Understanding Consumer Reactions to Assortment Unavailability

Manufacturers in hedonic product groups with a brand that possesses a high equity level (e.g.,
Coca-Cola, Douwe Egberts coffee) can be more confident in their negotiations than can
manufacturers with low-equity brands in utilitarian categories (e.g., Remia margarine, Witte
Reus detergent). Retailers should be selective in which cases they will or will not use the threat
of a brand boycott in the negotiation process. Choosing the wrong brand to boycott could
severely damage category sales and store loyalty.
5.1.3 Summary of Chapter 4
Similar to that in Chapter 3, the essay in Chapter 4 focuses on the impact of a permanent
assortment reduction. However, whereas we researched the impact of a single brand delisting
previously, with this essay, we research the effect of a multi-item reduction within a product
category assortment. In close cooperation with a major Dutch retailer, we researched the short-
and long-term effects of a cut of 37 out of a total of 150 detergent items (25%). This assortment
cut was tested in two stores, and two control stores were used to estimate its category sales
effects. The retailer provided us with 52 weeks (26 weeks before the reduction and 26 weeks
after) of customer loyalty card data for over 25,000 households across the two test and two
control stores.
The main results indicate that the assortment cut caused a loss of category sales, mainly
among the group of former buyers of the delisted items. Furthermore, we find that short-term
sales losses are significantly higher than long-term sales losses. This effect can be explained
partially by the higher percentage of new category buyers in the test stores; that is, we found a
higher influx of new buyers in the detergent category in the test stores than in the control stores.
A possible explanation for this effect is that the reduced assortment provides greater benefits for
certain groups of customers than does the nonreduced assortment. Indeed, an additional before-
and-after survey of detergent buyers in the two test stores indicated that the reduced assortment
received a higher overall evaluation and scored better in terms of search efficiency than did the
old detergent assortment with all 150 items.
An important limitation of this study is that we have data in only one category. However,
if these results were to be replicated in controlled and/or natural experiments that included more
product categories, they would have very important implications for retailers’ decision making
about assortment reductions. First, the study shows that an initial negative impact on category
sales might diminish over time. Second, it shows that a reduced, “cleaned-up” assortment may be
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