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APJML
20,4
Malaysian grocery shoppers’
behavioural response to
stock-outs
396 Mario J. Miranda and K. Jegasothy
School of Applied Economics, Victoria University, Melbourne, Australia
Received April 2007
Revised March 2008 Abstract
Accepted April 2008 Purpose – A better understanding of the response of shoppers in developing countries to inevitable
product stock-outs would help logisticians to put structures in place to reduce the disruption. The
purpose of this paper is to examine the differences in orientations that characterize shoppers’
responses to stock-outs in retailing environments by comparing an emerging economy, Malaysia,
with a developed economy, Australia.
Design/methodology/approach – Randomly selected adult grocery shoppers across Kuala
Lumpur, Malaysia were surveyed to examine shoppers’ behavioural response to a most recent stock-
out of their preferred dairy item. This study followed the methodology and reporting framework
adopted in an Australian study.
Findings – When responding to stock-outs of their preferred grocery items, shopping lists serve as
instruments that give archetypical Malaysian shoppers, unlike their Australian counterparts, a
framework to adjust their budgets and seek alternatives within the store itself rather than venture to
another store. Most Malaysian shoppers’ reactions to an out-of-stock situation, just as their
Australian counterparts, appear to be underpinned by their household size. If their preferred item is
not available, the frugal and observant among Malaysian shoppers, however, are not inclined as
much as their Australian counterparts, to buy more of their alternative choice, even if these substitute
items are discounted.
Research limitations/implications – Insight into Malaysian shoppers’ behavioural response to
inadequate shelf life of perishable products, considering that they might feel impelled to act as per
their shopping lists, would give members of the supply chain confidence to adopt inventory
management policies that make a judicious balance between avoiding stock-outs and ensuring stock
availability with acceptable shelf life.
Practical implications – Malaysian frugal and observant shoppers when responding to stock-outs
of their preferred items might allow the opportunity to let a bargain pass on alternative brands or
variants, because these shoppers, guided by their shopping lists, are possibly hamstrung, by
budgetary constraints in not being able to make heavier purchase outlays and by likely storage
constraints in their living accommodation. Retailers in Malaysia have a greater challenge than
Australian retailers to dispose of stocks of grocery products that are fast approaching their expiry
dates through discounting, because Malaysian shoppers may resist buying more than their
immediate need.
Originality/value – Malaysian shoppers, inclined to carry memory scripts to assist them in their
shopping efforts, are conditioned to stay within their planned budgets and when confronted with a
stock-out of their preferred item, are likely to resist buying anymore than what they had planned to buy.
Keywords Malaysia, Australia, Consumer behaviour, Stock control
Paper type Research paper
Introduction
Increasingly global brands are filling shopping baskets of grocery shoppers all round
the world. Inevitably every now and then, there is a stock-out of the shopper’s preferred
Asia Pacific Journal of Marketing
and Logistics
brand. There is no gainsaying that these mega brands confront a significant chance of
Vol. 20 No. 4, 2008
pp. 396-412
# Emerald Group Publishing Limited
1355-5855
The authors are grateful to Garry Terdich, Jason Cheok and Geoff Atkinson for their useful
DOI 10.1108/13555850810909722 input in designing the survey instrument and assistance in collecting the data.
not getting to the destination stores in time because of several logistic imponderables, Shoppers’
particularly in those markets that have structural limitations. Equally true, is the fact
that finding out that one’s preferred item is not in stock, is bound to annoy shoppers.
response to
When customers are faced with a stock-out, they must decide whether to buy the stock-outs
same brand at another store, switch brands, delay the purchase and buy the same
brand later at the same store or forgo the purchase altogether (Corsten and Gruen,
2004). To have more products in-store is a rather simplistic solution that an average
shopper might offer. Few businesses can afford to have working capital tied up in 397
surplus stock sitting out the back of the store, or tied up elsewhere in the supply chain.
