The overall objective of this dissertation is to contribute to the understanding of the impact visible shelf inventory has on consumer decision making in retail settings. Two essays examine the effects of visibly diminished shelf inventory on both consumer perceptions and product choice. Conventional retailing wisdom suggests high levels of shelf inventory increase demand and stimulate sales. “Stack ‘em high, let ‘em fly” is an industry saying used to convey that greater quantities of shelved products equate to greater demand and sales. This research identifies conditions under which the opposite is true; it in other words, when lower levels of shelf inventory emit positive signals to consumers. Diminished inventory is suggested to operate in this way by providing behavioral evidence of other consumers’ choices, thus serving as an inferred endorsement.

The first essay contributes to both theory and practice by providing insights into the effects of diminished shelf inventory. Three studies, two controlled laboratory experiments and a field experiment, reveal that consumers rely on shelf inventory for information when product knowledge is lacking or other information is not readily available. Lower levels of inventory, in the absence of other information, compared with higher levels of inventory of a competing product, provide information about the behavior and apparent preference of other consumers and thereby increase perceptions of quality, purchase intentions, and product choice. In a broad sense, Essay 1 provides added insight into what constitutes noninteractive informational social influence and how subtle observable environmental cues may be utilized by consumers in routine shopping situations. In addition, considering current retail practice with respect to shelf inventory levels, this work highlights a paradoxical relationship between shelf quantity and consumer demand.

The second essay evaluates the diminished shelf inventory effect, uncovered in the first essay, within an environment where competing shopping heuristic cues are present and consumers must select from among competing cues. Specifically, three experimental studies focus on whether the diminished inventory effect increases consumer willingness to pay and how it competes with established price and brand heuristics that consumers are known to apply at the point of sale.