[en] This study examines the impacts of consumer confidence on stockpiling behavior and, subsequently, retail inventory management. We show how stockpiling behavior evolved during the “Great Recession” of 2008-2009 as consumer confidence waned and demonstrate the impact of this development on inventory management. Drawing on the two-segment household inventory theory consisting of non-stockpiling and stockpiling segments, we use a panel dataset (2005-2015) to calibrate household inventory holdings. This dataset then serves as input for a retailer-level case study. Our empirical analysis reveals significant impacts from changing stockpiling behavior. When consumer confidence is low, both stockpiling and non-stockpiling segments respond by reducing weekly consumption rates; however, the stockpiling segment also significantly lengthens the time between shopping trips, and ultimately increases the duration of inventory holdings. These changes to consumption and stockpiling add complexity to inventory planning, requiring retailers to carefully adjust inventory levels to maintain service levels.
Disciplines :
Production, distribution & gestion de la chaîne logistique
Auteur, co-auteur :
Pan, Xiaodan
Dresner, Martin
MANTIN, Benny ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
Co-auteurs externes :
yes
Langue du document :
Anglais
Titre :
When the Going Gets Tough, Do the Tough Go Shopping?
Date de publication/diffusion :
2022
Titre du périodique :
Journal of Business Logistics
ISSN :
0735-3766
eISSN :
2158-1592
Maison d'édition :
John Wiley & Sons, Hoboken, Etats-Unis - New Jersey
Akaike, H. (1974). A new look at the statistical model identification. IEEE Transactions on Automatic Control, 19, 716–723.
Angrist, J. D., & Pischke, J.-S. (2008). Mostly harmless econometrics: An Empiricist's companion. Princeton University Press.
Bell, D. R., Iyer, G., & Padmanabhan, V. (2002). Price competition under stockpiling and flexible consumption. Journal of Marketing Research, 39(3), 292–303.
Bendoly, E., Croson, R., Goncalves, P., & Schultz, K. (2010). Bodies of knowledge for research in behavioral operations. Production and Operations Management, 19(4), 434–452.
Bendoly, E., Donohue, K., & Schultz, K. (2006). Behavior in operations management: Assessing recent findings and revisiting old assumptions. Journal of Operations Management, 24(6), 737–752.
Blattberg, R. C., Eppen, G. D., & Lieberman, J. (1981). A theoretical and empirical evaluation of price deals for consumer nondurables. Journal of Marketing, 45(1), 116–129.
Boudreau, J., Hopp, W., McClain, J., & Thomas, L. (2003). On the interface between operations and human resources management. Manufacturing & Service Operations Management, 5(3), 179–202.
Breiter, A., & Huchzermeier, A. (2015). Promotion planning and supply chain contracting in a high-low pricing environment. Production and Operations Management, 24(2), 219–236.
Chan, T., Narasimhan, C., & Zhang, Q. (2008). Decomposing purchase elasticity with a dynamic structural model of flexible consumption. Journal of Marketing Research, 45(4), 487–498.
Ching, A. T., & Osborne, M. (2020). Identification and estimation of forward-looking behavior: The case of consumer stockpiling. Marketing Science, 39(4), 707–726.
Cohen, J. (1983). The cost of dichotomization. Applied Psychological Measurement, 7, 249–253.
Croson, R., Schultz, K., Siemsen, E., & Yeo, M. (2013). Behavioral operations: The state of the field. Journal of Operations Management, 31(1–2), 1–5.
Donohue, K., Ozer, O., & Zheng, Y. (2020). Behavioral operations: Past, present, and future. Manufacturing & Service Operations Management, 22(1), 191–202.
Dooley, K. J., Yan, T., Mohan, S., & Gopalakrishnan, M. (2010). Inventory management and the bullwhip effect during the 2007–2009 recession: Evidence from the manufacturing sector. Journal of Supply Chain Management, 46(1), 12–18.