Much of what is consumed in developing countries has made their way into these
market places from foreign suppliers. These markets will invariably engage with
globalisation in a manner that is different from that of the developed world because of
differences in infrastructure and cultural idiosyncrasies. Inevitably there will be
shortages and stock-outs of items sourced nationally and more so of products coming
from beyond national boundaries. A better understanding of shoppers’ response in
emerging markets, to stock shortages or stock-outs, would help the local distribution
trade and retailers in particular, to configure their procurement patterns for reducing
the disruption and possible loss of business. Literature appears to be particularly
remiss in addressing whether societies in countries in various stages of economic
development respond to stock shortages different ways. We were therefore motivated
to examine if there are substantive differences in orientations that characterize
shoppers’ responses to stock-outs in retailing environments by comparing an emerging
economy, Malaysia, with a developed economy, Australia.
Background
A recent study of grocery shoppers in Melbourne, Australia, by Miranda and Jegasothy
(2007), has estimated the orientation of consumers that motivated them to respond to
stock outs of their preferred milk and milk products, using behaviour typologies (study
and interpretation of shopper profiles) that foreshadowed consumers buying a brand
variant, buying another brand, forgoing/postponing their purchase or buying from
another store. In this study it emerged that for most grocery shoppers, their household
size appeared to be a pressing variable that influenced the way they tackled the non-
availability of their normal choice.
Malaysia, a quintessentially Southeast Asian country is considered an emerging
economy that is highly westernised. According to Austrade (2007), the GDP per capita
of Malaysia in 2005 was AUD 11,160 as against AUD 31,000 for Australia. Malaysia
has a population of around 28 million consisting of several Asian ethnicities, housed in
an area of about a tenth of Australia. The capital of Malaysia, Kuala Lumpur was
chosen for our research because we believed that since a high proportion of Malaysians
in Kuala Lumpur are sufficiently well versed in the English language, the
administration of the same survey instrument used by Miranda and Jegasothy (2007)
in Melbourne, Australia, would be facilitated without having to compromise through
translation, the nuances of the earlier investigation.
Literature review
Rising urbanization and the greater concentration of wealth in cities, combined with an
increasingly westernised society, are gradually changing the behaviour and
aspirations of Malaysian consumers. In Malaysia, numerous companies and brands
represent grocery products from several parts of the world. The consciousness of
APJML health and wellness also appears to play a key role in purchasing decisions with regard
to packaged food products and fresh produce (Euromonitor, 2006). Inevitably,
20,4 consumers are required to confront the use-by dates of products that they pick from the
supermarket shelves. Added to the challenge of ensuring that grocery items provide
enough consumption time before the use-by date, consumers also have often to address
the stock-out of their preferred items, as Schonberger (1990) has identified that at any
point in time, the average supermarket is out of stock of approximately 8 per cent of the
398 items planned to be on the shelves. A serious concern for retailers is that an earlier
report (though published more than three decades ago), identified 39 per cent of
stocked-out items were subsequently bought elsewhere (Nielsen, 1975). Further,
shoppers who had experienced stock-outs left the store with a lower store image and
less satisfaction, measured on several scales (Zinszer and Lesser, 1980).
The ability of a store to provide a wide range of assortments and variety is one of
the critical factors to producing customer satisfaction. However, larger the range,
greater is the chance that at some point of time, the store will suffer an out-of-stock for
some brand variant (Bucklin, 1972). Consumers are less loyal to specific brands but
instead will have a portfolio of brands within a category from which they make their
choice, particularly in grocery markets, as the purchase involvement increases
(Ehrenberg et al., 1994; Knox, 1995). In fact, according to Christopher, (2005), ‘‘markets
are becoming increasingly commodised and brands are beginning to lose their lustre.
The perceived product equality in the eyes of customers is resulting in their
preparedness to substitute one brand for another, including store labels’’.
Shoppers’ in-store buying behaviour largely depends on their orientation, i.e.
inclination in particular contexts, motives and attitudes (Stone, 1954). Considerable
shopping behavioural research has given attention to the four shopper orientation
segments identified by Stephenson and Willet (1969) as under, which may have a
bearing on the manner in which shoppers react to a stock-out of their preferred item:
(1) Convenience shoppers who put a premium on disposable time in the store.
(2) Recreational shoppers who perceive the shopping activity as filling in time,
both in terms of number of shopping trips undertaken and time spent browsing
in the store.
