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Dynamics in consumer response to product unavailability: Do stock-out reactions signal response to permanent assortment reductions?

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  • CAMPO, Katia
  • GIJSBRECHTS, Els
  • NISOL, Patricia

Abstract

This paper investigates consumer reactions to out-of-stocks (OOS) – which are unexpected and temporary in nature – as opposed to permanent assortment reductions (PAR). We discuss similarities and differences between OOS and PAR reactions as well as their underlying factors, and empirically test our propositions in two product categories. Next, managerial implications are discussed. Our results indicate that retailer losses incurred in case of a PAR may be substantially larger than those in case of a stock- out for the same item, suggesting that retailers (i) should be cautious in extrapolating consumer response to stock-outs, to situations where the item would be permanently removed, (ii) should keep a minimum of variation in the assortment even if this implies a higher stock-out risk for these items, (iii) may wish to explicitly signal the temporary character of a stock-out by leaving the shelf space of the OOS item unused. The results further suggest that stock-out losses may disproportionally grow with stock-out frequency and duration, emphasizing that even if OOS cannot be completely avoided, efforts should be made to keep their occurrence and length within limits.

Suggested Citation

  • CAMPO, Katia & GIJSBRECHTS, Els & NISOL, Patricia, 2000. "Dynamics in consumer response to product unavailability: Do stock-out reactions signal response to permanent assortment reductions?," Working Papers 2000024, University of Antwerp, Faculty of Business and Economics.
  • Handle: RePEc:ant:wpaper:2000024
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    Cited by:

    1. Pizzi, Gabriele & Scarpi, Daniele, 2013. "When Out-of-Stock Products DO Backfire: Managing Disclosure Time and Justification Wording," Journal of Retailing, Elsevier, vol. 89(3), pages 352-359.
    2. Mehrani, Saharnaz & Sefair, Jorge A., 2022. "Robust assortment optimization under sequential product unavailability," European Journal of Operational Research, Elsevier, vol. 303(3), pages 1027-1043.
    3. Schäfer, Fabian & Hense, Jonas & Hübner, Alexander, 2023. "An analytical assessment of demand effects in omni-channel assortment planning," Omega, Elsevier, vol. 115(C).
    4. Alexander Hübner & Fabian Schäfer & Kai N. Schaal, 2020. "Maximizing Profit via Assortment and Shelf‐Space Optimization for Two‐Dimensional Shelves," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 547-570, March.
    5. Bhatnagar, Amit & Syam, Siddhartha S., 2014. "Allocating a hybrid retailer's assortment across retail stores: Bricks-and-mortar vs online," Journal of Business Research, Elsevier, vol. 67(6), pages 1293-1302.
    6. Hübner, Alexander & Kuhn, Heinrich & Kühn, Sandro, 2016. "An efficient algorithm for capacitated assortment planning with stochastic demand and substitution," European Journal of Operational Research, Elsevier, vol. 250(2), pages 505-520.
    7. Gibson, Samantha & Hsu, Maxwell K. & Zhou, Xing, 2022. "Convenience stores in the digital age: A focus on the customer experience and revisit intentions," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    8. Marco Wolf & Shaun McQuitty, 2011. "Understanding the do-it-yourself consumer: DIY motivations and outcomes," AMS Review, Springer;Academy of Marketing Science, vol. 1(3), pages 154-170, December.
    9. Aleksandar Grubor & Nikola Milićević & Nenad Djokic, 2016. "The Effect of Inventory Level on Product Availability and Sale," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(2), pages 221-233.
    10. Hyung Sup (Zack) Bhan & Eric T. Anderson, 2023. "Multiyear Impact of Backorder Delays: A Quasi-Experimental Approach," Marketing Science, INFORMS, vol. 42(2), pages 314-335, March.
    11. Hans Corsten & Michael Hopf & Benedikt Kasper & Clemens Thielen, 2018. "Assortment planning for multiple chain stores," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(4), pages 875-912, October.
    12. Kowalczyk, Liliana & Breugelmans, Els & Campo, Katia, 2021. "It's not there, I love it! How relevance to objective needs of an unavailable item impacts emotions, store image, and behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    13. Hense, Jonas & Hübner, Alexander, 2022. "Assortment optimization in omni-channel retailing," European Journal of Operational Research, Elsevier, vol. 301(1), pages 124-140.
    14. Azeem, Muhammad Masood & Baker, Derek & Villano, Renato A. & Mounter, Stuart & Griffith, Garry, 2019. "Response to stockout in grocery stores: A small city case in a changing competitive environment," Journal of Retailing and Consumer Services, Elsevier, vol. 49(C), pages 242-252.
    15. Sloot, L.M. & Verhoef, P.C. & Franses, Ph.H.B.F., 2002. "The impact of brand and category characteristics on consumer stock-out reactions," ERIM Report Series Research in Management ERS-2002-106-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    16. Hübner, Alexander & Schaal, Kai, 2017. "An integrated assortment and shelf-space optimization model with demand substitution and space-elasticity effects," European Journal of Operational Research, Elsevier, vol. 261(1), pages 302-316.
    17. Derhami, Shahab & Montreuil, Benoit & Bau, Guilhem, 2021. "Assessing product availability in omnichannel retail networks in the presence of on-demand inventory transshipment and product substitution," Omega, Elsevier, vol. 102(C).
    18. Liberopoulos, George & Tsikis, Isidoros & Delikouras, Stefanos, 2010. "Backorder penalty cost coefficient "b": What could it be?," International Journal of Production Economics, Elsevier, vol. 123(1), pages 166-178, January.
    19. Hickman, William & Mortimer, Julie Holland, 2016. "Demand Estimation with Availability Variation," SocArXiv qe69j, Center for Open Science.
    20. Beneke, Justin & Cumming, Alice & Jolly, Lindsey, 2013. "The effect of item reduction on assortment satisfaction—A consideration of the category of red wine in a controlled retail setting," Journal of Retailing and Consumer Services, Elsevier, vol. 20(3), pages 282-291.
    21. Monika Kukar-Kinney & Angeline Close Scheinbaum & Larry Olanrewaju Orimoloye & Jeffrey R. Carlson & Heping He, 2022. "A model of online shopping cart abandonment: evidence from e-tail clickstream data," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 961-980, September.
    22. Hoskins, Jake D., 2020. "The evolving role of hit and niche products in brick-and-mortar retail category assortment planning: A large-scale empirical investigation of U.S. consumer packaged goods," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).
    23. A. Gürhan Kök & Marshall L. Fisher, 2007. "Demand Estimation and Assortment Optimization Under Substitution: Methodology and Application," Operations Research, INFORMS, vol. 55(6), pages 1001-1021, December.
    24. Khare, Adwait & Chowdhury, Tilottama G. & Morgan, Jeremy, 2021. "Maximizers and Satisficers: Can’t choose and Can’t reject," Journal of Business Research, Elsevier, vol. 135(C), pages 731-748.
    25. Jabir Ali & Ashwin Chandra & Tabassum Ali, 2017. "Self-started versus Family Inherited Businesses: A Comparison of Managing Unorganized Food Grocery Retail Stores in an Emerging Economy," Business Perspectives and Research, , vol. 5(1), pages 24-35, January.

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