatively smaller income declines or find greater employment opportunities if they lived in a metropolitan area with more jobs — for instance, an IT worker in San Francisco/Silicon Valley — or a state with softer non-compete laws limiting movement within an industry.

Housing prices and wages

Still, they found that declines in housing prices as a result of that 2007-08 recession suggested a 2.3% reduction in monthly wages economy-wide due to constrained mobility.

“If the adverse effects of the current pandemic on local economic conditions also spill over to house prices, then we will find ourselves with a number of underwater homeowners,” Gopalan said. “In that scenario, the effects we document will be very relevant.”

Gopalan and Hamilton were joined in the research by two former Olin PhDs, Ankit Kalda and David Sovich, who work at Indiana University and the University of Kentucky, respectively.

They wrote that a homeowner with an underwater mortgage were to face a new job offer in a different area, they were confronted with three (unappealing) prospects:

  1. Sell and swallow the shortfall — meaning they still must require some access to liquidity, despite being credit constrained.
  2. Retain the home and rent it out — meaning there will be no or negligible down payment on a new home in the new area.
  3. Walk away and default on the mortgage — meaning deeper credit issues.

In short, their mobility was as hampered as their current job situation, the co-authors said. A worker may not seek out better opportunities in the first place and, consequently, feel adverse effects on income because of an undermined bargaining power at the current workplace.

For the record, the median individual in their study group was 41 years old with an annual $41,015 salary; comparatively, the median person in the U.S. workforce overall in that time window was 41.9 with an annual $41,392 income, the co-authors wrote. The median loan: $192,400.

“Our study highlights an important cost of home ownership,” Gopalan said. “While the ‘American dream’ is usually defined in terms of building wealth through home ownership, the financial crisis has revealed a few glaring holes in this story. Our study formally quantifies one important cost of following the ‘American Dream.’ A relatively safe way to own a house is to make sure one has sufficient down payment or home equity so that even if house prices fall, one is not stuck with an underwater mortgage. To this extent, our study recommends caution in pushing mortgages with less down payment.”

Hamilton added: “Our study highlights that policies affecting financial markets can directly impact the labor market as well. Businesses also need to be aware of the indirect costs that credit markets and home ownership may impose on mobility and the optimal allocation of their workforces.”




Amid a pandemic when limitations on disinfecting wipes, toilet paper and drugs brought attention — and disruption — to supply chains, new research involving Washington University in St. Louis delivers something of an answer to improving these lines of business:

Work with who you know.

While most of the business world builds success from existing relationships, four scientists including Xiumin Martin from the Olin Business School crunched data to find that personal connections between suppliers and vendors particularly improves the efficiency of the supply chain. To be precise, such rapport results in better overall performance, less restrictive and longer-lasting contract terms, and crystallized communication.

Martin

“Recent years witnessed significant increase in the complexity of supply-chain relationship due to outsourcing,” said Martin, professor of accounting. “Such increased complexity pushes my co-authors and me to think about how some fundamental issues concerning information asymmetry are addressed in this new regime. We examined this question by focusing on personal connections because the world has also become increasingly connected.”

The research team — Martin along with Ting Chen of the University of Massachusetts Boston, Hagit Levy of the City University of New York and Ron Shalev of the University of Toronto — studied 2000-11 data from public companies, though private businesses may even more keenly rely on personal, existing relationships.

College and work connections

In their paper, forthcoming in The Review of Accounting Studies, the researchers focused on previous education and work connections between suppliers and vendors. They showed such a personal relationship proved a successful way to select suppliers in a chain that has become more complex amid outsourcing and this global economy/information age.

In compiling their 12-year-long data set, they used a database called BoardEx — listing universities, employment histories, charitable involvements and board memberships — to try to find supplier-customer connections. Through another database, Compustat Segment, they were able to determine long-running business relationships between 1,430 suppliers and 2,630 customers.

Ultimately, they focused on just two relationships: university and work connections. They found 7.4% of the sample had educational connections and 21% had either educational or past-work relationships. Looking at the organizational charts, they discovered 0.5% connections between CEOs and 15.2% between non-C-level executives.

Such personal connections increased the likelihood a vendor will select a supplier by 60% over baseline probability, the scientists learned. Connections between C-Level executives show statistically stronger effects than those between lower-level executives, though the COO — who oversees most firms’ supply chain — has a more pronounced effect on supplier selection than a CEO or CFO.

They also studied when that connection was broken — say, one of the parties in the relationship leaves their employer or retires. There, they found that the supplier-customer relationship ended earlier after a departure of a connected executive than after a departure of an unconnected executive.

Boiled down, these prior college or work connections:

  • increased a vendor’s chance of being selected as a supplier;
  • relaxed procurement-contract terms;
  • improved firms’ operating efficiency;
  • expanded geographical areas to choose supplier-chain partners when there are limited choices nearby; and
  • smoothed out exchanges of information.

Simply put, these businesses know one another. And that enabled them to make more accurate assessment of supply-chain risks, helped to reduce costs, facilitated more timely updates and improved the effectiveness of monitoring the supplier along the chain.