(3) Price-bargain shoppers could range anywhere between ‘‘economic shoppers’’
(Darden and Reynolds, 1971) and ‘‘deal-prone’’ segments (Blattberg et al., 1978).
(4) Store-loyal shoppers are considered a worthwhile segmentation criterion
because this cohort is a profitable segment (Massy, 1966).
One’s tendency to behave in a certain manner is modified by the situation in which the
behaviour will occur (Hawkins et al., 1998). Shoppers’ specific predispositions or
inclinations in various contextual situations direct them to respond in different ways to
stock-out situations. Inevitably response behaviour is also affected by the post hoc
attitude shifts that occur with shoppers who have had to cope with stock-outs of their
preferred items (Emmelhainz et al., 1989; Zinszer and Lesser, 1980).
Research problem
A number of shopper typologies, according to Moschis (1976), while associating
shopping behaviour to customer dispositions (mindsets), do not inquire which
customer orientations (predispositions) in certain contextual situations explain
shoppers’ specific behavioural response to stock-outs. Any identified inconsistency in
the product (including its non availability), which belies the attitude that the consumer Shoppers’
holds towards the product, according to McGuire (1976), is sufficient to cause the
consumer some psychological discomfort. McGuire’s (1976) argues that the ensuing
response to
cognitive dissonance will drive the consumer to respond to this discomfort. It is logical stock-outs
to believe that the character of product decisions and spontaneous choice made by
consumers in response to the unavailability of their preferred items would depend on
the nature of the social (e.g. employment situations, disposable incomes, product range,
transport and travel times to stores) and economic environment (e.g. inflation, interest 399
rates and credit availability). There seems to be a literature gap of the differences in
orientations and contextual circumstances that motivate shoppers, in developing
economies and the developed world, to deal with stock-outs of their preferred item, in
specific ways. It is only when logisticians become aware of what drives customer
response to items that are unavailable, will they be able to put structures in place to
improve the certainty of availability.
The objective of our study is to compare and contrast the orientations that
characterize Malaysian shoppers’ responses to stock-outs of their preferred dairy item
with the study of Melbourne, Australia by Miranda and Jegasothy (2007). In the study
done in Australia, the dependent variable was the shoppers’ responses to stock-outs of
their preferred dairy item with the independent variables being shopper dispositions,
the contextual shopping situations, and customer demographics.
Research method
The same framework of research enquiry administered in Melbourne, Australia by
Miranda and Jegasothy (2007) was used in Kuala Lumpur, so that we could make
meaningful comparisons with the Australian study. The Malaysian study just like the
study in Australia was restricted to the investigation of groceries and perishable items
(milk and milk products). Shoppers when choosing a course of action to deal with a
stock-out of a convenience item are called upon to apply some rigour to their decision-
making (Miranda and Jegasothy, 2007). Moreover milk/milk products have the added
dimension of offering/not offering adequate consumption time.
Research setting
The research methodology included the personal administration of a structured
pretested questionnaire among 579 randomly (non-systematic) selected adult shoppers
across Kuala Lumpur, exiting four supermarkets, after having purchased their
groceries. Supermarkets, which are the leading distribution channel for groceries in
Malaysia, almost always have a presence in the shopping malls that are sprinkled all
around Kuala Lumpur and some of the other bigger cities in Malaysia. Over 70 per cent
of groceries are sold through supermarkets in Malaysia (Euromonitor, 2006).
The survey was meant to investigate the actual behavioural response of grocery
shoppers to a most recent stock-out of their preferred dairy item that they had to deal
with. Most supermarkets are conveniently located in shopping centres and these stores
stock a wide and deep range of grocery varieties and assortments including private
labels of every day need products. Almost all selected respondents were prepared to
participate in the survey. Only those respondents that admitted to being confronted
with an out-of-stock situation of dairy items in their principal store were included in
the data analysis. Around 3 per cent (17) of respondents claimed that they could not
recollect in the recent past, a dairy item that was not available to them to purchase. The
survey was conducted at varying times on different days of the week over a two-week
APJML period in the second quarter of 2006. No incentive was offered for participating in the
20,4 survey, but the respondents were made aware that the investigation was part of
academic scholarship.
