Here's the problem: the retailer's number one competitor also happened to be focused on inventory turnover and was able to take its ratio from 5.1 times to 8.1 times during the same period. So even as the first retailer strengthened its absolute performance, its relative position weakened. This is one of the lessons of the paradox of skill. Getting better in an absolute sense doesn't matter if it's offset by the competition. Hitters today are much better than they were in the past, but so are the pitchers. The improvement is obscured by the interaction. Likewise, the first retailer was better in 2002 than it was in 1994 but it actually lost ground relative to its prime competitor.

Research has pointed out the variance of quality in consumer goods has narrowed over time, another finding that's consistent with the paradox of skill. In years past, companies offered products across a wide spectrum of quality, and prices by and large reflected that quality gap. For instance, some automobiles were cheap and shoddy, and others were expensive but well made.

Over time, the gap in quality has narrowed. As a consequence, customers now rely less on price-quality trade-offs and more on other variables, including convenience, after-sale service, and store location. This can enhance the role of luck in securing the sale. In business as in baseball, the skill distribution has likely tightened allowing luck to play a growing role in outcomes.

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