Disposal-based scarcity: How overstock reduction methods influence consumer brand perceptions and evaluations

Abstract

Overstock reduction methods offer important marketing signals that may affect consumer brand perceptions. In particular, some overstock reduction methods create disposal-based scarcity, that is, product scarcity resulting from reductions of unsold stock. Three experimental studies reveal distinct effects of incineration, which completely destroys the product, compared with methods that are less destructive, such as recycling, donating, or discounting through factory outlets. Achieving disposal scarcity through destruction ultimately damages consumer brand evaluations. In contrast, recycling, donating, and discounting methods, along with indicating a lack of brand overstock, can enhance brand evaluations. Communicating sold-out stock does not translate into such beneficial effects. These varied effects of different overstock reduction methods are mediated by perceptions of exclusivity, popularity, and wastefulness. Furthermore, the mediating effect of perceived wastefulness in the link between overstock reduction methods and brand evaluations is moderated by self–brand connection but not by perceived brand luxuriousness. This article thus integrates literature on scarcity, branding, wastefulness, and disposal behavior to identify a distinct type of scarcity and the conditions in which it has more positive or negative effects on brand perceptions and evaluations.

Overstocks represent an ongoing management concern. Companies often must reduce their overstock, or inefficient excess stock (Song et al., 2021), which conventionally meant discounting, particularly during specific shopping seasons, such as Christmas and Boxing Day sales, or by sending overstocks to parallel channels such as factory outlets (Reynolds et al., 2002; Whyatt, 2008). But some brands prefer not to discount and instead opt for other methods, which might include donating to communities in need or charities (e.g., Thread Together, the Red Cross) (Singer, 2022). Another option is to destroy the products (Dalton, 2018), such as through incineration (Park et al., 2021), as practiced by Amazon, H&M, Nike, Burberry, Chanel, and Louis Vuitton for example (Bird, 2018; Farmbrough, 2018; Hamilton, 2021). Others (e.g., Victoria’s Secret, Cartier, Montblanc) send their overstock to landfills (Mayo, 2021; Stevenson, 2022). In response to criticisms of the environmental consequences of these latter methods, companies also increasingly practice recycling, and some novel business models have emerged to transform recycled, used products into new ones, such as On Running and its Cyclon program.¹

The need to deal with overstock is not just a question of what to do with the actual products; reducing these stocks also might benefit the brand by increasing its perceived scarcity and exclusivity (Dalton, 2018), which underlie perceptions of product value (Brock, 1968). Scarcity cues stimulate consumer inferences about how valuable a product is and increase brand evaluations (Wu & Lee, 2016), whereas overly abundant stock may undermine consumer preferences (van Herpen et al., 2009; Yang & Zhang, 2014). As applied to create or sustain scarcity though, overstock reduction also represents a sales tactic, which could prompt consumer skepticism or reduced brand evaluations (Lee et al., 2014; Park et al., 2020). Consumer responses to scarcity differ across types of brands as well, because luxury brands are valued explicitly for their rarity and support for conspicuous consumption, whereas functional brands plan large stock volumes and depend on market demand as a popularity cue and signal of their product desirability and value (Ge et al., 2009; Khan & DePaoli, 2023; Park et al., 2020). Scarcity also affects consumers to a greater degree when they have weak prior preferences (Parker & Lehmann, 2011). Finally, different types of scarcity exert distinct impacts on consumers, such that supply-induced scarcity effects are not the same as those of demand-based scarcity (Barton et al., 2022). Thus, managing overstock reduction remains a complex task that demands further research to understand fully.

We investigate consumer responses to overstock disposal methods that induce product scarcity, through the reduction of unsold stock, which we refer to as disposal-based scarcity. These effects might be mediated by consumers’ perceptions of exclusivity, popularity, and perceived wastefulness, with distinct implications for their brand perceptions and evaluations. With three studies, we examine different overstock conditions and destructive and non-destructive overstock reduction methods for both hypothetical and existing brands. Study 1 entails a set of scenario experiments to test the proposed main effects; with Study 2, we experimentally test how consumers respond when exposed to information about a real luxury brand’s (Burberry) disposal methods and the mediating effects of perceived exclusivity and perceived wastefulness, along with the moderating role of self–brand connection. Then we extend Study 2 by focusing on a real non-luxury brand (H&M) in Study 3, with several additional measures and conditions to test the mediating effect of perceived popularity and the moderating effect of perceived luxuriousness.

The resulting contributions are fourfold. First, we connect literature on scarcity (Barton et al., 2022; Cialdini, 2009; Lynn, 1991; Shi et al., 2020), unused utility and disposal behavior (Bolton & Alba, 2012; van Herpen & de Hooge, 2019), and branding (Eelen et al., 2017; McFerran et al., 2014) to propose a novel domain of disposal-based scarcity and offer new insights into how different overstock reduction methods affect brand evaluations. We establish that the varied methods produce distinctive, brand-related perceptual, evaluative, and behavioral effects. Second, this study responds to calls to investigate when product scarcity might result in unfavorable effects (Kristofferson et al., 2017; Shi et al., 2020). Disposing of overstock yields negative brand effects when it involves destructive, wasteful methods such as incineration but not if it relies on less destructive methods such as recycling or else on non-destructive and non-wasteful methods (e.g., donations, discounting). Third, we identify self–brand connection (Rosendo-Rios & Shukla, 2023) and brand luxuriousness (Sung et al., 2020) as moderators of how consumers respond to overstock and disposal methods. Fourth, this research extends research into the communication of scarcity signals (Gierl & Huettl, 2010; Griskevicius et al., 2009) by examining how messages about both the presence of overstock and related disposal methods affect consumer responses (Humphrey Jr. et al., 2017; White et al., 2020). The remainder of this article first presents the background and hypotheses. It next presents the details of the three studies. It concludes with a discussion of the findings and implications.

Background and hypotheses

Overstock management and consumer perceptions

Brands typically do not publicize their overstock management methods. Yet due to increased public interest in wastefulness and sustainability (Thaichon et al., 2022), such methods have attracted the interest of consumers and reports in popular media. A prominent example involves the sportswear brand adidas’s high-profile partnership with the U.S. entertainer Kanye West to create Yeezy-branded apparel and footwear. In 2022, following contentious statements made by West on social media, the Yeezy brand suffered significant damage, and adidas came under pressure to end the partnership, which it ultimately did (Lenthang, 2022). As was widely reported, adidas was left with approximately US$1.3 billion of redundant stock (Eddy, 2023). These assets had transformed into inefficient overstock, nearly overnight, and the company’s top management faced the difficult challenge of disposing of the products without necessarily engaging in discounting that could undermine its overall brand while also still seeking valuable collaborations with social media influencers (Eddy, 2023).

Neither could adidas just trash the items, as consumer concerns about waste have gained traction. Media reported trash bags full of slashed and destroyed shoes, t-shirts, and sweaters outside a Nike store in Manhattan (Dwyer, 2017). On platforms such as TikTok and YouTube, hundreds of videos shared by workers detail their mandates to destroy overstock by shredding, incinerating, and bleaching goods (Jimenez, 2020). An undercover investigation by British ITV News at an Amazon warehouse in Scotland, showing thousands of items being destroyed, prompted the Prime Minister to promise a review (Hassan, 2021). In response to such reports, consumers have initiated petitions and movements such as #RetailMadeMe, SustainUS, and the Sunrise Movement, seeking justice and sustainability, with a view to change policy and behaviors (Jimenez, 2020). In response, for example, the luxury fashion brand Coach announced it would refrain from destroying unsold goods (Cernansky, 2021). France enacted a law to prohibit the destruction of unsold products, requiring brands reuse, donate, or recycle them (Matthams, 2019). Similarly, Germany requires businesses to report their overstock disposal volumes and justify their decisions (Huestebeck & Bellot, 2022). Even as efforts continue to effect more widespread change in overstock reduction methods (Roberts et al., 2023), companies still face the thorny problem of dealing with overstock through methods that might include incineration, recycling, donation, or discounting, while also finding ways to enhance consumer perceptions and brand evaluations.