Knowledge about shopper’s predispositions and demographics (operators), about
the conditions of their applicability in contextual situations and about their responses
(reactions) to stock-out situations is critical for the retailer’s merchandise planning
400 efforts. The following independent variables used in the Australian study that could
explain how shoppers react to stock-outs were also used in the study in Malaysia:
. Various shoppers’ dispositions, like store loyalty (length of time that shopper has
been visiting this supermarket and is a predictor of whether consumer would
prefer an alternative item in the same store or move to another store), deal-
proneness (susceptibility to product promotions) and inclination to observe
expiry dates
. Shopping contextual situations, like presence of alternative contiguous (near-by)
stores, shopping lists (carried by the shopper to aid memory), price offers
(discounted priced items) and products’ use-by dates,
. Customer demographics, like age and household size.
The measures of each of these explanatory variables are detailed in the section of
Analysis and are the same that were used in the Australian study.
The dependent variable (shopper reaction to stock-outs) included four options,
namely, forgo/postponing purchase, buying a brand variant, buying another brand and
buying from another store. Since the purpose of this research study is to compare and
contrast the predispositions of Malaysian shoppers to stock-outs of their preferred items
of milk and milk products with that of shoppers in Australia, we used the same
dependent and independent variables. The study done in Australia showed evidence of a
good fit in a multinomial logit model between the dependent and independent variables.
The Australian study also estimated a binary logit model that predicted shoppers’
orientations, which motivated them to seek their preferred item from another store.
The choice of dairy items for investigation was motivated because they are
considered as convenience products and literature has identified that almost 43 per
cent of ‘‘product decisions’’ are made in the store (Corsten and Gruen, 2004). Their study
also observed that the proportion of convenience products that qualify for
‘‘spontaneous choice’’ in the store would be far higher than for shopping products and
specialty items. The dairy items that were examined included, milk, yoghurt, butter,
cheese, cream and margarine.
Analysis
As stated by Corsten and Gruen (2004), customers respond to stock-outs in one of five
ways, namely:
(1) forgoing purchase of the item (9 per cent of shoppers);
(2) postpone the purchase of the item (15 per cent of shoppers);
(3) buy another brand (19 per cent of shoppers);
(4) buy a brand variant (31 per cent of shoppers); or
(5) buy the item from another store (26 per cent of shoppers).
In this study the respondents were specifically asked what was their response if they Shoppers’
did not find their preferred milk/milk product on the retail shelf. By combining three response to
defining dimensions of shopper’s behaviour – their orientations, the contextual stock-outs
situations and shoppers’ demographics, we can distinguish the classes of
representational responses to stock-out situations. A Multinomial model can be fitted
very well to the data and allows calculating the significance of different types of
explanatory variables, namely, orientations, contextual situations and demographics 401
that explain the behavioural response to stock-outs. The functional form chosen to
structure the relationship between the available response options and the explanatory
variables is logistic and thus the model is known as Multinomial Logit regression
(MLLR).
In the MLLR, one of the response options is to be treated as the base option. We
considered that the shopper acquiring their preferred item from another store to be the
least desirable outcome for the principal store; and in order to inhibit store attrition, it
is important for the principal store to know what is the orientation of these shoppers
that foreshadows them crossing floors to another store. Therefore when specifying the
MLLR model, we selected our base option as ‘‘buying from another store’’. However the
Multinomial Logit regression while identifying the significant explanatory variables
for the other options does not identify the variables that explain the base option.
When applying MLLR, the dependent variable is the response variable (Y) and the
explanatory variables or predictor variables (xk) represent respondents’ orientations,
their demographics and contextual situations. The parameters with respect to the
explanatory variables can differ across the categories of the response variable.
Given that j þ 1 options for response (Yij) are available to shoppers, then under
MLLR the probability an individual shopper (i) will choose:
option 0 (base option) is
" #
XJ
0
Pi0 ¼ 1= 1 þ expðXi j Þ ð1Þ
j¼1
where Xi: vector of independent variables relates to the shopper i, j: vector of
coefficients specific to the category of response j.
