Coronavirus Log of Consumer Hoarding Behaviors March 2020 - July 2020

Consumer Behavior Causing Retail Product Shortages When There Is No Underlying Supply Shortage

Boomerang, Whiplash, Bullwhip, and Forrester Effects

Types of Retail Product Shortages

Retail product shortages occur in two distinct instances (a) when supply genuinely decreases, such as a bad peach crop or (b) when there is no supply decrease but panic buying occurs.

Retail Product Shortages With a Supply Decrease

The most obvious examples of product shortages caused by supply decreases are seasonal produce such as peaches. Consumers expect that no peaches will be available when it is not peach season. Consumers generally understand differences in year-over-year availability based on the size of the peach crop. Generally expected seasons supply shortages do not cause panic buying.

Retail Product Shortages Without a Supply Decrease

Retail product shortages without a supply decrease are caused by rapid increases in consumer buying.

In some cases rapid increases of consumer buying occur for no discernible reason. The great toilet paper shortage of 1973 [1] is a good example. There was no supply shortage. An unfounded rumor about a toilet paper shortage appeared. The false toilet paper shortage rumor spread by word of mouth. The rumor induced consumer panic binge buying and a resulting shortage. The illusion of a shortage was continuously reinforced when consumers frequently found shelves empty. After four months the public finally realized there was never an underlying toilet paper supply shortage and the panic buying stopped.

In some cases rapid increases of consumer buying occur via a disproportionately large overreaction to an unrelated event. A good example is the Honda Civic shortage which was indirectly related to the oil crisis of 1978-1979. Through the 1960s and early 1970s Americans were happy driving large heavy fuel inefficient vehicles. During the late 1960s and early 1970s American oil production decreased and OPEC was organized. In late 1978 oil exports from Iran and Iraq disappeared. The retail price of gasoline dramatically increased due to a genuine supply decrease. Long lines appeared at gas stations in 1978-1979, similar to the first gas price crisis of 1973. The higher price of gasoline increased the demand for smaller fuel efficient vehicles. Due to word-of-mouth communication, the Honda Civic achieved cult status by attracting a disproportionately large share of the new demand for smaller vehicles. There was a Honda Civic shortage which lasted for months. There was no supply reduction to Honda Civic stock. Eventually the recognition of competitors for the Honda Civic and an increase in Honda Civic production ended the shortage. In this case, the specific Honda Civic shortage among a field of competing vehicles was a disproportionate reaction to indirectly related events. The oil crisis directly caused gas lines but only indirected affected the Honda Civic crisis.

Bullwhip or Forrester Effect

The bullwhip or Forrester effect refers to increasing swings in inventory in response to shifts in customer demand as one moves further up theĀ  supply chain. Many consumers hoard a product. The retailer experiences a larger demand than normal and increases the order level with the wholesaler. The wholesaler experiences larger demand than normal from many retailers and increases the order with the manufacturer. The manufacturer experiences larger demand than normal from many distributors and increases production. If the demand increase is artificial rather than organic, then all supply chain layers experience a product glut when demand returns to normal. The product glut is even larger if many consumers temporarily stop buying because they realize they overbought during panic mode.

The concept first appeared in Jay Forrester's Industrial Dynamics. Wikicommons graphic here.

Boomerang or Whiplash Effect

The boomerang or whiplash effect is terminology used by this author to describe a single-product single-location shortage followed by a glut. A single consumer engages in more frequent consumption of a specific product. For a while normal retail restocking works. Eventually the retail stock drops to zero. A larger order is placed by the retailer with the wholesaler. Stocking level of the single product becomes larger. When the meal preferences of the consumer changes, a short term single-product glut occurs. The boomerang effect has been observed by the author on tootsie rolls and Beefaroni

Consumer Staple Panic Buying During the Corona-virus March 2020 - July 2020 Event - No Actual Product Shortages

The coronavirus pandemic event of early 2020 resulted in shelter-at-home guidelines, closing of group meetings, and closing of non-essential businesses. However, grocery stores did not close and there were no actual product shortages. However, panic buying of various products categories ensued, such as toilet paper, paper towels, fresh meat, canned goods, etc. Difficult to predict spot shortages of specific branded products also occurred. The following are day-by-day stock level observations.

Stock Level Graph

Thursday March 19, 2020

Stater Brothers and Vons both: Fresh meat completely gone. Shelf stable MREs in boxes or cans completely gone. Frozen meat present at normal levels. Deli stocked at normal level. Paper products 30% of normal at Vons. Beefaroni gone.

Friday March 20, 2020

Smart and Final: Occupancy limit of 75 being enforced. Twenty people lined up on front of store at six foot intervals.

Saturday March 21, 2020

Vons: Parking lot has half the cars normal for time of day. Articles begin appearing about toiler paper buyer's remorse.