Disposal-based scarcity

In retail settings, consumers routinely experience product scarcity because marketers adopt approaches to manipulate stock levels to emphasize their offerings’ uniqueness, popularity, or limited availability. Quantity restrictions can be imposed by supply, demand, or time (Barton et al., 2022; Gierl et al., 2008; Yang & Zhang, 2014). If they evoke perceptions of product scarcity, they might generate business opportunities that retailers can exploit (Shi et al., 2020). Such psychological effects of scarcity reflect commodity theory, which holds that “any commodity will be valued to the extent that it is unavailable” (Brock, 1968, p. 246). The value of a commodity can be conveyed with symbols, informational stimuli, and messages and increases when situational variables induce scarcity, or perceptions thereof. As Lynn (1991) explains, a commodity offers utility, can be transferred, and can be possessed—a definition that encompasses most consumer goods.

Furthermore, scarcity might be based on demand, supply, time, or segments (Barton et al., 2022). Demand-based scarcity results because a product is popular and in demand; supply-based scarcity exists if suppliers limit their production to preserve resources and convey exclusivity (e.g., limited edition products) (Li et al., 2019; Steinhart et al., 2014). Time-based scarcity typically involves limiting product supply to a specific period (Gierl et al., 2008), and segment-based scarcity arises if supply is limited to specific consumer subgroups, such as loyalty program members. These two forms often are combined (e.g., “Offer expires at 11:59 pm on your birthday”; Hmurovic et al., 2023). As detailed in Table 1, we propose that disposal-based scarcity is another, separate type of scarcity, generated when a company acts to reduce overstock and limit the quantity of supply².

Table 1 Classification of scarcity strategies and examples from prior literature

In turn, we investigate four overstock reduction methods that combine to constitute two broad types: destructive reduction methods that either completely destroy the product, such as incineration, or partially destroy the product, such as when its component parts are recycled, versus non-destructive methods that reduce overstock through its redistribution, such as through parallel channels like donation or discounting through factory outlets. We compare the different methods by focusing on the distinction between destructive and non-destructive types, as shown in Fig. 1. We also look at how these methods compare with situations where there is overstock but no reduction method has been nominated versus where there is no overstock at all.

Fig. 1

Conceptual model of disposal-based scarcity

Overstock effects on exclusivity and popularity

Some products are more desirable when they have a limited availability (Cialdini, 2009). For luxury products, stock scarcity especially evokes perceptions that the items are more valuable, unique, and desirable (Das et al., 2018). In contrast, overstocks suggest product abundance and a lack of rarity or scarcity. Prior research highlights the effects of perceived exclusivity on distinct product designs (Simonson & Nowlis, 2000), word of mouth (Cheema & Kaikati, 2010), and luxury experiential consumption (Kim, 2018), and clarifies that consumer responses differ between luxury and functional brands (Aggarwal et al., 2011). For luxury brands in particular, constraining product availability through product destruction methods might increase perceptions of exclusivity, which should enhance brand evaluations. If instead a scarce product becomes more widely available, such as through corporate giving (Ellen et al., 2000) or when the brand relies on parallel channels and offers discounts, consumers may use this lack of exclusivity to update and reduce their brand evaluations. We again expect this effect to be stronger for luxury products.

Prior research also suggests a popularity effect: Products appear more desirable when more people express an interest in, own, or try them (Steinhart et al., 2014). For functional products, limited availability signals high demand and might enhance consumer perceptions of product desirability, especially if they are less familiar with the product and draw inferences from observations of other people’s purchases (Ge et al., 2009). In such settings, disposing of excess products might signal a lack of demand. Destruction of the product suggests the brand does not expect any remaining demand. Donations and selling through parallel channels similarly imply a reduced demand, at least from the initially targeted consumer groups. Thus, considering the perceived popularity of the product, we anticipate it to produce a negative effect of stock disposal on brand evaluations.

Finally, if a company plans its supply perfectly and avoids overstock, possibly even selling out before planned, commodity theory predicts a positive effect on brand evaluations, because this scenario signals both exclusivity and popularity to consumers (Cialdini, 2009; He & Oppewal, 2018; van Herpen et al., 2009).

Consumer perceptions of wastefulness

In general, people are averse to disposing of objects that retain some unused utility (Bolton & Alba, 2012; Haws et al., 2012; van Herpen & de Hooge, 2019); they even tend to delay purchases to avoid waste that will be created by the product’s disposal (Trudel et al., 2016). Consumers also avoid product destruction even when it might mean compromising their own interest (Arkes, 1996). Merely mentioning disposal among the product information undermines product evaluations by increasing wastefulness perceptions (Chang et al., 2021). Thus, consumer wastefulness perceptions can mediate the link between disposal methods and product evaluations.

Brands that use destructive methods, and thus waste unused utility, likely create perceptions of wastefulness and negative consumer responses. Non-destructive methods instead should stimulate more favorable responses, because they preserve the product’s value and remaining utility (Goenka & Van Osselaer, 2019). Lastly, brands that do not have overstock will be perceived as less wasteful than those who are known to have overstock.

Effects of disposal-based scarcity on brand evaluations

Considering our prior arguments, we posit that destructive overstock reduction methods might increase perceived exclusivity but also increase perceived wastefulness, whereas non-destructive methods instead might reduce perceived exclusivity and wastefulness. Both types of methods might decrease perceived popularity. Therefore, if a brand intentionally creates scarcity by destroying overstock, consumers might exhibit more unfavorable brand evaluations than if it relies on non-destructive methods, which can yield favorable consumer brand evaluations. If a brand has no overstock, increased exclusivity and popularity combined with reduced wastefulness might also yield favorable brand evaluations. Formally,

H1

Compared with when they receive no information about a brand’s overstock reduction method, consumers’ brand evaluations are (a) lower in response to destructive overstock reduction methods, (b) higher in response to non-destructive overstock reduction methods, and (c) higher if the brand has no overstock.

H2

The effects of overstock reduction methods and no overstock on brand evaluations are mediated by (a) perceived exclusivity, (b) perceived popularity, and (c) perceived wastefulness.

Moderating effect of self–brand connection

These effects also could depend on the degree to which a brand resonates with consumers’ self-identity, or their sense of self–brand connection (Escalas & Bettman, 2003). Consumers form strong relationships with brands that signify congruent values and personalities (Sirgy, 1982). A stronger self–brand connection tends to arise when the consumer’s self-image aligns closely with the brand’s (MacInnis & Folkes, 2017), leading them to exhibit favorable behaviors such as increased brand loyalty, word of mouth, and attachment (Eelen et al., 2017; Park et al., 2010). Such consumers use brands to establish and communicate their positive self-concept (Fournier, 1998; Sirgy, 1982) and view threats to the brand as threats to themselves (Ahluwalia et al., 2000; Lisjak et al., 2012). These committed consumers also are more willing to disregard negative information about their favored brand (Spiggle et al., 2012; Swaminathan et al., 2007) and forgive brand failure (Hess et al., 2003).

