Consumer Responses to Favorite Product Removal: Evidence from Beverage Vending Machines

In the retail industry, it is common for firms to discontinue some products for various reasons. However, because of heterogeneous consumer preferences, discontinued products are often someone’s favorite products. Therefore, it is important for managers to know how consumers react when their favorite product is removed. This paper shed light on this question by using a novel dataset of vending machine purchases in Japanese train stations and a synthetic difference-in-differences approach. We find that for regular consumers, the removal of their favorite products would lead to a sales drop in their favorite vending machine; however, we also find that it has an insignificant impact on the overall sales at the station level. Our micro-level data show that some consumers stay with their favorite machine and buy something else. Even if they leave their favorite machine, a large proportion of them are willing to visit other machines. To investigate what explain the consumers who stay or leave their favorite machine, we hypothesize that variety-seeking tendency may play a role. Using four different measures of variety-seeking, we show that it indeed can explain our empirical findings. In particular, high variety-seeking consumers tend to stay with their favorite machine, and low variety-seeking consumers are more likely to visit other machines to try to find their favorite products.