The novel coronavirus COVID-19, which was first detected in Wuhan, China in December 2019, has now taken the world by storm. While efforts are being made across multiple countries to contain the transmission of the virus, public spaces have been closed and people are being urged to socially distance themselves by staying indoors.
The World Health Organization has declared the situation to be an international pandemic as it has currently spread to over 150 countries. The worldwide spread has led to, among other consequences, many individuals panic buying, a term which refers to consumers buying more of a product than they need to at that point in time due to the fear of a possible future shortage.
Panic buying has been observed across Canada as store shelves have been stripped bare of food items, household essentials, and especially toilet paper rolls, sanitizers, and masks. A survey conducted across Canada between March 13 and 15 of this year by Dalhousie University and the Angus Reid Institute showed that 71 per cent of Canadians were worried about the pandemic while 41 per cent had hoarded groceries and household supplies in preparation of a shortage.
The Medium interviewed Dr. Lisa Kramer, a professor of finance at the University of Toronto and an expert in behavioural economics, about panic buying and the reasoning behind it. Kramer explains that “shopping is a common and natural way for people to try to assuage their negative emotions,” a phenomenon which has “giv[en] rise to the expression ‘retail therapy.’ In an emergency situation, people are worried about running out of essential provisions, and so they can feel the urge to stockpile.”
Furthermore, pandemics tend to cause helplessness and extreme anxiety in individuals—feelings which are in stark contrast to our inherent desire to be in control of events which affect us. As a result, panic buying becomes a means of retail therapy, and more importantly, a way to maintain a sense of control.
As to whether businesses and producers may exploit consumers due to the increased demand, Kramer confirms that “the good news is that retailers and government officials are reassuring the public supply chain is in good shape. There are plenty of goods in warehouses to restock stores’ empty shelves. Large chains also have an incentive to maintain goodwill with their customers, and many have committed not to raise prices to exploit the pandemic.”
Marc Fortin, president of the Retail Council of Canada in Quebec, has also confirmed that there should be no worries in regard to Canada’s food supply. In an interview with Global News, he explained that the problem was not a shortage in supply, rather it was restocking the shelves as products which would normally take days to sell out were purchased in a mere few hours. Large chain grocery stores are also monitoring consumption and adjusting their inventories accordingly.
In response to the question of whether one should stock up, Kramer reiterates that “governments are asking consumers to buy only what they need for a week or two at a time. One exception is that people who take prescription medication should consider ensuring they have sufficient supplies to last for at least the duration of a quarantine, should one become necessary. Many insurance plans allow for up to three months’ supply refill at a time.”
Regarding the financial impacts of the pandemic on the economy, Kramer notes that in the “short term, we will see an immediate impact on people who work in the service sector, especially travel, restaurants and bars, live entertainment, and some retail establishments. Many employers are striving to continue paying their employees even if they aren’t working, but not all will be able to for an extended period. Fortunately, provincial and federal governments are stepping up to help cushion the impact of lost revenues. Many institutions are likely to waive penalties for late payments or allow extra usage of services at reduced or waived fees. Consumers should check with service providers for specific details as their needs evolve. Financial institutions are often willing to make an exception for a customer facing extreme circumstances, so it is worthwhile to ask rather than assuming the worst.”
All in all, while panic buying is understandable, there is currently no need to worry about shortages or to hoard food. The government has assured citizens of a reliable chain of supply and therefore, all we must do is stay indoors, wash our hands, and socially distance ourselves until we no longer have to.