We contend that the effects of scarcity creation, through destructive or non-destructive methods, are contingent on a consumer’s self–brand connection. If the self–brand connection is stronger, we can expect better brand evaluations, whereas for consumers with a weak self–brand connection, considerations of the brand are less relevant to their selves (Gaustad et al., 2018; Song et al., 2017). Thus, they process brand information in a casual or superficial manner (Taber & Lodge, 2006; Tao, 2018), whereas consumers who associate strongly with the brand might engage in biased information processing and resist contrary information (Kappes et al., 2020). Building on this premise, we posit that consumers who sense a strong self–brand connection have developed a more established view of the brand and are less susceptible to the negative effects of exposure to destructive overstock reduction methods. The positive effects due to perceptions arising from non-destructive methods, such as donations, also might be weaker though, because their established view of the brand may reach a ceiling level, such that evaluations cannot improve any further. Overall, the effects of overstock versus no overstock should be weaker in the face of stronger self–brand connection, leading us to hypothesize:

H3

Self–brand connection moderates the effects of overstock reduction methods on brand evaluations, such that when it is stronger, the mediating effects are weaker for (a) exclusivity, (b) popularity, and (c) perceived wastefulness.

Luxury versus non-luxury brands

Consumer motivations and behaviors vary significantly in luxury versus non-luxury contexts (Ko et al., 2019; McFerran et al., 2014; Sipilä et al., 2020). For example, women who use luxury handbags express more concern toward others and are more willing to engage in donations than women with non-luxury handbags (Wang et al., 2020). Consumers’ responses to destructive and non-destructive overstock reduction methods might also depend on brand type. In particular, to maintain their differentiated market positioning, product quality, and prestige, luxury brands might feel justified in adopting stock management approaches that are designed to maintain their exclusivity (Kapferer & Bastien, 2017; Park et al., 2021). That is, their inherent uniqueness (Fromkin, 1970), rarity, and exclusivity motivates consumers to obtain luxury goods to elevate their social status or sense of power (Ko et al., 2019; Wang et al., 2020). Exclusivity can be achieved by restricting supply (Aggarwal et al., 2011), whereas demand would diminish if consumption were non-exclusive and available to all consumers (Fromkin, 1970). We thus expect the effects of disposal methods, through exclusivity, to be greater for luxury than for non-luxury products. In contrast, for non-luxury products (Gierl & Huettl, 2010), we anticipate a more relevant effect through popularity. Non-luxury products do not rely on unavailability to signal quality, so cues that indicate that a product is in demand should exert more meaningful impacts on brand evaluations. That is, popularity has a more pertinent role for functional (non-luxury) than for luxury (non-functional) brands (Steinhart et al., 2014).

Still, ethical questions are becoming increasingly challenging for luxury brands (Janssen et al., 2014). The affordances historically allowed for luxury brand management have been questioned by suspicious and conscious consumers who demand sustainable, responsible business practices (Dalton, 2018; Winston, 2016). From this perspective, luxury brands are at greater risk of being accused of corporate hypocrisy when they engage in wasteful, unsustainable practices (Wagner et al., 2009). Finally, the presence of overstock, relative to no overstock, should differentially affect perceptions of wastefulness across brand types, because it implies an inefficient management of resources. Greater scrutiny of luxury brands could produce stronger effects of perceived wastefulness for them than for non-luxury brands. Formally,

H4

Brand type (luxury vs. non-luxury) moderates the effects of overstock reduction methods on brand evaluations, such that for luxury brands, the effects on brand evaluations are (a) stronger through exclusivity, (b) weaker through popularity, and (c) stronger though perceived wastefulness than is the case for non-luxury brands.

Overview of empirical studies

We conducted three studies to test these hypotheses. The scenario experiments in Study 1 use hypothetical brands of distinct product categories (clothes and accessories; electronics). We focus on one destructive and one non-destructive method for creating disposal-based scarcity (destroy vs. donate vs. control) and examine its effect on brand evaluations (H1). Study 1b also provides an initial test of the mediating role of perceived wastefulness (H2c).

To broaden this examination, in Study 2, we add one more destructive and one more non-destructive method (recycling and discounting through factory outlets), both of which are practiced by luxury brands in the market (Dalton, 2018). In our manipulations, we refer specifically to discounting through factory outlets to highlight the alternative channel (Reynolds et al., 2002; Whyatt, 2008). In addition, a separate condition refers to the company not having overstock. We focus on a single, real luxury brand (Burberry) and ask participants select a real product before being exposed to information about the disposal methods. By measuring perceived exclusivity and perceived wastefulness, we test how these brand perceptions mediate the relationship between disposal-based overstock reduction and brand evaluations (H2a, H2c). We also measure self–brand connection and test for moderating effects (H3a, H3c).

Finally, in Study 3 we address a non-luxury brand (H&M) and add some supplementary measures and conditions, including perceived popularity (H2b) and a sold-out condition, as an alternative implementation of the condition without any overstock. We investigate the moderating effects of self–brand connection (H3a–H3c) and brand type, using measures of the brand’s perceived luxuriousness (H4a–H4c).

Study 1: Disposal-based scarcity effects for a hypothetical brand

Study 1a: Clothes and accessories

Participants

Two-hundred twenty-six U.S.-based, adult consumers recruited from Amazon Mechanical Turk (MTurk) participated (ages 18–69 years, M_age = 36.7 years, 50.4% women).

Experimental manipulation

In a three-condition (overstock reduction methods: destructive vs. non-destructive vs. control) between-subjects design, participants imagined reading about a “well-known brand A” in the clothes, accessories, and perfumes category. In the destructive condition, participants read that “A has recently incinerated unsold goods in an attempt to reduce its inventory”; in the control condition, they read that “A has recently announced that it has an abundant quantity of unsold goods in its inventory”; and the non-destructive condition stated, “A has recently donated unsold goods to charity to reduce its inventory.” Then all the conditions revealed, “These goods which included clothes, accessories, and perfumes, are worth over $30 million.” All other information was consistent across the three conditions. Web Appendix A contains the stimuli details; Web Appendix E contains a full list of the measures.

Measures

Brand evaluations were measured using three 7-point items (Skard & Thorbjørnsen, 2014), including a general semantic differential item (“I think Brand A is very negative/very positive”) and two Likert items that capture intentions to spread positive word of mouth and buy from the brand (“If I am going to tell a friend about brand A, I will say positive things”; “I have no objections against buying brand A”; 1 = strongly disagree, 7 = strongly agree; α = .93).

Manipulation and comprehension checks

Following the procedure used by Deval et al. (2013), we asked participants to pinpoint the main idea in the article. They also rated the realism and understandability of the stimuli (“The description about the article was detailed enough for me to imagine the situation”; “The article was easy to understand”; 1 = strongly disagree, 7 = strongly agree) (Deval et al., 2013; van Herpen & de Hooge, 2019). The manipulation worked as intended. Most participants (83.6%) correctly indicated what the brand did with unsold goods. In the subsequent analysis, we report the results for all participants; they remain the same if we exclude participants with incorrect responses. We find no significant differences across conditions in the stimuli’s realism or understandability (p > .05), and participants reported that the descriptions contained enough detail (M_realism = 5.44, SD = 1.28) and were easy to understand (M_{understanding} = 6.00, SD = 1.02).

