Consumer Inventory and Demand for Storable Goods: New Evidence from a Consumer Survey

Abstract

In this study, I provide new evidence on consumer inventory from a unique survey on the purchase and inventory of a storable product. I confirm that the predictions regarding the correlations between the key variables of purchase probability, purchase quantity and inventory derived from the standard dynamic models of consumer inventory are consistent with the data. Furthermore, I find that the amount of daily consumption varies within a household across time and depends on inventory holding. The evidence does not conform to a constant consumption rate, which studies often assume for tractability.

A dynamic model of rational “panic buying”

“…26 Kano (2018) reports that about 93% of survey respondents purchase additional toilet paper even when they have household stocks beyond the rolls currently in use. This suggests that the average household is at very low risk of stock-out, except for the 5-10% of respondents who reported purchasing toilet paper at dence, we target (i) households replenish when they have an average of 2 weeks' worth of stock remaining, (ii) the average purchasing cycle spans 4 weeks, and (iii) the probability that households have less than 3 days' stock at the time of purchase is 1%.…”

“…The model is calibrated to align with purchase and inventory behaviors documented in a household survey by Kano (2018), which specifically examines toilet paper consumption, purchase, and inventory. Our quantitative experiments demonstrate that a month‐long increase in shopping costs can induce panic buying, revealing two key features.…”

Household Inventory, Temporary Sales, Price Indices

“…Fact 4: Consumption tends to decrease as household inventories decrease. Although earlier studies on household inventories often assume that consumption is constant, Hendel and Nevo (2006a) and Kano (2018) highlight that consumption is state dependent. In order to examine whether consumption is indeed state dependent, we investigate whether consumption decreases until the next purchase as inventories decrease, using the Shoku-map data.…”

“…5 There is a considerable literature on household inventories, covering a range of topics. For instance, Boizot et al (2001), Griffith et al (2009), Hendel and Nevo (2006a), Hendel and Nevo (2006b), and Kano (2018) investigate intertemporal patterns of household purchases and consumption from a theoretical and/or empirical perspective. Hendel and Nevo (2013) focus on heterogeneity in households' ability to store goods and show that temporary sales are driven by price discrimination.…”

“…The first strand consists of research on household inventories of storable goods. Boizot et al (2001), Griffith et al (2009), Hendel and Nevo (2006a), and Kano (2018) empirically document patterns of consumer purchases and consumption. In terms of the theoretical approach, our model is closest to that developed by Hendel and Nevo (2006a) but differs from it in that our model is a quasi-dynamic one with producer households, who hold and sell inventories, and consumer households, who do not hold inventories.…”