Retail System Scenario Modeling Using Fuzzy Cognitive Maps

Abstract

A retail business is a network of similar-format grocery stores with a sole proprietor and a well-established logistical infrastructure. The retail business is a stable market, with low growth, limited customer revenues, and intense competition. On the system level, the retail industry is a dynamic system that is challenging to represent due to uncertainty, nonlinearity, and imprecision. Due to the heterogeneous character of retail systems, direct scenario modeling is arduous. In this article, we propose a framework for retail system scenario planning that allows managers to analyze the effect of different quantitative and qualitative factors using fuzzy cognitive maps. Previously published fuzzy retail models were extended by adding external factors and combining expert knowledge with domain research results. We determined the most suitable composition of fuzzy operators for the retail system, highlighted the system’s most influential concepts, and how the system responds to changes in external factors. The proposed framework aims to support senior management in conducting flexible long-term planning of a company’s strategic development, and reach its desired business goals.