preprints.org > business, economics and management > other > doi: 10.20944/preprints202309.1671.v1

Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Version 1 : Received: 24 September 2023 / Approved: 25 September 2023 / Online: 26 September 2023 (03:12:05 CEST)

Recently, e-commerce companies have been adopting and continuously enhancing personalized product recommendation systems, and there is active research in this field within academia. However, personalized product recommendations in offline retail stores have not yielded significant outcomes thus far. Especially for small-format offline retail businesses like convenience stores, where customer information might be limited, providing personalized product recommendations poses even greater challenges. To address this issue, this study aimed to find a solution by shifting the perspective on recommendation methods and altering the target of recommendations in existing personalized recommendation models. In this study, recommending products that customers need in an offline store was defined as suggesting products that should be introduced and displayed within the store. In other words, the recommendation focus shifted from individuals to the stores themselves. This recommendation system proposes products that individual stores have not yet introduced but are anticipated to be purchased by customers among the products managed by the headquarters. Building upon this, we devised a store-based product recommendation system. The widely used user-based collaborative filtering model, a common technique in existing recommendation systems, was adapted into a store-based collaborative filtering model. Furthermore, various rules and logic pertinent to store operations and business considerations for convenience stores were integrated to implement this store product recommendation system. The accuracy and effectiveness of the system were demonstrated through its application in actual convenience stores. Results from the pilot implementation of the system showed that 88% of the newly recommended products in individual stores were sold based on one week of sales data, and the sales revenue was 1.75 times higher than the average sales revenue of those products across the entire company. Survey results on business owners' satisfaction yielded a score of 4.2 out of 5, indicating a high level of contentment. Additional observed effects included the expansion of product range and reduction in order lead times. However, 12% of the total recommended SKUs did not sell within one week, and 34% of the SKUs did not meet the overall average sales quantity. This research holds significance in extending the scope of personalized recommendation studies from primarily online platforms to offline retail businesses like convenience stores. It provides tangible methodologies and outcomes that can be implemented in real-world settings through the construction and validation of an actual system. The study also suggests avenues for future research to address some of the identified limitations.

recommendation models; store-based recommendation models; implementation of recommender system

Business, Economics and Management, Other

* All users must log in before leaving a comment