Consumer sensitivity to delivery lead time: A furniture retail case

Purpose–Short delivery time is a feature that can influence consumers’ purchasing decisions and that retailers compete over fiercely. Accordingly, evaluating the effect of delivery time on demand and identifying marketing-mix variables that alter this relationship may influence retailers’ strategies and impact supply chain performance. Design/methodology/approach–This study was performed in collaboration with the largest furniture retailer in Italy, which provided its sales and inventory data for 19,000 units sold over a six-month period in 32 stores throughout the Country. Data were analysed using logistic regression with fixed effects. Findings–The value of delivery time for consumers, even in an industry generally characterised by long delivery lead times, is surprisingly high. The evidence reveals that when the delivery time changes from two days to seven days, demand is reduced by 37.5%, although variables related to location and the marketing mix moderate this relationship. Practical implications–Retailers can use the findings presented herein to drive their inventory and facility planning decisions and to support investments in supply chain integration. Originality/value–Supply chain management studies consider the value of delivery time anecdotally and have neglected empirical estimations of the magnitude of the effects of delivery time on consumer demand. Further, supply chain management studies have not explored factors moderating this relationship, although intertemporal choice and service management studies have demonstrated the existence of such factors.