Panic buying during the covid-19 pandemic and its impact on global health is number one (1) on the list of consequences of Covid-19 (corona virus) on global market as soon as its declaration as a pandemic on March 11, 2020.
As an international phenomenon, panic buying posses threat to health systems’ ability to prevent and treat the corona virus. This threat includes shortages of hand sanitizers, masks, and pain relievers. etc.
There is also threat to deplete medicines that provide potential treatment for the virus including chloroquine and hydroxychloroquine which should be taken on recommendations by medical personnel, though medical research from WHO said its unproven to be the treatment for covid-19.
People are recently changing the way they buy and their shopping behavior; from regular bulk buying in retail stores to online shopping from online stores.The isolation and lock-down measures only worsened the uncertainty of not knowing what to buy at unprecedented times like this.
- 1 Panic buying during the Covid-19 pandemic
- 2 The dangers of panic buying
- 3 Most demanded products during the covid-19 pandemic
- 4 Shifting product categories during the COVID-19 pandemic
- 5 Conclusion
Panic buying during the Covid-19 pandemic
Panic buying is a crisis induced phenomenon that can drive up prices of commodities as a result of increased demand; induces hoarding of essential commodities away from the hands of people who need them most.
As news of COVID-19 spread and as it was officially declared a pandemic by the World Health Organization, people responded by stocking up their homes with essential supplies in preparedness for the long pandemic haul.
Medical supplies like hand sanitizer, face masks and household essentials like toilet paper and bread, was no where scarcely available in retail stores as they all sold out. Soon, the online stores started struggling to keep up with peoples demands, and price hiking for the highly demanded supplies became a norm.
As stated earlier, fear of the unknown plays a huge role in causing panic buying as well as a weird belief that dramatic event warrants a dramatic response – even though, in this case, the best response is something as mundane as washing your hands.
Panic buying is a normal experience because humans respond to crises in different ways. When faced with an uncertain, risky situation over which we have no control, we tend to try whatever we can to feel like we have some control.
The dangers of panic buying
During fearful events like looming natural disasters, such as a hurricane or flood, people frequently stock up with emergency supplies. It is a rational thing to prepare for something bad that is likely to occur.
However, it is irrational to over prepare, say you bought 500 toilet rolls for personal use for a likely 2-3 weeks isolation period. of course, they happened during the covid-19 pandemic
If its irrational, that is panic buying. This singular act can cause a chain of inter-looping consequences.This type of behavior can induce shortages, cause price hiking, increase theft etc
For example, when Hurricane Harvey hit oil-rich Houston, Texas in 2017. Precautions taken by refineries, as well as eventual flooding, temporarily stalled the supply of petrol and diesel in the US.
That was expected, but the problem got worse when people flocked to petrol stations and panic-filled their cars, contributing to a two-year high in petrol prices.
Irrational stockpiling can also lead to price gouging, says Steven Taylor, a professor and clinical psychologist at the University of British Columbia, and the author of The Psychology of Pandemics. “If the price of a roll of toilet paper is tripled, that’s seen as a scarcer commodity to acquire, which can lead to anxiety,” he says.
Most demanded products during the covid-19 pandemic
Groceries demand and prices spiked in the second week of March, immediately after the covid-19 pandemic declaration by WHO on 11th of March, 2020. Shoppers turned online to find the goods they needed because they weren’t available at their local grocery stores anymore.
Online stores suddenly started noticing spikes as well and shortage of products. Here is a graph, with data from google trend, showing a huge spike in grocery-related searches over a period of 12 months. The spike is visibly noticed on the second week of March.
2. Other Sectors Products
In addition to grocery, other products that sky-rocketed in price and demand, covers a wide number of products across categories in the pharmaceutical sector, baby products, household cleaning products, toys and games, etc.
Data provided by Common Thread Collective on the covid-19 pandemic trends as it related with ecommerce shopping behavior, tells us more about how other sectors responded to panic buying phenomenon. While ecommerce performance is not generally up or down, breaking down the data by vertical tells a bit more of the story.
From the chart above, It is clear to see what products people need, and are buying during the covid-19 pandemic. The chart is also a guide to know which products you need to be buying during this period.
3. Digital products – subscription services
As ecommerce physical products sales appear to be skyrocketing as one might expect, there is also an increase in number of subscribers in businesses that will make the stay at home order easier to bear. The entertainment industry is one of such industry. More Netflix, Cable TV, youtube and social media platforms were making huge gains in traffic drawn to their websites.
