In this week’s episode of Modern Work Mondays, Nolan and Jeff explore what happens when a shopper can’t find the exact item they came in for.

Do they choose something similar? Leave empty-handed? Or pull out their phone and order it from a competitor?

That decision comes down to something called the coefficient of substitution — and understanding it can help retailers improve service, recover sales, and keep customers coming back.

What is the coefficient of substitution?

Put simply, the coefficient of substitution refers to how likely a shopper is to buy a replacement product when their first choice isn’t available. Think about the difference between someone grabbing 10-foot piece of lumber when the 8-foot is out versus someone looking for a specific brand of power tool. If that Milwaukee drill isn’t in stock, they’re not walking out with a DeWalt. They'll leave empty-handed and find it elsewhere.

The level of substitution varies depending on the product category, price point, and customer expectations. Some items are easy to swap. Others are deal-breakers.

When substitution fails, support matters

When substitution is easy, the sale is often recovered. But when it isn’t, the risk grows. A customer might leave the store without buying anything, or worse, order the item from a competitor while still standing in your aisle.

This is especially true in categories like hardware or electronics, where brand preferences and compatibility matter. In these moments, quick support can turn a lost sale into a recovered one.

Picture someone in a fitting room needing a different size. If they have to get dressed again and walk back onto the sales floor, that moment becomes a point of friction. But if they can seamlessly request help, get the right size delivered to the fitting room, or even place a ship-to-home order for an out-of-stock item, it can save the sale.

What this means for retailers

The coefficient of substitution highlights an important truth in retail: when shoppers can’t find what they’re looking for, they’ll go elsewhere.

Retailers who understand which categories require support and which can be self-served are better equipped to reduce friction, protect sales, and build long-term loyalty.

Next week, we’ll explore another core retail concept: floor fill absorption and how it ties into inventory strategy and overall store performance.