Towards Understanding Consumer Reactions in Out-of-Stock Situations: A comparison of price promoted versus regular-priced items in grocery retail

Abstract: Temporarily unavailable products in the grocery retail environment cause problems for multiple parties, resulting in possible sales losses for retailers and high dissatisfaction among consumers. With price promoted products being twice as often out-of-stock (OOS) as regular-priced items, the need for a further understanding of reactions to price promoted products is evident. The purpose of this thesis is therefore to examine the differences between regular-priced and price promoted out-of-stock consumer responses based on the specific product category coffee. The development of a response model which tailored previously researched OOS responses towards price promoted products served as a foundation to approach the problem. Using an experimental survey design, the results of the experimental group (price promoted OOS) were compared against the results of the control group (regular-priced OOS), finding that consumers react differently in some instances. In both situations, consumers were most likely to switch to another product of the same brand followed by postponing the purchase until the product is available again. A great difference in behaviour was detected in relation to switching to another store to buy the intended product, being far more popular in regular-priced stock-out situations than in case of a price promoted OOS. The overall response patterns indicate that consumers faced with a stock-out of a price promoted product only react slightly different to stock-outs of regular-priced products, in both instances, however, guided by a remarkably strong brand loyalty according to the studied responses.