Brand evaluations

Brand evaluations varied significantly across conditions (F(2, 223) = 62.08, p < .001). Destructive methods prompted significantly lower brand evaluations (M_destructive = 3.09, SD = 1.78) than the control condition (M_control = 4.74, SD = 1.24, p < .001). Non-destructive methods evoked significantly higher brand evaluations (M_{non-destructive} = 5.48, SD = .87) than the control condition (p < .01).

Study 1b: Replication and extension

With the same three between-subjects conditions and procedures as Study 1a, we also tested an electronics brand. As a first test of our mediation hypothesis (H2c), we gathered perceived wastefulness assessments with a single item: “How wasteful do you feel about the way brand A manages their unsold goods?” (1 = not at all wasteful, 7 = very wasteful), which appeared after the main dependent variable in the survey.³

Method

The sample consisted of 188 MTurk workers, whose demographic characteristics were similar to those for the sample in Study 1a. Participants in all conditions read “A is a well-known electronics brand. A produces TVs, phones, cameras, computers, etc.” In the destructive condition, they next read, “A recently destroyed a large number of unsold goods as an attempt to reduce its inventory”; the control condition indicated that “A has a large number of unsold goods in its inventory”; and the non-destructive condition noted that “A recently donated a large number of unsold goods in an attempt to reduce its inventory.” Web Appendix B contains the stimuli details.

Results

Brand evaluations were measured as in Study 1a (α = .91), with the same manipulation checks. 82.4% of respondents correctly indicated whether the brand destroyed or donated unsold goods or neither. They reported sufficient levels of realism (M_realism = 5.63, SD = 1.16) and understandability (M_{understanding} = 5.95, SD = 1.07). The means did not differ significantly between conditions (p > .05).

Brand evaluations varied significantly across conditions (F(2, 185) = 39.63, p < .001). Compared with the control group (M_control = 4.66, SD = 1.16), the destructive method resulted in significantly lower brand evaluations (M_destructive = 3.61, SD = 1.71, p < .001), and the non-destructive method resulted in significantly higher brand evaluations (M_{non-destructive} = 5.72, SD = 1.02, p < .001). Perceived wastefulness varied significantly across conditions too (F(2,185) = 80.36, p < .001). Compared with the control group (M_control = 4.39, SD = 1.42), the destructive method significantly increased perceived wastefulness (M_destructive = 5.82, SD = 1.39; p < .001), whereas the non-destructive method significantly lowered them (M_{non-destructive} = 2.40, SD = 1.67, p < .001).

We next tested for a mediating influence of perceived wastefulness, using PROCESS Model 4 with 10,000 bootstrap samples and effect coding (Hayes, 2018). The control condition served as the reference group. The indirect effect was negative and significant for the destructive (relative to the control) condition (b = -.61, SE = .13, 95% confidence interval [CI] = [-.88, -.38]) but positive and significant for the non-destructive condition (b = .68, SE = .15, 95% CI = [.42, 1.00]). Thus, perceived wastefulness mediated the effects of overstock reduction methods on brand evaluations, in support of H2c.

Discussion

Replications across two product categories and contexts support our predictions that using destructive methods to create scarcity reduces brand evaluations (H1a), but using non-destructive methods enhances brand evaluations (H1b). These results provide initial support for a mediating role of perceived wastefulness (H2c). Thus, in Study 2, we investigate the role of the proposed mediators (H2) and the moderating effects of self–brand connection (H3) further.

Study 2: Disposal-based scarcity effects for a luxury product

Method

Participants

We recruited 1,527 U.S.-based, adult consumers from Prolific who had experience with luxury brands. After excluding 188 participants, in accordance with our analysis plan,⁴ the final sample comprised 1,339 participants (ages 18–78 years, M_age = 33.4 years, 70.6% women).

Experimental manipulation

Participants were randomly assigned to six between-subject conditions (i.e., destroy, recycle, donate, discount, no overstock, or unresolved overstock). First, participants responded to some general questions about perfumes, the real brand Burberry, and three items measuring their self–brand connection (“Burberry brand reflects who I am,” “I can identify with Burberry brand,” “I feel a personal connection to Burberry brand”; 1 = not at all; 7 = extremely well/very much, α = .94) (Escalas & Bettman, 2003). Second, to increase their engagement, we offered a brief introduction to Burberry and indicated that they would have a chance of receiving one of two real Burberry perfumes, based on their selection of which one they would prefer. As Web Appendix C details, the two perfumes were similar in size and shape and identically priced (US$99), but they differed in their scents.

After having made their product selection, participants had to imagine that they wanted to know more about the Burberry brand and that an online search had led them to the Forbes website, which presented two news headlines. The left side of the page provided the manipulation across the six conditions (Web Appendix C): “Burberry is [incinerating, recycling, donating, discounting via factory outlet stores] $38 million worth of unsold clothing and accessories” or else, “Burberry routinely sells its entire stock of clothing and accessories as planned” (no overstock) or “Burberry has $38 million worth of unsold clothing and accessories” (unresolved overstock, control). In all experimental conditions, the right side of the page showed a headline indicating: “Burberry introduces a see now, buy now option for its new options.” Participants noted which article they wanted to read and, in an open answer, briefly explained their reasoning for their choice.

Measures

Having indicated their preferred product option and interest in the Forbes articles, participants completed a measure of future purchase intentions, using three 7-point items ( “The likelihood that I would want to buy products from Burberry in the future is”; “The likelihood that, if I do not have a winning number, I will nevertheless spend money at Burberry in the future is”; “The probability that I will consider buying products from Burberry in the future is”; all ranging from 1 = very low to 7 = very high; α = .93) (Aggarwal & Vaidyanathan, 2003).

Next, we measured perceived exclusivity using three 7-point Likert items (“There are only limited number of consumers who can buy Burberry products”; “Burberry products appear to be exclusive”; “The availability of Burberry products is very much restricted”; 1 = strongly disagree, 7 = strongly agree; α = .73), adapted from Gierl and Huettl (2010), Kristofferson et al. (2017) and Sharma and Roy (2016). For perceived wastefulness, we relied on five newly created, 7-point Likert items (“The way Burberry manages its stock appears rather wasteful”; “Burberry manages its stock responsibly” [reverse coded]; “Burberry's production process seems not very efficient”; “Burberry seems to display integrity in the way it deals with unsold stock” [reverse coded]; “Burberry manages waste in a responsible way” [reverse coded]; 1 = strongly disagree, 7 = strongly agree; α = .88). Finally, participants provided their brand evaluations with three 7-point items (“My overall evaluation of the Burberry brand is: bad/good, unfavorable/favorable, negative/positive”; α = .97; Wu & Lee, 2016). The full list of items is in Web Appendix E.⁵

Manipulation and comprehension checks and rewards procedures

After participants indicated their perceptual and attitudinal responses, they indicated which information they obtained from the target news headline, choosing among several distractor categories (e.g., for donation, “Burberry does not have unsold stock; Burberry has just launched its newest collection; Burberry is donating its unsold stock; Burberry has recently increased its price; I cannot remember”). For perceived overstock intention, we gathered a single item: “The news headline about Burberry on the Forbes website indicated that Burberry intentionally manufactures more stock than they actually want to sell” (1 = strongly disagree, 7 = strongly agree). Two items measured stimuli understandability and credibility (“The news headlines about Burberry on the Forbes website were easy to understand”; “The news headlines about Burberry on the Forbes website were credible”; 1 = strongly disagree, 7 = strongly agree) (Deval et al., 2013).

Finally, we collected standard demographic information, and participants were debriefed. Before the debriefing, they stated their agreement with a single item: “I believe that if I have a winning number, I will definitely receive my prize” (1 = strongly disagree, 7 = strongly agree). After the data collection was completed, a random draw selected two winners from among all participants, who received their rewards, as approved by the relevant university’s human research ethics advisory panel.