Longer-lasting contracts

They found the utility of the relationship by breaking down such factors as: product quality and reputation; delivery reliability/on-time delivery; competitiveness of cost; manufacturing capability; management leadership; technical capability; research and development; financial risk; and production flexibility to customer requests.

The data showed that 27% — or one in four — contracts were between connected parties, and on average, the contracts lasted six months longer (48 months vs. 42 months) in duration than two parties with no connection. The less restrictive contract terms translated into product warranties, the ability to inspect supplier’s plants, supplier-paid liability or property insurance, and pre-scheduled periodic meetings often used to address risk and moral-hazard issues.

“The COVID-19 crisis has significantly disrupted supply chains,” Martin wrote in the paper. “It will be interesting and important to examine whether personal connections have an influence in counteracting such disruptions and fostering a more resilient and robust supply chain network.”




To lure customers, online retailer Alibaba often targeted existing customers when marketing resources were limited. Then along came a research project with a novel question: What if you pursued prospective customers, and then tracked their offline and online spending habits compared to frequent customers?

That’s how two Olin Business School researchers, along with a former fellow Olin faculty member and Alibaba officials, flipped the pop-up business model, and possibly more. The co-authors found that inviting potential customers via text message could increase buying with both a pop-up shop retailer and similar product vendors online.

In fact, that online shopping hangover — which they labeled a “spillover effect” — spread over far more retailers than the original participants and lasted as long as six weeks to three months after the initial text/pop-up lure.

Their paper, “The Value of Pop-Up Stores on Retailing Platforms: Evidence from a Field Experiment with Alibaba,” was published online Sept. 5 and is forthcoming in the journal Management Science.

Zhang

“Pop-up stores have become an increasingly popular channel for online retailers to reach offline customers,” said co-author Dennis Zhang, assistant professor of operations and manufacturing management at Olin. “Pop-up stores are cheap and fast to build, which means that those internet-based retailers can test building them in many different locations and find the best strategies.”

All this increased spending starts with a pop-up shop and a cellphone invite.

Pop-up week of jeans sales

Co-authors Zhang and Lingxiu Dong, professor of operations and manufacturing management, worked on the huge project wiith former Olin colleague Hengchen Dai of UCLA and Alibaba’s Qian Wu, Lifan Guo and Xiaofei Liu. The group conducted the experiment tracking some 799,904 Alibaba-app customers during a pop-up week of jeans sales in October 2017 in Hangzhou, China, southwest of Shanghai. Next, they followed those customers’ habits online for six- and 12-week periods to follow.

Dong

They randomly split the customers into two sets living within 6.2 miles of the pop-up: those who received a text-message invite — making no mention of brands, coupons or participant retailers — and control-group members who didn’t get an invite.

Using a type of “Internet of Things” (IoT) technology and the customers’ Alibaba apps, they were able to track customers even when the customers bought nothing in the pop-up, which mostly was an online portal that allowed them to use a virtual fitting-room function to “try on” jeans on a screen. (Customers also found coupons once they arrived at the physical store.)

Building trust with platform itself

Some of the findings:

  • Foot traffic increased by 76.19% because of the text invites; using the tracking information to determine frequent/existing from infrequent/prospective customers, the researchers found that the text invites increased foot traffic among the former by 200% and the sought-after second group by 69%.
  • Invitees spent 39.51% more money on participating retailers online long after the original pop-up visit. They also spent 17.17% more on non-participating retailers, defined as those beyond the pop-up vendors and carrying at least 10 jeans products on their online stores.
  • The buzz continued for those non-participating retailers deep into the New Year, some 12 weeks after the October pop-up week. Their sales saw a 14.89% increase while participating retailers experienced no lingering effect, at least not one that was statistically significant either way.

“This suggests that customers are not only building trust with specific retailers on the platform but also with the platform itself.” Zhang said.

The researchers found that the text invites increased foot traffic among existing customers by 200% and the sought-after prospective customers group by 69%.

“The experiment offers insights into the relationship and dynamics of online and offline shopping behaviors, which can be very helpful for retailers to devise omni-channel strategies,” Dong said.

The co-authors surmised that the pop-up visits served as a “transient billboard”: The shop advertised the presence, and thereby increased awareness, of these retailers — existing, frequent customers were already under the tent, but the prospective customers could be won over a fiscal quarter at a time. The visits also provided “experiential learning” so customers could assess these retailers’ products.

They also realize this experiment centered on jeans, a product requiring a good fit, feel. Commodity products — entertainment devices, food, etc. — could be evaluated more easily “without touching or trying on.”

Then again, it revolved around the online retailer Alibaba rather than a line of physical stores/chains. The study suggests positives for both types via pop-ups and invites, though the next step in research is to study pop-up store effects for traditional, omni-channel retailers. Using data correctly, the co-authors said, many retailers could be able to create personalized shopping experiences for both offline and online sales.

“As we have shown, pop-up stores are very efficient in reaching offline customers and attracting them online. This will be a good strategy for retailers who face online growth pressure in certain areas.” Zhang said.