Katia Campo

Towards understanding consumer response to stock-outs

Abstract Manufacturers as well as retailers can suffer important losses as a result of stock-outs. The magnitude of these losses depends on specific consumer reactions, which have been found to vary with product, consumer, and situation factors. This paper presents a conceptual framework that integrates the major determinants of consumer reactions to stock-outs. The theoretical relationships provide explanations for the marked differences in stock-out effects observed in previous studies. Moreover, the framework can be empirically implemented, allowing retailers and manufacturers to determine how much each factor contributes to stock-out losses. We collect survey data to provide evidence on the relevance of the framework and the direction and importance of the effect of different consumer behaviors.

The impact of store flyers on store traffic and store sales: a geo-marketing approach

Abstract This paper analyzes the impact of the composition of a retailers’ weekly store flyer on store performance. The paper presents and tests propositions on how a store flyer’s size, its average discount size, and the allocation of store flyer space to category and brand types, affects store traffic and sales. The moderating impact of location variables—socio-demographics of trading area inhabitants, characteristics of the store and competition—is also discussed and empirically tested. The outcomes provide key insights for retailers with regard to the financial ramifications of store flyer competition.

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

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.

Close Encounter with the Hard Discounter: A Multiple-Store Shopping Perspective on the Impact of Local Hard-Discounter Entry

“Hard discounters” (HDs) have become a considerable force in grocery retailing. With rock-bottom prices and minimal assortments, they differ greatly from “large discounters” such as Wal-Mart, constituting complements to, rather than substitutes for, more traditional supermarkets. Therefore, the authors propose that HD impact of entry on local incumbents is different as well. Using a store choice and spending model that explicitly accounts for interstore synergies and multiple-store shopping behavior, the authors study consumer responses to 194 HD openings. Although they find that HDs, like large discounters, especially appeal to private label–prone shoppers and lead to sizable incumbent losses, the results confirm that the nature of these losses is different. First, HDs do not cause incumbent chains to lose their best customers; instead, shoppers who have already visited other chains alongside the incumbent are lost. Second, the authors find that chains located in close proximity to new HDs do not suffer more from their entry. Third, losses are lower for upscale chains and incumbents that strongly complement the HD. The authors conclude by discussing implications for proper response to HD entry.

Improving Sales of Private Labels in Store

This paper analyzes the effectiveness of different merchandising techniques and in-store promotions in boosting sales of private label grocery products. Private labels differ substantially from (leading) national brands in product positioning and target customer group, and may therefore require a different in-store marketing mix to support their sales. By analyzing the relationship between brand type and the sales impact of different merchandising and promotion tools, we aim to obtain a better insight into which types of in-store stimuli are more appropriate to stimulate private label sales. Results confirm that (1) in-store stimuli have a differential effect on sales of private labels and national brands, and (2) merchandising and promotion tools that trigger a more cognitive and reasoned decision process are more effective in stimulating private label sales.

The Effects of Shelf Display on Online Grocery Choices

Research on shelf effects in traditional grocery stores has shown that a products absolute and relative shelf position may strongly affect consumer choices. In this paper, we examine whether and how such shelf effects translate into an online grocery context. We find that a products choice probability increases when presented on the first screen or located near focal items - especially when the latter are out-of-stock. These primacy and proximity effects have a stronger impact on choice decisions when assortments are more difficult to evaluate and when a clear shelf organization facilitates the use of shelf-based choice heuristics.

Are Different Merchandising Techniques and Promotions Equally Effective to Improve the Sales of Utilitarian and Hedonic Products? An Abstract

Grocery retailers face increasingly complex management problems. They not only have to manage multiple product categories and a huge number of different brands and SKUs but also have to cope with continuous changes in the competitive environment and an increased tendency of consumers to spread purchases over different chains and channels. To defend their competitive position, a differentiated, category-specific marketing mix approach is called for.

Buying in multiple stores : Shopping strategies beyond price promotions and their effects on Store Competition

Abstract Grocery-store switching has typically been viewed as evidence of cherry-picking behavior, with consumers switching stores to benefit from temporary promotional offers. However, research reveals that it may also result from a longer-term planning process based on stable store characteristics. Even in the absence of promotions, consumers have good reasons for shopping in multiple grocery stores. There is a link between consumer motives and the way shopping trips are organized. Some consumers visit different stores on separate shopping trips, while others visit multiple stores on combined trips depending on individual cost and benefit considerations. On the one hand, combined visits allow the consumer to save on transportation costs per trip and to purchase each product exclusively in the store where it is preferred. On the other hand, when the stores are visited on separate trips, the number of trips per store can differ and the trips to different stores can be spread over time. This allows the consumer to purchase high holding-cost categories on a more frequent basis, shifting some portion of these categories’ purchases to the less-preferred store. Depending on a store’s characteristics relative to local competitors, different competitive strategies are recommended for retailers.

Can In-Store Displays Improve Category Sales and Brand Market Share in Online Stores? A Study on the Overall Effectiveness and Differences between Display Types in an Online FMCG Context

Our study investigates the overall effects of in-store displays (ISD) on category sales and brand market share in an online shopping context, and compares the differences in effectiveness between ISD types. Using data from an online grocer, we examine three online ISD types that match with traditional ones: first screen (entrance), banner (end-of-aisle) and shelf tag (in-aisle) displays. Empirical results for 10 categories confirm that online ISD may substantially increase brand market share and to a lesser extent, category sales. Our results also demonstrate that not all types are equally effective. First screen displays clearly have the strongest effect on market share: they benefit from their placement on the ‘entrance’ location, central on-screen position and direct purchase link. While they only feature 1 SKU, banner displays typically feature all SKUs of a brand, yet, are placed on border-screen positions on traveling-zone pages without a direct purchase link. Based on our results, the advantage of banner displays does not weigh up against the advantages of first screen displays in most cases. Shelf tags, finally, may be very useful in attracting attention to interesting promotions, but appear to have no or at most a limited effect on their own.