Results

Manipulation and comprehension checks

The manipulations worked as intended. Among the participants, 96.9% correctly identified the information in the target news headline, and respondents broadly agreed they would receive their product if they drew the winning number (M = 5.34, SD = 1.83, significantly above the scale midpoint, t(1338) = 26.82, p < .001). Therefore, we report the results for all participants. With analyses of variance (ANOVAs), we identified significant differences for perceived overstock intention (F(5, 1333) = 28.024, p < .001), perceived understandability (F(5, 1333) = 5.054, p < .001), and perceived credibility (F(5, 1333) = 6.431, p < .001), so we include these three measures as covariates in our further analyses where appropriate. Pairwise comparisons demonstrated that participants in all conditions (p < .001) perceived that the brand intentionally manufactured more stock than it actually planned to sell, compared with the no overstock condition (M = 1.88, SD = 1.43). This perceived overstock intention was strongest in the unresolved overstock (M = 3.53, SD = 1.80) and destroy (M = 3.51, SD = 1.93) conditions.

Brand evaluations and purchase intentions

An ANOVA revealed that brand evaluations were significantly affected by the method of disposal (F(5, 1333) = 84.05, p < .001), which we display in Fig. 2.⁶ The cell means and standard deviations provided no indication of any ceiling effects. As predicted by H1a, destroy resulted in a significantly lower mean (M_destroy = 3.55, SD = 1.57, p < .001); as predicted by H1b, donate and discount had significantly higher means (M_donate = 5.67, SD = 1.18, p < .001; M_discount = 5.14, SD = 1.25, p < .001) than the control condition (M_overstock = 4.67, SD = 1.31). Recycle also indicated a significantly higher value though (M_recycle = 5.49, SD = 1.33, p < .001), which is contrary to H1a. The no overstock condition resulted in significantly greater brand evaluations than the control (M_{no_overstock} 5.60, SD = 1.22, p < .001), in support of H1c. In pairwise comparisons (Web Appendix F), destroy resulted in a significantly lower brand evaluations than any other overstock reduction method. Donate and recycle resulted in the highest brand evaluations but did not differ significantly from the no overstock condition.

Fig. 2

Brand evaluations for different disposal-based methods of creating scarcity for a luxury brand (Study 2). (Error bars represent 95% confidence intervals of the means)

Purchase intentions, which we measured before any of the perceptual measures, varied in a similar way and significantly across conditions (F(5, 1333) = 14.56, p < .001). It was lowest in the destroy condition (M_destroy = 3.34, SD = 1.80, p <. 01) and highest in the donate condition (M_donate = 4.49, SD = 1.63, p < .001), with the control condition taking a value in between (M_overstock = 3.81, SD = 1.66).⁷ Discount and recycle exhibited higher means than the control, but these differences were not statistically significant (M_discount = 3.96, SD = 1.62, M_recycle = 4.39, SD = 1.73, p > .10). Detailed results of the planned contrasts and pairwise comparisons are in Web Appendix F.

Moderated mediation analysis

Using PROCESS Model 14 with effects coding and 10,000 bootstrap samples (Hayes, 2018), we assessed the effects of each method on perceptions of exclusivity and wastefulness, then tested the mediating effects on brand evaluations and the presence of a moderating effect of self–brand connection (Table 2, Panel a). For perceived exclusivity, the control condition did not differ from the recycle, donate, or no overstock conditions (p > .05). Instead, destroy was significantly higher (b = .31, SE = .08, p < .001) and discount was significantly lower (b = -.29, SE = .08, p < .01). Although perceived exclusivity had no significant impact on brand evaluations (b = .03, SE = .04, p > .05), the indirect effects through perceived exclusivity were significant for destroy (positive) and discount (negative), as long as self–brand connection was moderate to high (see Table 2, Panel b). The index of moderated mediation was non-significant for these effects (their 95% CIs did not exclude zero). Thus, perceived exclusivity did not appear to mediate the effects of disposal methods on brand evaluations (H2a not supported), and we did not find a significant moderation by self–brand connection (H3a not supported).

Table 2 Moderated mediation analysis in Study 2

In contrast, perceived wastefulness varied significantly across methods and had a significant negative impact on brand evaluations (b = -.80, SE = .04, p < .001). These perceptions were significantly greater for destroy (b = 1.82, SE = .07, p < .001) and significantly lower for recycle (b = -.66, SE = .07, p < .001), donate (b = -.90, SE = .07, p < .001), and no overstock (b = -.86, SE = .07, p < .001), compared with the control, conditions. Discount showed a smaller difference for perceived wastefulness, but it was still significantly lower than the control (b = -.17, SE = .07, p < .05). The relative indirect effects on brand evaluations were significant for all methods (no 95% CIs included zero), yet these effects became significantly smaller as self–brand connection increased, as Table 2, Panel b, indicates. Thus, perceived wastefulness mediated the effects of overstock disposal methods on brand evaluations (H2c supported), and its effect was moderated by self–brand connection, as predicted (H3c supported).

Discussion

The Study 2 results show that different methods of disposal have distinctive effects on perceived exclusivity and perceived wastefulness, as well as on brand evaluations of a luxury brand. These effects extend to future purchase intentions. Destroy is the only method that increases perceptions of exclusivity, but it results in unfavorable responses with regard to perceived wastefulness and subsequently reduces brand evaluations. Recycle and donate do not affect perceived exclusivity, yet they lower perceived wastefulness and improve brand evaluations. Discount reduces perceptions of exclusivity while also lowering perceived wastefulness.

Study 2 also includes a condition without overstock. We note that consumer perceptions of exclusivity do not differ between overstock and control (unresolved overstock) conditions. However, the no overstock scenario resulted in lower perceived wastefulness, which enhanced brand evaluations. These results support H1c. The effect was mediated by perceived wastefulness, not by exclusivity. That is, the mere presence of overstock does not necessarily lower perceived exclusivity. Finally, with regard to self–brand connection, our findings accord with our prediction that it moderates the effects of the different disposal methods on brand evaluations for perceived wastefulness: Its effects were weaker for consumers with a stronger self–brand connection than for those with a weaker connection. For perceived exclusivity, we find no evidence of moderation by self–brand connection though.

Study 3: Disposal-based scarcity effects for a non-luxury product

Do these results also hold for non-luxury brands? To answer this question, in Study 3 we focus on H&M as a well-known non-luxury brand. We include a measure of perceived luxuriousness to test for the effects of (perceived) brand type on the mediators. We also include perceived popularity, to support tests of all three mediators, and a condition in which the product is described as having sold out, which allows us to determine if the effects through popularity might be particularly strong if selling out sends a message that the product is in high demand (Ge et al., 2009). We thus test all three proposed mediators (perceived exclusivity, perceived popularity, and perceived wastefulness) and both proposed moderators (self–brand connection and perceived luxuriousness). Although the procedure is similar to that of Study 2, it did not include a real product choice, which helped simplify the survey instrument. Considering the Study 2 responses, including its open question answers and comments, we expected that the survey task can generate sufficiently high levels of participant engagement even without a real product choice.

Method

Participants

We recruited 1,668 U.S.-based, adult consumers from Prolific. Using the same criteria as in Study 2 resulted in in 361 participants being excluded,⁸ for a final sample of 1,307 participants (ages 18–84 years, M_age = 38.4 years, 46.9% women).