Further, treating Yij as a binary (i.e. 1 if j is chosen and 0 other wise) and assuming
independence of alternative responses ( j) the log-likelihood function of shopper i can be
obtained by summing the individual log-densities.
Y
Li ¼ ðpij ÞYij ð1 pij Þ1Yij ð3Þ
Yij
where, Yij is the dependent variable and Xi is a vector of independent variables (i.e.
402 Xi ¼ x1i, x2i, . . . ,x23i)
By defining the dependent variable (Yij) options, the above-generalized MLLR
framework can be transformed into a Multinominal model.
Multinomial model
Yij: Purchase action (PA) following non-availability of preferred dairy item.
(Forgo/postpone purchase: j ¼ 1/buy a brand variant: j ¼ 2/buy another brand: j ¼ 3/
buy from another store j ¼ 0)
The number of shoppers who responded as forgoing purchasing the item because of
its non-availability was only 22 (about 3.9 per cent) in the total effective sample of 562
respondents. Since this small number of observations does not lend itself to statistical
validity, the forgoing purchase outcome is combined with the option that it closely
resembles, namely, the postponing purchase response, and represented as j ¼ 1.
The explanatory variable vectors of both models are constituted with the following
variables:
x1 (stloyal): Duration of store loyalty (<6 months/between 6-12/>1 year)
x2 (shpfreq): Shopping frequency (weekly/>weekly)
x3 (shdays): Shopping days (weekdays/weekends)
x4 (shlist): Preparation of shopping list (yes/no)
x5 (brdmilk): Choice of milk brand (popular brand(D1)/uncommon brand(D2)/home
brand(D3)
x6 (brdmpdt): Choice of brand of milk products (popular brand(D1)/uncommon
brand(D2)/home brand(D3)
x7 (stotime): Elapsed time of last stock out of preferred dairy product (6/>6
months)
x8 (stostat): Status of stock out (temporary/discontinued)
x9 (prsize): Preferred alternative dairy item’s size (same size/smaller size/bigger size)
x10 (prprice): Alternative dairy item’s price (; same price/less expensive/don’t
know)
x11 (exdmilk): Checking the expiry date of milk (yes/no)
x12 (exdmpdt): Checking the expiry date of milk products (yes/no)
x13 (paknstd): Purchase action after knowing short time duration for consumption of
preferred item (postpone purchase(D1)/buy a variant(D2)/buy another brand(D3)/buy
from another store(D4)
x14 (Astconv): Alternative store for convenient purchasing (yes/no)
x15 (prspec): Response to price specials (yes/no)
x16 (prdisc): Purchase of additional discounted products (yes/no)
x17 (awrefrig): Awareness of need for refrigeration of dairy items after opening (yes/no)
x18 (ppgbhbrd): Proportion of grocery bill spent on home brands (25/>25%)
x19[1] (shduratn): Average time duration spent in store during each visit (<15, 15-30,
31-45, >45 min)
x20[1] (avgb): Average size of grocery bill ($50, $51-$100, $101-$150,>$150)
x21[1] (age): Age group (<21, 21-35, 36-50, >50years) Shoppers’
x22[1] (hhsize): Household size (1 member, 2-3 members, 4 members)
response to
Odds of combination of variables stock-outs
It is customary to interpret ordered regression models by considering odds. Odds
measure, in probability terms, the relative strength of an event’s occurrence to that of
its non-occurrence. The sizes of the ratios are comparable and enable inferences to be
made about the occurrence of a given event over other events in a multi-event situation.
403
In this study, each event identified as alternative combinations of the options, belong to
a pair of (qualitative) variables. The odds of an event is estimated as
PrðaÞ PrðaÞ
ODDa ¼ ¼ ð5Þ
PrðbÞ þ PrðcÞ þ PrðhÞ 1 PrðaÞ
Estimation method
Maximization of log likelihood function (Equation 4) is accomplished by a non-linear
estimation method known as Maximum Likelihood Estimator (MLE) and therefore the
b estimates are Best Linear Unbiased Estimates (see Table I). MLE in this study is
carried out using the LOGDEN option of the non-linear estimation in Shazam program.
MLE is an iterative method and hence requires a starting value to commence
estimation process. Note that the log density function is concave and therefore permits
any starting value.
