Page 8 - Harvard Business Review (November-December, 2017)

IDEA WATCH WHY FASHION BRANDS NEED OUTLET MALLS

HARVARD BUSINESS REVIEW MARCH–APRIL 1972
“ In some respects, the middle PRODUCTIVITY
manager is the leader of his unit who
delegates, guides, and plans; in other STOP CHECKING OFF
respects, however, he has specific
operating responsibilities and must EASY TO-DOS
‘roll up his sleeves’ to achieve output
and to meet his targets. Therefore, he
is both a delegator and a doer, both a When work piles up, how do you react? If you’re
strategist and an operator, or, to use like most people, you begin by working longer.
But as the to-do list grows, people tend to shift
[a] sports analogy, both a coach and to another form of triage, which researchers call
a player. In contrast, his superiors are “task completion bias.” In simple terms, this
usually coaches and his subordinates means that we gravitate toward easy-to-finish
are normally players.” tasks, to create a sense of accomplishment—

“GENERAL MANAGERS IN THE MIDDLE,” BY HUGO E.R. UYTERHOEVEN even if those tasks aren’t very important. This
phenomenon was illustrated by a two-year
study of 90,000 patients in a hospital emergency
room, in which researchers examined how
RETAIL doctors chose which patients to focus on next.
WHY FASHION BRANDS NEED OUTLET MALLS Doctors are supposed to take cases on the basis

Conventional wisdom holds that high-end retailers of severity and time spent waiting, and most
use outlet stores to unload old or slow-selling followed that guideline. But as patient volume
merchandise on customers who can’t afford their increased, some of them tended to select the
full-price offerings. But a new study reveals a more
complicated reality. A researcher analyzed five years’ easiest cases instead. (The researchers controlled
worth of sales data from a U.S. fashion firm with for many variables, including patient
hundreds of regular and outlet stores. He found
that outlet and full-price shoppers actually have demographics and insurance status
comparable incomes; the main distinctions are and seasonality.) An examination
that the former care less about having up-to-date of billing records revealed that
fashions and are more willing to travel long
distances to save money (outlets are typically doctors who favored easier cases
located far from urban centers). Because were less productive than others
outlets absorb the value-conscious segment of over the long term. In follow-
the market, he says, they let retailers’ regular
stores cater to consumers willing to spend up lab experiments involving
more for new arrivals; they also lower the risk typing, transcription, and word
of introducing products that might fail. If outlets manipulation exercises, solid
vanished, he calculates, profits would fall by 23% and
product introductions would drop by 16%. majorities of participants exhibited
These findings have important implications for task completion bias. “Completing tasks
retailers as they increasingly embrace e-commerce, leads individuals to feel good and that increases
which eliminates the geographic distance that has kept
outlets from cannibalizing full-price stores. “Retailers short-term performance,” the researchers
lose the ability to play with location and travel distance write. “However, when we examine long-term
when they go online, requiring new and creative productivity, workers who exhibit TCB tend to
ways of providing different experiences for different
customer segments,” the researcher says. ■ be significantly less productive.” ■
ABOUT THE RESEARCH “Why Outlet Stores Exist: ABOUT THE RESEARCH “Task Selection and Workload: A Focus on
Averting Cannibalization in Product Line Extensions,” by Completing Easy Tasks Hurts Long-Term Performance,” by Diwas S. KC
Donald Ngwe (Marketing Science, 2017) et al. (working paper)

24 HARVARD BUSINESS REVIEW NOVEMBER–DECEMBER 2017