Sunday March 22, 2020

Vons: Parking lot has half the cars normal for time of day. Occupancy limit of 100 being enforced, actual occupants never exceeded 80. Fresh meat at 60% of normal. Shelf stable MREs in boxes or cans at 60% of normal. Frozen meat present at normal levels. Deli stocked at normal level. Beefaroni overstock.

Tuesday March 24, 2020

Smart and Final: Occupancy limit of 75 being enforced informally. Five people at a time gain entrance. Zero to three people waiting in front of store. Paper products gone. Fresh meat 50% of normal. Baked goods 50% of normal.

Thursday March 26, 2020

Vons: Occupancy limit of 100 not being enforced. Paper products stock 10% of normal. Kleenex gone. Fresh meat 60% of normal. Baked goods 60% of normal. Deli stock 80% of normal. Shelf stable MREs in boxes or cans 30% of normal. Beefaroni overstock.

Stater Brothers: Parking lot 40% of normal. Fresh meat 90% of normal. Frozen foods 60% of normal. Paper products gone. Cleaning product gone. Beefaroni gone.

Sunday March 29, 2020

Vons: Meat 70% of normal. MREs 50% of normal. Paper gone. Bread 50% of normal. Cleaning supplies 10% of normal. Beefaroni present. Stater Brothers: Meat 90% of normal. MREs 50% of normal. Paper 5% of normal. Bread 70% of normal. Cleaning supplies 40% of normal. Beefaroni gone.

Thursday April 2, 2020

Stater Brothers: Meat 80% of normal. MREs 30% of normal. Paper gone. Bread 60% of normal. Cleaning supplies 40% of normal. Beefaroni gone. Vons: Meat 50% of normal. MREs 50% of normal. Paper gone. Bread 50% of normal. Beefaroni overstock.

Tuesday April 7, 2020

Vons: Meat 90% of normal. MREs 60% of normal. Paper 5% of normal. Beefaroni overstock. .

Thursday April 9, 2020

Vons and Stater Brothers same levels: Meat 90% of normal. MREs 60% of normal. Paper 15% of normal. Beefaroni overstock.

Tuesday April 14, 2020

Stater Brothers: Meat 100% of normal. MREs 80% of normal. Paper gone. Beefaroni gone.

Wednesday April 15, 2020

Vons: Meat 70% of normal. MREs 80% of normal. Paper gone. Beefaroni gone.

Friday April 16, 2020

Stater Brothers: Meat 100% of normal. MREs 60% of normal. Paper 5% of normal. Beefaroni gone.

Thursday April 23, 2020

Vons: Meat 90% of normal. MREs 70% of normal. Paper 10% of normal. Beefaroni normal.

Friday April 30, 2020

Stater Brothers: Meat 90% of normal. MREs 60% of normal. Paper 5% of normal. Beefaroni gone.

Tuesday May 5, 2020

Vons: Meat 70% of normal. MREs 80% of normal. Paper 20% of normal. Beefaroni normal.

Thursday May 7, 2020

Vons: Meat 90% of normal. MREs 70% of normal. Paper 20% of normal. Beefaroni normal. Stater Brothers: Meat 80% of normal. MREs 60% of normal. Paper 5% of normal. Beefaroni normal.

Thursday May 14, 2020

Stater Brothers: Meat 100% of normal. MREs 80% of normal. Paper 5% of normal. Beefaroni normal.

Thursday May 21, 2020

Vons: Meat 100% of normal. MREs 90% of normal. Paper 40% of normal. Beefaroni normal.

Thursday May 28, 2020

Stater Brothers: Meat 90% of normal. MREs 80% of normal. Paper 10% of normal. Beefaroni normal.

Thursday June 4, 2020

Vons: Meat 90% of normal. MREs 70% of normal. Paper 30% of normal. Beefaroni gone.

Thursday June 11, 2020

Stater Brothers: Meat 100% of normal. MREs 70% of normal. Paper 30% of normal. Beefaroni normal.

Thursday June 18, 2020

Vons: Meat 80% of normal. MREs 65% of normal. Paper 60% of normal. Beefaroni normal.

Thursday June 25, 2020

Stater Brothers: Meat 90% of normal. MREs 80% of normal. Paper 60% of normal. Beefaroni normal.

Thursday July 2, 2020

Vons: Meat 90% of normal. MREs 80% of normal. Paper 80% of normal. Beefaroni normal.

Future use

Future use.

Future use

Future use.

[1] Crockett, Zachary. "The Great Toilet Paper Scare of 1973." Priceonomics, July 19, 2014, priceonomics.com/the-great-toilet-paper-scare-of-1973/.

Oremus, Will. "What Everyone's Getting Wrong About the Toilet Paper Shortage." Medium, Marker, April 2, 2020, marker.medium.com/what-everyones-getting-wrong-about-the-toilet-paper-shortage-c812e1358fe0.

Jeffrey Sward, March 2020 - July 2020.