As the underlying functional form of the estimated models is logit, the estimated
coefficients of Shopping list, Preferred alternative dairy item, Purchase of additional
discount products and Household size are non-linear and therefore cannot be
interpreted directly. Alternatively, the impact of these variables can be calculated using
the probability values of each response option and the estimated b coefficients. The
calculated Marginal Effects of Shopping list, Preferred alternative dairy item, Purchase
of additional discount products and Household size on alternative response options are
given in Table II.
Findings
The estimation results indicate that the probability of each of the following responses
to the non-availability of shoppers’ preferred dairy item is as follows:
. The probability of buying variants of their preferred brand among Malaysian
shoppers (probability equal to 0.408) is less than among Australian shoppers
(probability equal to 0.502).
. The probability of forgoing/postponing the purchase among Malaysian shoppers
(probability equal to 0.192) is marginally more than among Australian shoppers
(probability equal to 0.166).
. The probability of buying another brand among Malaysian shoppers
(probability equal to 0.214) is more than among Australian shoppers (probability
equal to 0.172).
APJML Yij Malaysia (sample size: 562) Yij Australia (sample size: 541)
20,4 ’s Variables j¼1 j¼2 j¼3 j¼1 j¼2 j¼3
Discussions
Buying variants of preferred brand – the circumspect shopper
Circumspect shoppers are careful not to compromise their faith in the brand that they
are familiar with. When confronted with a stock-out of their normal choice, these
shoppers would opt not to stray from their preferred brand but to select another
variant of the same brand (Miranda and Jegasothy, 2007). Unlike the Australian
circumspect shopper, Malaysian circumspect grocery shoppers are likely to be directed
by a shopping list. This finding suggests that Malaysian shoppers are less likely to
buy on impulse than their Australian counterpart. In fact the propensity of Malaysian
shoppers carrying a shopping list, to be wary of purchases that they make while
responding to the unavailability of their preferred choice, increases by 5.7 per cent
(Table II).
There is evidence that the Malaysian circumspect shopper is strongly inclined to
check the use-by date of their preferred choice and ostensibly is prepared to postpone/
forgo purchase of their preferred choice in favour of a brand variant even if their
preferred item was available but does not have ample time for consumption.
It appears from our study that the probability of Malaysian shoppers being
circumspect will increase by 8.07 per cent (Table II) as compared to the 1.3 per cent
increase in being circumspect among Australian shoppers, as their household size
increases. Large families may be encouraged to use larger pack sizes because they
would be less concerned about running out of the product (Folkes et al., 1993). A recent
study identified that circumspect shoppers are inclined to opt for another flavour in a
larger package and will ignore the smaller pack sizes (Miranda and Jegasothy, 2007).
However, we observe from Table II that Malaysian circumspect shoppers will tend to
discriminate against the variant of their preferred in the smaller pack size and will
either consider the alternative brand in the same size as they would for their preferred
choice (higher probability) or in a bigger size pack (lower probability). Notably, as
evident in Table II, Malaysian circumspect shoppers are not driven to respond to a
stock-out in favour of a variant of their preferred brand because it is made available in
at lower prices (MLLR estimate for prdisc ¼ 0.035). This study also demonstrates
that if the Malaysian shopper is inclined to buy brand variants as alternative
APJML purchases, they are prepared to do so at same or even higher prices. This is not to
suggest that Malaysian circumspect shoppers are not price sensitive, because they are
20,4 also prepared to buy more of the variant if opportunity presents the variant (being
available) cheaper, even though they may not be actively seeking discounted products.
There is no gainsaying that these (same brand) variants require to be priced as much as
or cheaper than the shopper’s normal (out-of-stock) item per unit measure, if they are to
qualify for purchase by these bargain opportunist circumspect shoppers. It also
406 evident in this study that while shoppers are inclined to be more circumspect with an
increasing outlay on purchases, Malaysian shoppers demonstrate less caution than
their Australian counterparts.
Note
1. Variables are treated as continuous variables in the regression while in obtaining logits
they are treated as discrete variables.
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Corresponding author
Mario J. Miranda is the corresponding author and can be contacted at: mario.miranda@vu.edu.au