Stall Economy: The Value of Mobility in Retail on Wheels

33 Pages Posted: 16 Oct 2020 Last revised: 27 Jul 2021

See all articles by Junyu Cao

Junyu Cao

University of Texas at Austin - Red McCombs School of Business

Wei Qi

McGill University - Desautels Faculty of Management

Date Written: October 15, 2020

Abstract

Urban open space emerges as a new territory to embrace retail innovations. Selling products in public spaces with wheeled stalls can potentially become ubiquitous in our future cities. Transition into such a "stall economy" paradigm is being spurred by the rapidly advancing self-driving technologies. This paper provides models, theory, and insights concerning how to deploy and operate autonomous wheeled vending stalls to scale up the stall economy. The central challenge here is to understand the interdependence between customer wait, walk, and stall movements. We address this challenge by proposing spatial-queueing models for two service modes: i) on-demand, first-in-first-serve, and ii) spatially and temporally pooling customer demands. In each mode, we derive the dependence of customer waiting and stall repositioning on two key decisions: the service zone size and the walking distance imposed on customers to meet a stall. In particular, for the on-demand mode, we propose and solve a "Rendezvous Problem" to analytically characterize the spatial distribution of the stall-customer meeting locations. We also propose a stylized joint truck-stall routing model to capture the inventory replenishment operations. Integrating these results leads to a stall-economy planning problem, which is then calibrated in a realistic setting. Our main finding is that the stall economy potentially profits more than stationary retail, not only because of the mobility of stalls for providing proximity to customers, but also because of its operational flexibilities that allow for avoiding the "last 100 meters" and pooling demands. In addition, flexible stall deployment and operations address customers' being less willing to wait or walk and can prolong the shopping time, each of which poses a different operational challenge. In a broader sense, this work looks toward an expanded scope of future retail, empowered by self-driving technologies.

Keywords: stall economy, mobile retail, self-driving, rendezvous problem, spatial queues

Suggested Citation

Cao, Junyu and Qi, Wei, Stall Economy: The Value of Mobility in Retail on Wheels (October 15, 2020). Available at SSRN: https://ssrn.com/abstract=3711896 or http://dx.doi.org/10.2139/ssrn.3711896

Junyu Cao (Contact Author)

University of Texas at Austin - Red McCombs School of Business ( email )

Austin, TX
United States

Wei Qi

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke Street West
Montreal, Quebec H3A 1G5
Canada

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