Experimental manipulation

Participants were randomly assigned to the between-subject conditions (i.e., destroy, recycle, donate, discount, no overstock, sold out, or unresolved overstock). They responded to some general questions about clothing, the real brand H&M, and the self–brand connection measure from Study 2 (α = .95). Following a brief introduction to the H&M brand, they were asked to evaluate H&M on the basis of their brand knowledge. Prompted to imagine that they would like to know more about the H&M brand, similar to Study 2, participants saw two headlines (see Web Appendix D). Depending on the condition, the left-hand side listed one of the seven news headlines for H&M, similar to those for Burberry in Study 2, with one added headline: “H&M products are routinely sold out” (sold-out condition). The right-hand side always indicated that “H&M introduces a see now, buy now option for its new options.” Participants noted which article they would be more interested in reading and provided their reasoning, as in Study 2.

Measures

The measures are the same as used in Study 2, except those referring to the rewards procedure. Thus, we gauged their level of interest in the Forbes articles, future purchase intentions (α = .98), perceived exclusivity (α = .83), perceived wastefulness (α = .90), and brand evaluations (α = .98). Then we measured perceived popularity, with four 7-point items (“H&M products are popular”; “I think many people want to buy H&M products”; “H&M products are sold well”; “H&M products are not in demand” [reverse coded], 1 = strongly disagree, 7 = strongly agree; α = .91), based on van Herpen et al. (2009). Next, the one-item measure of perceived luxuriousness, “To what extent do you consider H&M a luxury brand?” (1 = not luxury at all, 7 = very luxury), came from Sipilä et al. (2020). Although not part of the conceptual model, we measured perceived quality too, using three items: “I think H&M products are of high quality,” “I think H&M products are desirable,” and “I think H&M products are attractive” (1 = strongly disagree, 7 = strongly agree; α = .89), based on van Herpen et al. (2009). Web Appendix E contains the full list of items.

After indicating their perceptual and attitudinal responses, participants completed the manipulation check, perceived overstock intention, perceived understandability, and perceived credibility measures, as in Study 2. Finally, we asked standard demographics questions and debriefed the participants.

Results

Manipulation and comprehension checks

The manipulations worked as intended. Most participants (96.6%) correctly identified the information in the target news headline. In the subsequent analyses, we report the results for all participants. As in Study 2, we find significant differences for perceived overstock intention⁹ (F(6, 1300) = 22.44, p < .001), perceived understandability (F(6, 1300) = 2.73, p < .05), and perceived credibility (F(6, 1300) = 4.38, p < .001), so we included these three measures again as covariates where appropriate.¹⁰

Brand evaluations and purchase intentions

The ANOVAs showed that brand evaluations were significantly affected by the method of disposal (F(6, 1300) = 40.12, p < .001), in a pattern similar to that observed in Study 2 but with some notable differences (Fig. 3, also Web Appendix G). Evaluations were lowest in the destroy condition (M_destroy = 2.97, SD = 1.64) and highest in the no overstock (M_{no_overstock} = 5.18, SD = 1.39), donate (M_donate = 5.05, SD = 1.56), and discount (M_discount = 4.75, SD = 1.50) conditions, which all differed significantly from the control (M_overstock = 4.42, SD = 1.70, p < .05).¹¹ Recycle also differed significantly from the control condition but in a direction opposite our prediction (M_recycle = 4.79, SD = 1.59, p < .05) Donate was not significantly different from the no overstock condition (M_donate = 5.05, SD = 1.56, p > .05). The new sold-out condition was not significantly different from the overstock control condition (M_soldout = 4.58, SD = 1.67, p > .05), so we obtained mixed support for H1a–H1c.

Fig. 3

Brand evaluations for different disposal-based methods of creating scarcity for a non-luxury brand (Study 3). (Error bars represent 95% confidence intervals of the means)

Purchase intentions varied significantly across the conditions too (F(6, 1300) = 16.06, p < .001). It was lowest in the destroy condition (M_destroy = 3.01, SD = 1.72), which significantly differed from the control condition (M_overstock = 4.14, SD = 1.90, p < .001). Donate offered the highest mean, significantly different from the control (M_donate = 4.60, SD = 1.82, p < .05). The no overstock condition resulted in significantly higher future purchase intentions than the control (M_{no_overstock} = 4.58, SD = 1.85, p < .05). No other conditions revealed significant differences relative to the control condition (M_overstock = 4.14, SD = 1.90) (see Web Appendix G).

Moderated mediation analysis

Using Hayes’s (2018) PROCESS Model 16, with effects coding and 10,000 bootstrap samples, we assessed the effects of each method on perceptions of exclusivity, popularity, and wastefulness. We also tested the mediating effects on brand evaluations and whether self–brand connection and perceived luxuriousness moderated these effects (Table 3, Panel a). Contrary to our expectations, the effect of destroy on perceived exclusivity was not significant (p > .10). Recycle had a significant negative effect (b = -.29, SE = .10, p < .01), as expected; donate (b = -.23, SE = .10, p < .05) and discount (b = -.28, SE = .09, p < .01) displayed significantly lower levels of perceived exclusivity, also as expected. Then no overstock (b = .25, SE = .10, p < .05) and sold out (b = .58, SE = .10, p < .001) prompted enhanced levels of perceived exclusivity, as we predicted. Perceived exclusivity had a positive impact on brand evaluations (b = .15, SE = .05, p < .01). The model that includes the mediators, direct effects, and also the moderator effects, reveals that brand-self connection had no significant ‘main’ effect (p > .10) while perceived luxuriousness had a strong effect on brand evaluations (b = 0.28, SE = 0.10, p < .01).

Table 3 Moderated mediation analysis, Study 3

Among the indirect effects, perceived exclusivity exerted significant negative effects for recycle, donate, and discount but positive effects for no overstock and sold out (Table 3, Panel b). The signs of these effects match our expectations, except for recycle, so H2a is partly supported. The moderation effects reveal that the indirect effects only exist if perceived luxuriousness is low (index of moderated mediation is significant for each method; see Table 3, Panel b), in contrast with our prediction in H4a. Self–brand connection has no significant moderating effect (95% CIs include zero), thus H3a is not supported. That is, perceived exclusivity mediates the effects of donate, discount, no overstock, and sold out as expected, but their moderation effects conflict with our predictions, and we cannot confirm the expected effects of destroy and recycle.

For perceived popularity, as expected, destroy (b = -.50, SE = .09, p < .001) and discount (b = -.21, SE = .08, p < .05) resulted in lower perceptions; no overstock (b = .76, SE = .09, p < .001) and sold out (b = .56, SE = .09, p < .001) resulted in higher perceptions than observed for the control group. Recycle and donate did not significantly affect perceived popularity (p > .05). Perceived popularity had a positive influence on brand evaluations (b = .34, SE = .05, p < .001). The indirect effects through perceived popularity were significant and negative for destroy and discount; significant and positive for no overstock and sold out; and not significant for recycle or donate (Table 3, Panel c). The index of moderated mediation was not significant for self–brand connection or perceived luxuriousness (95% CIs did not exclude zero). Thus, perceived popularity mediated the effects of destroy, discount, no overstock, and sold out on brand evaluations, but not those of recycle and donate (H2b partially supported; H3b and H4b not supported).