Other non-subscription services that will allow you to work from home and earn money like Fiverr and Upwork also had increased traffic during these times and significant upward trends in both revenue and conversion.
Google trend showed there are more searches for the term “Netflix” during the covid-19 pandemic announcement and afterwards. Other services that assisted in keeping people entertained or to earn extra income also saw a dramatic increase.
Shifting product categories during the COVID-19 pandemic
As people are making different but similar purchase decisions as a result of new and ever-changing global and local circumstances, there is also a visible shift in the product category being purchased.
There are six key consumer behavior thresholds tied to the COVID-19 pandemic and their results on markets.
- Proactive health-minded buying.
- Reactive health management.
- Quarantine prep.
- Pantry preparation.
- Restricted living.
- A new normal.
As we progress through these stages, the items people choose to buy and the product categories that thrive continue to change. Here are some of the product categories most affected.
1. Food and beverage
Groceries are the most affected in this category. People need to get foods that can stay long without spoiling. In general, groceries sales are up. However, there are some behavioral changes around the way people are buying groceries.
For example, in a bid to safely practice social distancing and avoid crowds at the supermarkets, many consumers are choosing to buy-online-and-pick-up-in-store delivery option. Apps like Shipt and Instacart allows people to hire personal shoppers to purchase, or pick up their groceries order and deliver them at their doorstep.
There is a 124% (for Shipt) and 218% (for Instacart) increase in the purchases through their site. People are also choosing to buy these items from online stores more than they did prior to the covid-19 pandemic.
2. Health and safety products
When we are faced with life threatening situation,we turn to our pharmacies in order to get in shape again. Since public gathering will increase the chances of contracting the virus, we stay stocked up in the basic medical supplies.
Anyone who has faced empty shelves or seen price gouging online knows that health and safety products are being purchased far faster than they can be produced and restocked.People try to protect themselves from harms way by keeping extra supplies for the rainy day.
3. Online streaming
Staying at home and isolating oneself from neighbors and colleagues at work is not an easy fit. Everyone is scared of contracting the virus. So, while we focus on protecting and feeding ourselves, it comes as no surprise that we are home-bound and no longer pursuing external entertainment options as before.
Cinemas and game houses are all closed, so the next best option is turning to digital streaming services. There is a significant increase in the number of subscribers to streaming services like Netflix, Amazon, Hulu, and Disney+ during this period.
The non-traditional streaming services like movie studios are have the option of releasing media streaming, on-demand, sometimes earlier than projected release.
4. Luxury goods
Even though many products experienced a boost in demand and sales during the covid-19 pandemic, there are other sectors that are not doing as well. In addition to obvious ones like entertainment, restaurants, and travel, one sector that experienced significant losses during this period is the luxury goods industry.
They truly lived up to their name “luxury goods”. They are not among the essentials needed for the pandemic.More so, this is in part because luxury goods rely heavily on the Asian market’s purchasing power, where the pandemic has been affecting consumers since January.
Vogue Business projects a likely loss to the tune of $10 billion for this industry by the end of 2020 due to the COVID-19 pandemic.
5. Fashion and apparel
As mentioned above, omnichannel sellers are seeing big losses, in part because they’re closing the retail arms of their businesses all together. People are understandably not interested in shopping for clothes in person.
Department stores like Macy’s and JCPenney, large chains like Abercrombie & Fitch and Nike, and DTC brands with some storefronts like Rothys and Everlane are all closing their physical stores and experiencing losses.
Some stores like Patagonia are halting even their online stores to protect all workers in their supply chain. Even online apparel sales are down as people are putting more of their budgets into daily essentials.
Not just the apparel market; shoes, bags, wrist watches, eye glasses and all fashion related accessories are all experiencing a drawback in sales during this period. Its best to jettison products in this category and save up more for the essentials.
Don’t panic or perhaps, don’t over panic. We are all in this together.
There products that are more useful than the others, you should go for them and have just enough quantity to sustain you for 2 weeks on the row. As a business owner, you need not be worried, your customers are doing their best to adapt to strange times like this without a lot of footholds and shifting their behavior as a result.
Try to support your customers as we all are facing same uncertainty. We all know the feeling of not having access to our needs. Your industry and audience will determine the kind of response to give till this ever growing situation changes for the better.
Have other products your customers are buying during the covid-19 pandemic, feel free to comment inside the comment box.