Drukker, D. M. (2003). Testing for serial correlation in linear panel-data models. Stata Journal, 3(2), 168–177.
Durante, K. M., & Laran, J. (2016). The effect of stress on consumer saving and spending. Journal of Marketing Research, 53(5), 814–828.
Erdem, T., Imai, S., & Keane, M. P. (2003). A model of consumer brand and quantity choice dynamics under price uncertainty. Quantitative Marketing and Economics, 1(1), 5–64.
Eroglu, C., & Hofer, C. (2011). Lean, leaner, too lean? The inventory-performance link revisited. Journal of Operations Management, 29(4), 356–369.
Gallino, S., Moreno, A., & Stamatopoulos, L. (2016). Channel integration, sales dispersion, and inventory management. Management Science, 63(9), 2813–2831.
Gavan, J. F. (2008). Death to dichotomizing. Journal of Consumer Research, 35(1), 5–8.
Gino, F., & Pisano, G. (2008). Toward a theory of behavioral operations. Manufacturing & Service Operations Management, 10(4), 676–691.
Greenleaf, E. A. (1995). The impact of reference price effects on the profitability of price promotions. Marketing Science, 18(4), 82–104.
Haviv, A. (2014). Does purchase without search explain counter cyclic pricing? Working paper, Simon Business School, University of Rochester, Rochester, NY.
Hendel, I., & Nevo, A. (2006). Measuring the implication of sales and consumer inventory behavior. Econometrica, 74(6), 1637–1673.
Hendel, I., & Nevo, A. (2013). Intertemporal price discrimination in storable goods markets. America Review of Economics, 103(7), 2722–2751.
Ho, T.-H., Tang, C. S., & Bell, D. R. (1998). Relational shopping behavior and the option value of variable pricing. Management Science, 44(12), 145–160.
Huchzermeier, A., Iyer, A., & Freiheit, J. (2002). The supply chain impact of smart customers in a promotional environment. Manufacturing & Service Operations Management, 4(3), 228–240.
Irwin, J. R., & McClelland, G. H. (2003). Negative consequences of dichotomizing continuous predictor variables. Journal of Marketing Research, 40, 366–371.
Iyer, A. V., & Ye, J. (2000). Assessing the value of information sharing in a promotional retail environment. Manufacturing & Service Operations Management, 2(2), 128–143.
Kesavan, S., & Kushwaha, T. (2014). Differences in retail inventory investment behavior during macroeconomic shocks: Role of service level. Production and Operations Management, 23(12), 2118–2136.
Kesavan, S., Kushwaha, T., & Gaur, V. (2016). Do high and low inventory turnover retailers respond differently to demand shocks. Manufacturing & Service Operations Management, 18(2), 198–215.
Kmenta, J. (1986). Elements of econometrics (2nd ed.). Macmillan.
Krause, D., & Ellram, L. M. (2014). The effects of the economic downturn on interdependent buyer–supplier relationships. Journal of Business Logistics, 35(3), 191–212.
Lal, R., Little, J. D. C., & Villas-Boas, J. M. (1996). A theory of forward buying, merchandising, and trade deals. Marketing Science, 15(1), 21–37.
Laroche, M., Pons, F., Zgolli, N., & Kim, C. (2001). Consumers use of price promotions: A model and its potential moderators. Journal of Retailing and Consumer Services, 8(5), 251–260.
Liu, Y., & Balachander, S. (2014). How long has it been since the last deal? Consumer promotion timing expectations and promotional response. Quantitative Marketing and Economics, 12(1), 85–128.
Loch, C., & Wu, Y. (2007). Behavioral operations management. Foundations and Trends in Technology, Information, and Operations Management, 1(3), 121–232.
Lubin, G. 2011. Sign of the times: Baby suffer from rash epidemic as parents buy fewer diapers. Business Insider. http://www.businessinsider.com/diaper-rash-recession-2011-10
MacCallum, R. C., Zhang, S., Preacher, K. J., & Rucker, D. D. (2002). On the practice of dichotomization of quantitative variables. Psychological Methods, 7, 19–40.