For perceived wastefulness, all methods had significant effects, except sold out (p > .10). Destroy (b = 2.01, SE = .09, p < .001) resulted in greater perceived wastefulness; recycle (b = -.61, SE = .08, p < .001), donate (b = -.87, SE = .08, p < .001), discount (b = -.29, SE = .08, p < .01), and no overstock (b = -.98, SE = .09, p < .001) resulted in lower such perceptions. Wastefulness perceptions in turn lowered brand evaluations (b = -.61, SE = .05, p < .001). Correspondingly, we observed indirect effects through perceived wastefulness for all disposal methods (95% CIs did not include zero) except sold out, with negative effects for destroy and positive effects for recycle, donate, discount, and no overstock (H2c partially supported). As predicted, these effects became smaller as self–brand connection increased. The index of moderated mediation was significant for all conditions (95% CIs did not include zero; see Table 3, Panel d), except for sold out. We thus conclude that self–brand connection is a moderator, as predicted in H3c, but there was no moderation of perceived luxuriousness (95% CIs did not exclude zero), in contrast with H4c. Thus, perceived wastefulness mediated the effects of overstock reduction methods on brand evaluations, in effects moderated by self–brand connection but not by perceived luxuriousness.

Discussion

The main results from Study 3 align with those from Study 2: The method of disposal affects how consumers perceive a non-luxury brand (H&M) in terms of exclusivity, popularity, and wastefulness, as well as how they evaluate the brand. But some differences are instructive. The destroy condition increased perceived wastefulness, but its exclusivity-enhancing effect, as observed for the luxury brand in Study 2, did not arise for the non-luxury brand in Study 3. As it also lowered perceptions of popularity, it diminished the overall brand evaluations. Recycle resulted in a diminished, instead of increased, perception of exclusivity, thereby lowering brand evaluations, but this effect arose only when the brand was perceived as less luxurious. Nevertheless, it enhanced overall brand evaluations, due to lowered perceptions of wastefulness. Donate similarly decreased perceived wastefulness and displayed strong effects on brand evaluations (as in Study 2), but it had a negative effect through exclusivity when it was perceived as less luxurious (in Study 3). Discount negatively affected both exclusivity and popularity perceptions but had a positive effect through (reduced) wastefulness, resulting in improved brand evaluations overall, as in Study 2. The no overstock condition increased perceived exclusivity but only when the brand was perceived as less luxurious. It increased the brand’s perceived popularity and lowered wastefulness perceptions; as such, it evoked the highest brand evaluations. The sold out condition (i.e., extra condition in Study 3) led to favorable perceptions of exclusivity and perceived popularity but did not significantly affect perceived wastefulness and, as a result, did not lead to distinctive brand evaluations.

The results of Study 3 thus indicate that five of the six overstock management methods significantly influence brand evaluations. As also revealed in Study 2, the effect of recycling conflicts with our expectations (H1 partly supported). These effects of the overstock management methods also are mediated by perceived exclusivity, popularity, and wastefulness (supporting H2a–H2c). Self–brand connection moderates the effects on brand evaluations through perceived wastefulness but not through exclusivity or popularity (H3a and H3b not supported; H3c supported). Perceived luxuriousness moderates the effects of overstock disposal methods on brand evaluations through perceived exclusivity but in a direction opposite what we predicted, and it does not moderate the effects through popularity or wastefulness (H4a–H4c not supported).

General discussion

The starting point for this research was a real-world problem for companies: how to manage overstocks (Song et al., 2021). Companies might not reveal their overstock disposal methods regularly, but the information clearly can be leaked through popular media, with a risk of negative brand publicity (Web Appendix H). Brands also might actively communicate their overstock disposal management methods, in attempts to improve consumer perceptions of the brand—especially in relation to scarcity perceptions. Existing literature has not yet addressed the impacts of overstock management or disposal-based scarcity creation on consumer brand evaluations or the related role of scarcity-linked variables, including perceived exclusivity, popularity, wastefulness, and luxuriousness or self–brand connection. By addressing this gap, we seek to advance existing literature and provide practitioners with evidence-based insights that reflect an integrated theoretical foundation, based on prior research on scarcity, branding, wastefulness, and disposal behavior. We thus reveal when overstock reduction methods that induce disposal-based scarcity exert positive versus negative effects on brand evaluations.

Our three experimental studies detail the effects of four overstock reduction methods on consumer brand evaluations, highlighting differences between destructive versus non-destructive methods, as well as the influences of the mere presence of overstock versus no overstock or an unresolved overstock. Table 4 summarizes the results of the hypothesis tests. In addition to hypothetical experiments (Study 1), we also consider how consumers respond to a real luxury brand (Burberry, Study 2) or real non-luxury brand (H&M, Study 3) when they receive varying information about the brand’s destructive or non-destructive disposal of overstock, lack of overstock, or unresolved overstock. As we hypothesized, the type of disposal significantly affects brand evaluations. We obtain strong evidence that full destruction reduces brand evaluations, but, somewhat surprisingly, partial destruction (recycling) has unexpected positive effects. Of the non-destructive methods, donation indicates a consistent positive effect, as does not having any overstock; these two achieve the highest brand evaluations, closely followed by recycling. Discounting only increases brand evaluations for non-luxury brands. No overstock results in higher brand evaluations than if overstock is present. From a brand evaluation perspective, the safest option is however to avoid having any significant overstock at all.

Table 4 Hypothesis test results

With regard to mediating effects, for the luxury product in Study 2, destroy (i.e., a fully destructive method) demonstrates a positive effect through perceived exclusivity on brand evaluations, while discounting (i.e., a non-destructive method) exerts a negative effect on brand evaluations through perceived exclusivity, as long as self–brand connection is moderate to high. For the non-luxury product in Study 3, perceived exclusivity does not mediate the effect of destroy the product. However, if the brand is perceived as less luxurious, perceived exclusivity negatively mediates the effects of recycle, donate, and discount methods and positively mediates the effects of not having overstock and of being sold out. These mediating effects of perceived exclusivity do not depend on the levels of self–brand connection. As in Study 3, perceived popularity negatively mediates the effects of destroy and discount and positively mediates the effects of no overstock. In both studies 2 and 3, perceived wastefulness negatively mediates the effects of destroy and positively mediates the effects of recycle, donate and discount, as well as of the no overstock condition.

Theoretical contributions and managerial implications

We summarize the theoretical and managerial implications of this research in Table 5.

Table 5 Summary of research findings

Roles of exclusivity, popularity, and wastefulness perceptions

Our work provides evidence of underlying processes that drive the effects of disposal-based scarcity methods. Perceived exclusivity, popularity, and wastefulness all mediate the relationships between disposal-based scarcity methods and brand evaluations. In this unchartered area, we establish that overstock reduction using the destroy method enhances perceptions of exclusivity, but it diminishes perceived popularity, increases perceived wastefulness, and reduces brand evaluations. Meanwhile, recycling and donating improve brand evaluations by reducing perceived wastefulness, even though they both negatively affect perceived exclusivity and popularity. Comparatively, discounting reduces perceived exclusivity and perceived popularity, but it also decreases perceived wastefulness, thereby enhancing brand evaluations. Our findings reiterate the need for managers to consider the potential negative exclusivity effects of discounting (Dalton, 2018). Not having any overstock helps build perceptions of exclusivity, consistent with prior research (Das et al., 2018), though signaling that the brand has no overstock, such as by communicating that it has sold out of stock, does not necessarily translate into positive brand evaluations (Khan & DePaoli, 2023; Kumar et al., 2021). These insights reinforce the challenge of stocking: It is a problem to sell out, but it also is not ideal to have overstock (Kim and Jeong 2019).

