Many of us remember all too well hunting for toilet paper, cleaning products and even cans of soup during the early days of the global pandemic. Fortunately, the initial hysteria has subsided. However, as we brace for subsequent waves of the pandemic, some wonder if we should also prepare for additional rounds of panic shopping.
Matthew Osborne, Associate Professor of Marketing
“It's hard to predict what will happen when a second wave occurs,” says Matthew Osborne, who is an associate professor in the University of Toronto Mississauga’s Marketing Department, with a cross-appointment to the Rotman School of Management.
“Whether we see a second wave of panic buying or not will depend on how well stores prepare and manage consumer expectations,” he says.
Osborne’s latest paper, which was published in Marketing Science, sheds light on consumer spending habits when it comes to stockpiling. Though this research was completed before the pandemic arose, it raises important points on how consumers make decisions, and these insights might guide companies and retailers on how to price, sell and manage their stock effectively.
In this current study, Osborne and his co-investigator developed a stockpiling model based on data concerning household spending on laundry detergent. The model also considered household consumption rates and the amount of extra detergent consumers stored for future use.
“Whether we see a second wave of panic buying or not will depend on how well stores prepare and manage consumer expectations.”
—Matthew Osborne, Associate Professor of Marketing
According to their model, consumers made purchasing decisions looking approximately eight weeks in advance. They considered future product prices and in-store availability and the likelihood of running out of the product in that time frame.
These findings could explain the rampant stockpiling that occurred when the global pandemic was first declared.
“The term ‘panic buying’ implies that consumers are acting irrationally, but we know that people like to plan for the future,” says Osborne. “If you’re thinking about the weeks ahead and see diminishing stocks of a certain product, it’s not irrational to stockpile or buy extra.”
As Toronto and other regions of the world prepare for a second wave of the pandemic, retailers, governments and consumers can do their part in preventing a second wave of panic buying by looking ahead.
“Stores can assure customers by restocking their shelves quickly and imposing purchasing limits on certain products. Many retailers have established loyalty programs, so they can easily track and enforce restrictions with customers,” he says. “At the same time, governments can watch out for and crack down on price-gouging practices.”
Otherwise, consumers bear some responsibility in preventing panic.
“Hopefully, most of us will remember that we have been through this once before,” says Osborne. “If we consumers are truly forward-looking, then we should remind ourselves that after the chaos, shops restocked and resumed their normal pace within a few weeks.”
Written by Rebecca Cheung | More Rotman Insights »