Maxwell, S. E., & Delaney, H. D. (1993). Bivariate median-splits and spurious statistical significance. Psychological Bulletin, 113, 181–190.
Osborne, M. (2018a). Approximating the cost-of-living index for a storable good. American Economic Journal, 10(2), 286–314.
Osborne, M. (2018b). Frequency vs. depth: How changing the temporal process of promotions impacts demand for a storable good. The Japanese Economics Review, 69(3), 258–283.
Parks, R. (1967). Efficient estimation of a system of regression equations when disturbances are both serially and contemporaneously correlated. Journal of the American Statistical Association, 62, 500–509.
Peinkofer, S. T., Esper, T. L., Smith, R. J., & Williams, B. D. (2015). Assessing the impact of price promotions on consumer response to online stockouts. Journal of Business Logistics, 36(3), 260–272.
Pesendorfer, M. (2002). Retail sales: A study of pricing behavior in supermarkets. The Journal of Business, 75(1), 33–66.
Pires, T. (2016). Costly search and consideration set in storable goods markets. Quantitative Marketing and Economics, 14(3), 157–193.
Reed, S., & Crawford, M. (2014). How does consumer spending change during boom, recession, and recovery?. https://www.bls.gov/opub/btn/volume-3/how-does-consumer-spending-change-during-boom-recession-and-recovery.htm
Remler, D. K., & Ryzin, G. G. V. (2011). Research methods in practice: Strategies for description and causation. SAGE.
Robertson, S.K. 2017. Huggies campaign: When promoting a good cause is good for the bottom line. The globe and mail. https://www.theglobeandmail.com/report-on-business/industry-news/marketing/huggies-campaign-when-promoting-a-good-cause-is-good-for-the-bottom-line/article34114486/
Royston, P., Altman, D. G., & Sauerbrei, W. (2006). Dichotomizing continuous predictors in multiple regression: A bad idea. Statistics in Medicine, 25(1), 127–141.
Rucker, D. D., McShane, B. B., & Preacher, K. J. (2015). A researcher's guide to regression, discretization, and median splits of continuous variables. Journal of Consumer Psychology, 25(4), 666–678.
Schwarz, G. (1978). Estimating the dimension of a model. Annals of Statistics, 6, 461–464.
Seiler, S. (2013). The impact of search costs on consumer behavior: A dynamic approach. Quantitative Marketing and Economics, 11(2), 155–203.
Su, X. (2010). Intertemporal pricing and consumer stockpiling. Operations Research, 58(4), 1133–1147.
Sun, B. (2005). Promotion effect on endogenous consumption. Marketing Science, 24, 430–443.
Teunter, L. H. (2002). Analysis of sales promotion effects on household purchase behavior. ERIM Ph.D. Series Research in Management (pp. 262–272).
Udenio, M., Fransoo, J. C., & Peels, R. (2015). Destocking, the bullwhip effect, and the credit crisis: Empirical modeling of supply chain dynamics. International Journal of Production Economics, 160(C), 34–46.
Udenio, M., Hoberg, K., & Fransoo, J. C. (2018). Inventory agility upon demand shocks: Empirical evidence from the financial crisis. Journal of Operations Management, 62(1), 16–43.
Wang, E. Y. (2015). The impact of soda taxes on consumer welfare: Implications of storability and taste heterogeneity. The Rand Journal of Economics, 46(2), 409–441.
Wiehenbrauk, D. (2010). Collaborative promotions-the value of upstream information sharing. Springer Verlag.
Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. MIT Press.
Zinn, W., & Liu, P. C. (2001). Consumer response to retail stockouts. Journal of Business Logistics, 22(1), 49–71.
Zinn, W., & Liu, P. C. (2008). A comparison of actual and intended consumer behavior in response to retail stockouts. Journal of Business Logistics, 29(2), 141–159.
