Panic buying toilet roll – lesson identified or learned?
This week I look at panic buying and what lessons we can identify from the ongoing COVID-19 outbreak to help prevent this in the future.
When I talk to Jacqui Semple, Head of the EPS and Resilience Lead at Angus Council, about incidents and the lessons learned from them, she always corrects me by saying they are ‘lessons identified’. She says that more often than not, the lesson identified in one incident is forgotten by the next one. Often in reports on major incidents, you can see the same lessons occurring, again and again, and they are forgotten between incidents. During the coronavirus outbreak, the lack of toilet rolls on the shelves of supermarkets is a classic case of this point. We know that if the public thinks something essential is in short supply then they will go out and panic buy it. Officials saying there is not a supply problem just seems to exacerbate the problem, and the more people that see the queues and empty shelves the more likely they are to go out and buy whatever they can find, making the problem worse. In today’s bulletin, I am going to look at the reasons why the public panic buys, what I think the lessons identified from this incident are and how organisations could prevent this in future.
We all know that supply chains are very fine-tuned and there is very little access capacity within them. In the supermarket business, this is especially true. This is a very competitive industry, with low margins and they have invested huge amounts in technology to understand their customers' buying patterns and make sure the right goods are in the right place at the right time. Having excess inventory costs money, uses up warehouse space and transport capacity, which could be used for better selling items and perishable goods with short sell-by-dates, whereby the supermarket takes a loss on any of these items which are thrown away. They also understand the pattern of life so they know people stock up for Christmas and so they make sure that there is stock in place to cope with the increased demand. What they are not prepared for is a sudden and unprecedented increase in demand for particular items and panic buying.
When there is panic buying, it is very difficult for supermarkets to cope with the increased demand, even if there is plenty of the item manufactured. Toilet roll is usually manufactured within the country, so there is no supply chain delay in shipping the item, it is just a matter of pushing it along the supply chain and getting it to the empty shelves. I am sure that supermarkets are getting in additional supply and manufacturers are ramping up production. The issue will be, and I am sure that supermarkets are very aware of is, that all those who have panic bought these supplies will have lots of stock and will not need to buy any for a while. As it is not perishable, supermarkets will want to avoid getting large stock into the shops just in time for people not needing to buy it.
This bulletin was inspired by an article I read on Continuity Central by Dr. Ali Fenwick, an expert in human behaviour at Nyenrode Business University, and he gave four reasons why people bulk buy during incidents:
1. Survival mode
During incidents or a threatening situation, the more primitive part of our brain takes over, which prevents or distorts normal rational behaviour. We buy to survive and we don’t trust the government’s reassurances that there is enough for everyone and so we panic buy to ensure that ourselves and our family have enough.
2. The scarcity effect
When there is less of something, people perceive it as being more valuable and desirable, so they want it more and are prepared to pay a higher price, even if it is something they don’t actually need it. I was in my local butcher last week talking about panic buying. He said a husband and wife came in and the wife said to the husband ‘what about buying the Bombay chicken dish’. He said ‘I don’t like curried chicken’ and she said, ‘we will take three’. The butcher said it will sit in the fridge for a few days and then go in the bin.
3. Herd behaviour
You see someone bulk buying and so you think if they are doing it you should do the same. Especially when you hear on the news that there is lots of panic buying going on. We as a family try and be a little more enlightened as we are in the disaster business (helping, not causing) but we were guilty of saying ‘if you see any toilet roll just buy some’, even though we knew we had enough.
4. Sense of control
Incidents cause anxiety especially this one as its effect is worldwide and so buying essentials gives us a sense of control and a feeling at least we are in control of our own destiny or that we have the food and toilet roll to survive this.
When researching for this bulletin, the other academic quoted was Professor Nikita Garg from the University of South Wales, who said that panic buying was also motivated by the FOMO syndrome - Fear Of Missing Out. He said, ‘we think if this person is buying it, if my neighbour is buying it, there's got to be a reason and I need to get it too’. I am sure that the viral clip of two women fighting over toilet roll in Australia helped push the issue worldwide, as we have seen panic buying in many different counties. I have also read that as loo roll is a bulky item, empty shelves are a lot more visible than much smaller, less bulky items.
In the UK fuel crisis of 2012, many of the issues were caused by panic buying. People saw long queues at petrol stations and joined them ‘just to top up’, even if they would normally wait another few days before filing up. In the same way, just before rationing was introduced in 1939 there was panic buying and the shops were similarly stripped of essentials. I read an article about a man who found a box of chocolate in his loft which his parents bought before rationing started and was left forgotten throughout the war and long after it. If we are in the business of identifying lessons then we should know that once an incident occurs there will be panic buying and it feeds upon itself, panic buying causes more panic buying until there is nothing left to buy. Shops and other retailers should, as part of their business continuity plan, impose rationing on panic buying items as soon as they see it happening. If everyone knew that ‘essential’ items were not in short supply, they many not panic buy. In natural disasters there may be a supply problem in the short term, as goods may not be resupplied immediately; rationing would help the poor, the less able and the vulnerable get essential supplies.
We know that it is a primeval instinct to panic buy in response to an incident and whatever authorities say will not stop it. It is a ‘lesson identified’ from COVID-19, so make it a lesson learned by putting this in your plans, if it is appropriate for your own organisation's response.