Panic Buying: The Impact of External Crises on Consumer Behavior and Retail Revenue

It was the Toilet Paper Panic of 2020 where calm neighbors turned into competitive shoppers at supermarkets across America due to COVID-19, creating a frenzy more intense and worrisome than the Tickle Me Elmo craze of the 1990s. This surge in panic buying had significant ramifications for economies and societies. Despite its impact, panic buying remains understudied, especially regarding its commercial effects and long-term trends. 

Panic buying occurs suddenly in response to crises like pandemics, driven by fear of shortages and disrupting the balance between supply and demand. It is more about consumer anxiety than actual supply issues, stemming from fears of supply disruptions, media coverage, and social influences like peer pressure and social norms.

A 2024 study by Lim, Kalantari, and Perera used data from Australian supermarkets and grocery stores coupled with COVID-19 statistics, finding a significant positive relationship between COVID-19 cases and increased consumer spending. Specifically, each new COVID-19 case increased supermarket and grocery store sales by approximately AU $0.02 million. This highlighted that crises like COVID-19 trigger panic buying, leading to commercial benefits.

Managerial Implications

For retailers and policymakers, the study offered several actionable insights:

For Retailers:

• Improve Supply Chain Management: Enhance forecasting techniques and inventory strategies to better predict demand spikes.
• Strengthen Supplier Relationships: Build stronger relationships with suppliers for quicker replenishment of high-demand items.
• Communicate Effectively: Keep consumers informed about product availability and restocking times.
• Implement Purchase Limits: Introduce limits on essential items during peak demand to ensure wider access.

For Policymakers:

• Support Supply Chain Diversification: Encourage supply chain diversification and strategic stockpiles of essential goods.
• Facilitate Stakeholder Collaboration: Foster collaboration among supply chain stakeholders to ensure a coordinated response.
• Prevent Price Gouging: Implement temporary regulations to prevent price gouging during crises.

How Panic Buying Research Can Shape Retail Marketing Strategies

Analyzing the research by Lim, Kalantari, and Perera provides key insights for refining marketing strategies. Understanding the drivers and economic impacts of panic buying enables retailers to develop effective and ethical approaches during crises.

• Transparency and Communication: Provide real-time stock updates and transparent messaging about supply chain realities to build consumer trust and reduce anxiety.
• Foster a Sense of Security: Promote preparation over panic. Highlight safety protocols to build confidence in the shopping environment.
• Ethical Pricing Strategies: Maintain fair pricing to avoid backlash and build long-term trust. Offer special discounts for vulnerable groups to demonstrate social responsibility.
• Community Engagement: Support local initiatives like food bank donations and healthcare support to enhance brand reputation and foster loyalty. Promote these activities in marketing campaigns.
• Implement Purchase Limits Strategically: Introduce purchase limits on essential items to ensure fair access. Communicate these limits clearly and adjust loyalty programs to reward responsible purchasing behavior.

By integrating these strategies, retailers can drive sales while promoting responsible consumer behavior and social equity, creating a successful and ethical marketing approach in the new normal.