Not having overstock also positively affects perceived popularity, while the destroy and discount methods negatively affect it. This is a relevant finding because popularity is an important cue for inferring product quality. Although perceived quality was not part of our conceptual model, consistent with the literature (Jeong & Kwon, 2012; Parker & Lehmann, 2011), perceived popularity and perceived quality were positively correlated. This suggests that while using the destroy and discount methods can result in reduced perceptions of product quality, not having overstock can enhance perceived quality.

Our findings regarding wastefulness specifically support the global push to increase the rate of recycling; in the textile industry for example, 75% of unsold textiles are sent to landfill or destroyed, and only 25% are recycled (Juanga-Labayen et al., 2022). In response, Sweden’s Renewcell has opened the world's first commercial-scale, textile-to-textile chemical recycling pulp mill, using chemical recycling methods to increase quality and scale of production and keep valuable fibers in use for as long as possible. Popular but criticized brands such as H&M and Zara have strong motivations to partner with such providers, to improve their recycling and sustainability practices (Santi, 2023). In the same vein, Amazon has recently donated more than 15 million products to charities across the UK (Amazon, 2022). Our findings echo these practices by showing that donation should be considered as an overstock disposal option; while donation does not affect perceptions of exclusivity and popularity, it helps to reduce perceptions of wastefulness and it results in the highest evaluations and future purchase intentions for both luxury brands and non-luxury brands, compared to other overstock reduction methods.

When choosing an overstock reduction strategy on the basis of consumer perceptions of exclusivity, popularity, and wastefulness, marketers again need to note the trade-offs involved. If they place more emphasis on being perceived as less wasteful or, more generally, as sustainable, they might communicate about their uses of recycle, donate, and discount disposal methods. But as our findings show, being known for having no overstock results in the greatest perceived exclusivity and lowest perceived wastefulness.

Considering the role of self–brand connection and brand type (luxuriousness)

For research on branding, we identify a moderating effect of self–brand connection (Sirgy, 1982) on the relationship between disposal-based scarcity and consumer responses. More connected consumers are less responsive to scarcity-creation tactics with regard to perceived wastefulness and thus brand evaluations. Managerially, we show that for disposal-based scarcity methods to influence consumer perceptions and brand evaluations effectively, the focus should be on consumers who express weaker self–brand connection. This insight suggests novel opportunities to use scarcity-based brand communications to influence perceptions of the brand as sustainability-oriented and thus to appeal to new customers.

We propose but find no evidence that the luxuriousness of a brand moderates the relationship between disposal methods and brand evaluations. Thus, we find little reason for luxury brands to use different disposal methods than those adopted by non-luxury brands, despite prior claims that they play by a different “rulebook” (Kapferer & Bastien, 2017). The only exception is that when a luxury brand wants to build a perception of exclusivity, it still might use destroy methods, accept the negative immediate impact on overall brand evaluations, and pursue its long-term goal to build a particular image or create publicity. The longer term effects of this overstock disposal method should be addressed further, for both luxury and non-luxury brands.

Limitations and directions for research

Disposal-based scarcity is an important consideration, due to its effects on brand evaluations through consumer perceptions of wastefulness, exclusivity and popularity. We thus hope that further research continues to address these questions.¹²

Communicating disposal-based scarcity methods

To extend our findings, continued research might investigate the weight that consumers assign to each overstock disposal method when undertaking actual purchase decision-making. Such insights would complement knowledge pertaining to scarcity in different contexts, such as stockouts that prompt switching behaviors and reduced brand loyalty (Khan & DePaoli, 2023). The messaging used in support of a disclosure strategy might have negative sales effects though, compared with discounting stock (Park et al., 2020). Furthermore, the specific language used to disclose scarcity information will be interpreted differently by various consumers, such that it might elicit diverse responses among them (Kumar et al., 2021, Peterson et al., 2020).

The concepts of greater or lesser wastefulness and greater or lesser utility destruction also warrant further investigation. Our results show that incineration is perceived as wasteful and yields negative effects on brand evaluation, but recycling, discounting, and donation are viewed more positively. Disposal methods can thus be classified not only as more or less destructive but also as more or less wasteful, based on the extent to which they represent unused utility. It could be investigated if the unused utility of destructive methods can be reframed as used utility, for example, when destruction becomes associated with a positive cause, for example, heating produced from incineration. Their retaining of unused utility can similarly explain the positive effects of non-destructive methods and this reasoning would thus predict that non-destructive methods that are perceived as wasteful can result in negative brand effects. An example is when overstock is donated to an organization that next is found to be fraudulent, which would make the donation appear wasteful. The findings related to recycling are also interesting; despite involving destruction of the original product, it results in a relative increase in brand evaluations. Perhaps “recycling” evokes distinct connotations among consumers, such that some imagine upcycling, where fibers are used to create new products, but others anticipate that the products are mechanically destroyed to produce different products of lesser value, such as converting garments into cleaning rags or mattress filling. Another connotation might involve re-use by others, in which case recycling does not waste the utility inherent in the raw materials (Sun & Trudel, 2017). Consistent with this argument, the notions of end-of-life versus extension-of-life approaches to overstock handling offer additional avenues for exploration.

This study also could be extended with deeper explorations of various scarcity creation methods. Additional layers of complexity could be presented in pitched scenarios that depict different levels of product destruction and measure effects, or even dynamic effects, across 10%, 20%, or 30% destruction, for example. Investigating such issues would be theoretically and managerially interesting because consumers might respond differently at various thresholds within the same broader context. Similar to the work of Das et al. (2021b), such studies could indicate consumer response patterns that follow U-shaped or inverted U-shaped curves, such that perceptions change direction after a certain point of tolerance.

Causal attributions relating to why a brand disposes of its overstock may also affect consumer perceptions and brand evaluations (Eslami et al., 2020; Weiner, 2000). Consumer evaluations of corporate social responsibility actions depend on the motives ascribed to companies, for example when making donations (Ellen et al., 2006). How such attributions moderate the effects of disposal-based scarcity deserves further study.

Finally, we measure only immediate impacts on perceptions and evaluations of short-term exposures to information about how brands dispose of their overstock. These incidental exposures have impacts; continued research should focus on their longer-term impacts, whether due to continued media coverage or systematic brand communications.

Beyond commodity theory?

Consumers appear to assign more weight to wastefulness rather than exclusivity or popularity. The timing of our study may offer a partial explanation of these findings. Luxury purchases traditionally refer to hedonic consumption and offer social stratification means (Kapferer & Bastien, 2017). Our study findings may intimate that consumers are rethinking their spending priorities (Das et al., 2021a), such that they are trading down, choosing less conspicuous purchases, buying less overall, or focusing on environmental and social goals rather than on creating social distance with luxury brands. These changes can however still be deemed consistent with commodity theory. Consumer concerns about wastefulness in fact reflect concerns about scarcity of shared natural resources. In the meantime, non-destructive methods of disposal such as donation and discounting are a means for particular consumer segments to access products (Blocker et al., 2023) deserve more study too. Further research also is needed to determine how disposal-based scarcity effects differ between hedonic and utilitarian goods and if the need for uniqueness and other consumer traits moderate consumers’ responses.

Our study also raises questions about how perceived wastefulness relates to sustainability performance and the wider construct of social responsibility. Companies need to adhere to dominant norms in society, which increasingly revolve around sustainability, in addition to other social causes. When a brand is perceived as wasteful, it conflicts with this social norm and might jeopardize its social license. How does a company’s sustainability-based performance compare with its efforts in support of other causes, such as social justice, in terms of influencing consumers’ brand evaluations? Further research might establish the unique role of different social responsibility components in disposal-based scarcity.